Indonesia's startup sector at a crossroads: regaining trust after a wave of scandals

Indonesia’s startup winter didn’t arrive quietly - it broke in with the collapses of prominent players such as eFishery, Investree, TaniHub and its lending arm TaniFund, and Zenius, shattering assumptions about governance and the durability of “unicorn” ambition. The fallout has left founders, investors, and regulators confronting uncomfortable truths: inflated valuations, fragile fundamentals, and trust stretched thin.

Some of the failings mirror patterns identified in a recent whitepaper by Wright Partners (in partnership with MING Labs). Their analysis of corporate-backed ventures across Southeast Asia found a common set of “traps” - not insufficient funding, but weak venture design, misaligned ownership structures, and poor execution discipline.

Although their study emphasises corporate ventures specifically, the conclusions apply to regard to startups more broadly. Essentially: even large capital injections cannot compensate for poor product-market fit, flawed incentives, shallow governance, or the inability to pivot when markets shift. For Indonesia - where several high-profile failures combined fintech, agritech, and edutech - the warning is clear: size and hype do not insulate against collapse.

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Yet optimism hasn’t faded. Rather than mourning the end of an era, leading investors, founders, and policymakers cast this moment as a necessary reset - a return to discipline, transparency, and value creation that could rebuild what has been lost. 

Resetting the ecosystem: Integrity, fundamentals, and the long road back

At the Tech in Asia Conference 2025, speakers offered an analytically grounded, if cautiously optimistic, blueprint for restoring trust. Their common refrain: the ecosystem must return to fundamentals - starting with character, governance, and consistent value creation.

Willson Cuaca, co-founder and managing partner of East Ventures, argued that the investor-founder relationship must again emphasise integrity: “There are failures with integrity, and failures without integrity,” he said, pointing out that despite recent scandals, many founders continue to build responsibly, though outside the media spotlight. For him, it remains about backing founders - not simply products - and signalling confidence in entrepreneurial resilience.

Achmad Zaky, founder of Bukalapak and founding partner of Init-6 Venture Capital, echoed this. He dissected the startup universe into three “boxes”: the large unicorns and established firms; a broad middle of mid-size companies; and a small “tail” - fewer than 5% - of failed or scandal-tainted firms.

By that accounting, the many “good apples” should not be lumped together with the miscreants. As Cuaca pointed out, what the ecosystem needs now is consistent building - and the discipline to show, clearly and repeatedly, that real value is being created.

It’s important to focus on what we’ve built and how the ecosystem has actually impacted people’s lives.

The scandals that have beset Indonesian startups are as stark as they are varied. eFishery - once hailed as a Southeast Asian aquatech unicorn valued at US$1.4 billion - is grappling with allegations of massive financial fraud. Investree - which operated a peer-to-peer lending platform - had its licence revoked by the Financial Services Authority (OJK) due to violations and poor performance; its founder was reportedly included on Interpol’s wanted list before being detained to face legal proceedings.

Even outside the “fraud” category, failure has struck. Zenius, once a prominent edutech startup with tens of millions of users, announced a shutdown of its operations in early 2024 after heavy losses, operational mis-steps, and unsuccessful attempts to pivot from digital learning to offline tutoring via acquisition.

Taken together, the collapses reveal a simple truth: Indonesia’s startup crisis is not a funding problem, but a fundamentals problem - one that cannot be solved by capital alone. And that is precisely where the conversation now turns.

Trust, media, and the perception gap

One central insight from the discussion is that the role of media - and public narrative - is pivotal. The scandal-driven coverage tends to converge on the negative: failed startups, frauds, layoffs, liquidation. As Cuaca noted, “darkness is the absence of light”: if public discourse only amplifies negatives, the “good actors” remain invisible, further eroding confidence in the ecosystem as a whole.

To rebuild trust, the ecosystem needs not just transparency and accountability, but also balanced storytelling. That means amplifying success - but also, crucially, documenting the rebuild and the many founders quietly carrying on.

“I disagree with the claim that Indonesia is uninvestable because of a few fraudulent founders. In reality, as you can see in this room, many people are still doing the right things,” Cuaca said.

This gap between perception and reality was also underpinned by observations from Anu Gupta, director of APRW, the publicity partner of the conference. After nearly a decade working closely with tech founders, she observed a meaningful shift in mindset: entrepreneurs are becoming more grounded, emphasising sustainable growth, regional expansion, and rebuilding trust with users and investors.

“Despite recent headwinds, Indonesia remains one of the most promising tech markets in the region... What’s changing now is the approach to growth: it is becoming more responsible, deliberate, and focused on long-term value creation. This evolution marks an important step forward - one that could define the next chapter of Indonesia’s tech ecosystem,” Gupta said.

Ziv Ragowsky, managing partner at Wright Partners, told MARKETING-INTERACTIVE that publicly available data already illustrates how difficult it is to build and scale startups - particularly in Southeast Asia.

In Indonesia, the ministry of communication and digital affairs (Komdigi) recently reported that only around 10% of local startups survive - a figure he described as “underscoring just how difficult it is to build sustainable ventures in emerging markets.” The ministry also pointed out that, despite the challenges, Indonesia’s survival rate is still considered high compared to the global average of just 1%.

Talent, founder pipeline - and why Indonesia still has a shot

Ragowsky added that there is growing evidence suggesting structured venture-building models can improve those odds. Research from the Global Startup Studio Network (GSSN) indicates that startups launched through venture studios are around 30% more likely to succeed, with 84% reaching seed funding and 72% of those progressing to Series A - often in about 25 months, compared to 56 months for traditional startups.

“What we consistently see is that corporates who approach venture building with entrepreneurial autonomy and disciplined experimentation tend to achieve higher survival rates than those that treat it like an internal project. The key isn’t to avoid risk altogether, but to design ventures that learn fast, validate early, and pivot decisively. That’s how successful corporate ventures make it past what we call the Corporate Venture Valley of Death,” he said.

Further, Zaky counselled founders - especially those in early stages - to prioritise market-fit, execution, and sustainability over chasing valuations or hype. He suggested that rigid governance may hamper creativity for early startups, but beyond a certain scale (say mid-size or growth-stage firms), prudent financial practices, clear financial statements, and sustainable growth paths are crucial.

From a public policy vantage, Edwin Hidayat Abdullah, director general of digital ecosystems at Komdigi, stressed the importance of creating a “conducive environment” for startups to grow, but also to fail - as part of normal innovation cycles. The role of government, he argued, lies in providing frameworks for talent development, regulatory stability, and broad collaboration across public, private, and civil society actors. Mechanisms such as nationwide networks of innovation hubs - not confined to major cities - should democratise access to resources and nurture a broader base of founders and entrepreneurs.

As some of the experts emphasised, the fundamentals remain promising. With a population of around 280 million, a growing digital-savvy populace, and increasingly educated youth, Indonesia remains fertile ground for innovation. Abdullah pointed out that the challenge is not a shortage of talent - but the systems and structures that connect talent with opportunity, resources, mentorship, and regulation.

The rise of a more mature class of investors, managers, and institutional backers - who now demand stronger governance and market discipline - may, paradoxically, be a helpful filter. As East Ventures suggested, consistent, responsible founders may attract capital once again, especially if they learn to adapt with humility, realism, and long-term perspective.

While urging founders to stay alert to the next major technology cycle - one increasingly shaped by AI - Cuaca argued that Indonesia’s ecosystem is entering a phase where “time is being compressed”, a dynamic that is accelerating both growth and learning curves. He noted that companies which once needed seven years to reach US$100 million in revenue can now achieve it in as little as four, driven by better distributed knowledge, stronger mentorship networks, and more sophisticated investors.

Crucially, he pushed back against the idea that capital has disappeared. The money, he said, is still very much in the system - it’s simply waiting for clarity.

“There is a lot of dry powder. People raised heavily during 2021-2022, and now they’re waiting. The money is there. Those who keep building - and can clearly articulate the value they’ve created - will get funded.”

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