An Introduction to Crowdfunding Startups in Indonesia: Tips & Requirements

A spike in internet usage is a catalyst for boosting crowdfunding in Indonesia, which involves raising money from many people to support a new business endeavor. Crowdfunding in Indonesia is a vital instrument for raising funds from the general public in a quick, inexpensive, and seamless way.

According to Statista, by 2025, the value of transactions related to crowdfunding in Indonesia will increase to US$7.5 million. The enormous opportunities crowdfunding presents for businesses and Indonesia’s vast internet usage landscape have set the stage for foreign investors to invest in the archipelago.

This article will discuss important questions like what exactly crowdfunding is in Indonesia and how it works.

How Crowdfunding in Indonesia Became a New Trend

As Indonesia’s economy has grown in recent years, the aspiring middle class is heavily contributing to the growth of new creative industries such as coffee shops, fashion, and healthy food. Most of these industries are startups or micro, small, and medium enterprises (MSMEs) that need money to secure, streamline and expand their operations.

Moreover, bankability is a common issue for these startups and MSMEs, which makes it difficult for them to expand their operations. In light of such problems, equity crowdfunding is a viable solution.

Indonesia’s Financial Services Authority (OJK) published Regulation Number 37/POJK.04/2018 on Information Technology-based Crowdfunding Services via Public Offerings (POJK 37). The question begs: what exactly is equity crowdfunding?

The method of acquiring essential capital (for a new firm) by seeking contributions from many individuals, particularly from the internet community, is defined by Merriam-Webster as equity crowdfunding (also known as crowdfunding).

Equity crowdfunding is a method of bringing together investors and businesses in need of capital.

How to start a crowdfunding business in Indonesia

Who can conduct Crowdfunding services?

The following are the participants in equity crowdfunding activities as defined under POJK 37:

• Investors who acquire issuer-issued shares through platform providers;
• Suppliers of platforms, managers, and operators of crowdfunding operations in Indonesian legal entities;
• Issuers such as Indonesian limited liability companies that offer their shares through platform providers and are not controlled by:
  • a business group or conglomerate,
  • public companies or subsidiaries of public companies;
  • having assets of more than USD 675k, excluding land and buildings;
  • Custodian parties that offer custodians services for securities and other assets connected to securities and other services

What are the requirements to conduct Crowdfunding in Indonesia?

A platform provider must get a business license from the OJK to launch a crowdfunding platform. In addition, a platform provider must meet the following criteria to be able to apply for OJK licenses:

• It’s either a partnership or a limited liability business.;
• It has a minimum capital of USD 170k;
• It possesses human resources with knowledge and/or experience in the field of information technology, or it may review the issuer

Amended Provisions on Crowdfunding Service Providers’ Mandatory Registration as Electronic Systems Providers issued on August 25, 2021, include:

• After obtaining company licenses from the Financial Services Authority (Otoritas Jasa Keuangan – “OJK”), crowd funders must now register as electronic system providers with the Ministry of Communications and Informatics (Article 15A).
• If they have not filed a registration certificate as an electronic system provider to the OJK, crowdfunding service providers who have obtained business licenses from the OJK are banned from providing any services related to selling securities by issuers.
• Any violation of the requirement as mentioned earlier and restriction shall result in the application of administrative penalties.

Crowdfunding Requirements

In compliance with POJK 37, the following are the crowdfunding standards the issuer must meet:

• The crowdfunding activity must be carried out through a platform provider that has received an OJK license.
• Unless the OJK specifies otherwise, the money raised through the crowdfunding activity shall be at most USD 675k in one or more offerings.
• The time for issuing shares must be completed within sixty days.
• POJK 37 also allows platform providers to create a secondary market for trade among their registered customers.

Start your Crowdfunding Business in Indonesia with InCorp Indonesia

InCorp Indonesia (formerly Cekindo) provides business setup services that can make the crowdfunding business in Indonesia accessible and affordable for global individuals and companies. Projects can be accomplished at a fraction of the total cost by using a crowdfunding model through your business.

A crowdfunding business allows entrepreneurs to build working capital, whereas financing through conventional methods has become a challenge for most foreigners. We are a fully authorized business setup company in the country with specialists who can analyze the potential and feasibility of your crowdfunding business by using our expertise.