Indonesia’s startup malaise continues as four VCs sentenced to prison
Executives connected to failed TaniHub deal are sentenced despite overall investment successes
Happy Monday and welcome back to Asia Tech Review, your curated digest to keep up to date with tech news across Asia.
Today we’re looking at a nonsensical decision to jail four executives from state-owned venture capital funds in Indonesia, and the hugely negative signal it sends out to the local ecosystem and Indonesians studying overseas who had previously returned in droves to build in the country.
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Politics and startups collide in Indonesia once again
Dark clouds continue to circle over Indonesia’s startup ecosystem after four former employees of venture capital firms backed by the government were given jail sentences. While the former executives were sentenced for corruption, the allegations centre around investments in TaniHub, an agritech startup that cut out the middlemen to connect farmers directly to buyers.
TaniHub appeared well intended with a focus on social impact, which included a lending fund for farmers. It raised more than $90 million from investors, which included $20 million from MDI Ventures, a fund owned by state-owned telco Telkom Indonesia, and $5 million from BRI Ventures, the ventures arm of state-owned bank Bank Rakyat Indonesia.
Things began to go awry during the pandemic in 2022 when TaniHub downsized its operations and staff, and changed its CEO. It closed its operational business later that year, and the company went into liquidation after its lending business lost its license as farmers defaulted on loans they’d received. All in all, it was a spectacular collapse for a startup that put Indonesia on the investment map and had even been mentioned by former Prime Minister Joko Widodo during a speech.
TaniHub executive Ivan Arie Sustiawan and Edison Tobing (former CEO and finance director, respectively) were jailed for 9 years and 7 years over corruption, but the case generated concern as the VC executives were also punished:
Donald Wihardja, former CEO of MDI Ventures, was sentenced to five years in prison and fined 750 million rupiah (around $42,000)
Aldi Adrian Hartanto, former VP of investment at MDI Ventures, was sentenced to two years in prison and fined 250 million rupiah (around $14,000)
Nicko Widjaja, former CEO of BRI Ventures, was sentenced to three years in prison and fined 350 million rupiah (around $20,000)
William Gozali, former CFO of BRI Ventures, was sentenced to two years in prison and fined 250 million rupiah (around $14,000)
Prosecutors alleged that the state-backed VCs unlawfully approved and disbursed investment into TaniHub without sufficient verification and proper legal basis. That, it is claimed, contributed to state losses after funds were allegedly misused and diverted.
In their defence, the four executives claim the outcome and loss was simply startup risk and not corruption or any enrichment for personal gain.
“We contracted three external due diligence parties, two global top 10 financial audit firm[s], and a local law firm for legal dd [due diligence]. And all have been reviewed through our internal team as well as our investment committee that represents our shareholders,” Wihardja wrote in a LinkedIn comment days before being sentenced.
He added that approval to make the investment required all board members, and not simply two partners on the fund.
The TaniHub investment ultimately ended in a loss for MDI Ventures, but the fund produced more than $100 million in returns, as Wihardja’s sister, Cynthia, pointed out in one of a series of posts in support of her brother.
“Think about what that means for a second. It’s like firing — and jailing — a fund manager whose portfolio returned 500%, because one position went to zero. It’s not just unjust. It’s bad maths,” she wrote.
Much like the ongoing case around alleged corruption from Nadiem Makarim, the founder of Gojek and Indonesia’s former education minister, the VC sentencing clearly shows the challenge of bringing modern thinking and startup economics into politics, a domain with more traditional and conservative foundations.
There are certainly bad apples in the startup space. eFishery founder Gibran Huzaifah was jailed for nine years after he admitted to manipulating and falsifying his business numbers to mislead investors, but that doesn’t mean all losses can be attributed to fraud.
That’s a very obvious observation to make, but that’s exactly why these four gentlemen look set for prison. The issue certainly gets more complicated when the money used to invest comes from the state.
Singapore’s Temasek, GIC and Vertex are all generally seen as successes of sovereign wealth funds, but they’re not immune to getting things wrong and being criticised by an angry public. Temasek, for example, embarrassingly wrote off $275 million that it invested in crypto company FTX, which imploded in 2022 resulting in founder Sam Bankman-Fried going to US jail.
We’ve also seen similar outrage in Malaysia. Asia Tech Review broke news of the fire sale of FashionValet, previously backed by the country’s sovereign wealth fund Khazanah, in 2024. The issue made its way all the way to the top as prime minister Anwar ordered an investigation into the due diligence behind the investment.
Back to Indonesia and these trials won’t just stifle potential investment in the country and deter potential founders from taking the risk that is starting a business, but they threaten to reduce the talent returning to the country from overseas.
“Sea turtles,” aka Indonesians who studied overseas and returned to start companies, was a hallmark of the previous decade as Indonesia’s startup scene boomed. Makarim, Wihardja and Widjaja are all examples of US-educated Indonesians who returned to help grow the startup scene. Would they make the same decision if they had that choice today?
DayOne attracting multi-billion dollar acquisition interest as pathway to IPO continues
DayOne is at a crossroads as the Singapore-based data centre company contemplates its next move.
We previously reported that the company is well-placed to go public with the tailwinds around AI picks and shovels companies, with a US-Singapore listing widely expected at a valuation that could reach $20 billion. Now Bloomberg is reporting that Hillhouse is in talks for a $600 million loan to refinance its investment in DayOne, which stands at around 19% of the business, in a sign of that potential IPO.
At the same time, Reuters reported that DayOne could be about to be approached by MGX, the AI investment firm backed by Abu Dhabi, for a potential “multi-billion dollar” acquisition.
MGX’s ownership stakes include TikTok USA, US-based Aligned Data Centers, chip firm Altera and OpenAI and Anthropic. Reuters’s brief report claimed it is talking with investment banks to construct a bid for DayOne. The company certainly fits its investment profile, which includes the doomed-looking Stargate AI proposal, and it would also bring MGX into Asia Pacific in a major way.
The deal may not happen, but DayOne is certainly a company to watch as 2026 develops.
Markets
Jio Platforms is moving close to a record $3.8 billion Indian IPO after it formally approved the listing, we will have a deeper dive this week [Reuters]
Perhaps taking a page from SpaceX/Starlink, Jio Platforms is said to be planning to build its own low-earth-orbit satellite constellation [CNBC]
Momenta, a Chinese autonomous-driving startup backed by General Motors and Grab among others, is set to raise about $1 billion in a Hong Kong IPO at a roughly $9 billion valuation [WSJ]
Deals
DeepSeek is widely reported to have raised $7.4 billion in its first funding round (it’s worth noting that this hasn’t been officially confirmed), but the most interesting detail may be the terms it has dictated. Aside from setting up a vehicle that won’t allow investors to sell their shares for five years, another condition is that investors cannot poach DeepSeek staff or encourage them to start their own businesses [CNBC]
Meta is reportedly in talks to invest in or acquire fintech startup Cred at a $4 billion valuation, higher than its marked-down $3.5 billion valuation in 2025 but short of the $6.4 billion it fetched in 2022. Is this another talent acquisition to get the highly-rated operator and angel Kunal Shah into Meta or an effort to finally crack India’s fintech and payments market? [Moneycontrol]
ByteDance is said to be on track to spend over $1 billion annually on Microsoft AI and cloud services, making it the company’s largest AI customer in China [Bloomberg]
There’s yet another report that the early Chinese backers of AI firm Manus, including HSG and Tencent, plan to repurchase the company from Meta at the $2 billion acquisition price. But, maybe more interestingly, Manus has seen ARR jump from $100 million at the acquisition six months ago to $400-$500 million now [The Information]
Hyundai will buy SoftBank’s remaining stake in Boston Dynamics for $325 mln, according to reports [Reuters]
Long-time Southeast Asia VC firm Golden Gate Ventures opened an office in Uzbekistan, the Singapore-based fund launched its first MENA fund two years ago with a target of raising $100 million [Golden Gate Ventures]
Politics
Senator Tom Cotton is pressing US treasury secretary Scott Bessent to launch a CFIUS probe into Airwallex over alleged Chinese ties [Axios]
The US blocked Chile’s bid to connect South America to Asia via a Chinese-backed undersea cable [Rest Of World]
US commerce secretary Howard Lutnick accused ASML of potentially violating US export restrictions by allowing one of its advanced extreme ultraviolet lithography machines to reach China. The company denies the claim, but even if it is true it is unclear how responsible ASML would be. [Bloomberg]
AI and Data Centres
The Bank of Korea warned that outsized bonuses at major chip firms in the country could stoke broader wage demands and consumer spending [Bloomberg]
SK Hynix has begun to ship samples of its next-generation high-bandwidth memory (HBM) chips to major customers [Reuters]
Alibaba is investing deeply into AI and its chairman Joe Tsai argued AI could develop into a US$50 trillion market, and he clarified that the tech giant will invest across the whole value chain covering chips, cloud infrastructure, foundation models and consumer applications [South China Morning Post]
Alibaba Cloud is opening a fifth data centre in Japan with a focus on supporting AI-based services, its most recent launch in the country was only in March [Nikkei Asia]
India’s real estate and investment firm RMZ plans to invest $35 billion over the next five years to scale its data centre capacity to 2-3 gigawatts, it currently has 250 megawatts of capacity [Reuters]
Chinese authorities will promote the further integration of AI and consumption, according to a plan released by the Ministry of Commerce and seven other ministries [South China Morning Post]
In other news
South Korea’s antitrust regulator rejected settlement bids from food delivery giants Baedal Minjok and Coupang Eats over allegations they pressured restaurant partners into price parity arrangements with rival platforms [Bloomberg]
We know Brazil is a major market for Shopee’s growth, and now the company has begun offering quick commerce-like services in the country in partnership with Uber [Momentum Works]