Far from Jakarta, a different kind of VC is thriving

As foreign venture capital pulls back from Indonesia, one group of investors has quietly continued writing checks.

They’re not chasing AI startups or the next unicorn. Instead, they’re financing palm oil traders, small manufacturers, handicraft exporters, and other businesses far removed from Jakarta’s tech scene.

One of these investors is Sarana Sumbar Ventura. Based in Padang, the capital of West Sumatra, the firm provides financing exclusively within the province. Most of its portfolio goes to MSMEs, particularly individually owned businesses.

Around 70% of Sumbar Ventura’s borrowers are tied to plantation and commodity-related businesses such as oil palm and agricultural trading, sectors that underpin West Sumatra’s economy. Its CEO, Mulyadi, says strong palm oil prices have helped sustain both the local economy and the firm’s operations.

See also: The Nadiem effect on investors, talent, and Indonesia

In the country, Sumbar Ventura is considered a hyperlocal venture capital firm, meaning it invests exclusively in businesses within a single province rather than across the archipelago.

As investment sentiment toward Indonesia weakens, these little-known firms offer a different model of venture capital: backing local businesses in sectors conventional VCs rarely touch.

Not your typical VC

According to Indonesia’s venture capital association, Amvesindo, there are 17 hyperlocal venture capital firms among its members.

Many trace their origins to the 1990s, when the Indonesian government established regional venture companies to expand financing access for small businesses that struggled to secure bank loans.

Unlike Silicon Valley-style funds, which invest in exchange for equity, Indonesia’s hyperlocal VCs provide debt financing to local businesses in productive sectors such as agriculture, trade, transportation, housing, and small-scale manufacturing.

“Equity investment models are not suitable for economic conditions outside major cities because those seeking funding are often individuals rather than companies,” explains Hasan Ruspandi, CEO of Sarana Kalsel Ventura.

Investing where they know best

Local strength, local risks