Soon, the backbone of Indonesia’s startup ecosystem will not be only foreign private capital, but the centralised, collective power of the state-owned enterprises (SOEs). Over the past decade, Indonesia has quietly transformed its SOEs from the old-school infrastructure builders to the country’s toughest digital investors. This shift is not accidental. It is part of a calculated strategy to protect the economic value of Indonesia’s digital economy within its own borders.
The merger of large state-backed funds led by the Merah Putih Fund and the newly formed Danantara super-holding represents a major shift towards a more state-led approach to venture investing, prioritising national strategic goals, long-term profitability and domestic exits over the growth-at-all-costs model of the past.
We look at the next frontier of digital infrastructure, Southeast Asia positions itself for global data demand
The rise of state-backed CVC
Indonesia’s startup ecosystem was previously driven by foreign giants like SoftBank and Sequoia. This played a key role in the rise of unicorns such as GoTo and Traveloka, but it also exposed the market to global volatility and the need to list overseas. Realising this, the Ministry of State-Owned Enterprises (BUMN) launched a series of initiatives.
It began with MDI Ventures (Telkom Indonesia), which demonstrated that it was feasible for a state-linked Corporate Venture Capital (CVC) to perform as fast as a private company, investing in more than 80 startups and pioneering deep tech investments.
MDI’s breakthrough was a blueprint for others to follow. To focus on fintech integration, Mandiri Capital Indonesia (MCI) emerged as an actor, while BRI Ventures leverages the huge network of micro-banking at Bank Rakyat Indonesia to deliver financial inclusion using Sembrani funds. By 2026, they will have evolved from experimental units into market makers tapping into the country’s most important financing rounds.
The Merah Putih mandate and capturing the soonicorns
The key stage of this consolidation was to set up the Merah Putih Fund (MPF). Unlike early-stage funds, MPF is about soonicorns, startups valued at upwards of $200 million and which may top out at $1 billion. With five state CVCs as anchor investors, the fund carries a unique patriotic mandate to invest in Indonesian founders who operate in Indonesia and are going to exit on the Indonesia Stock Exchange (IDX).
This is a critical pivot. It further ensures that the value that is created by the next generation of tech giants stays with the domestic capital market, deepening the liquidity of the IDX. Yet the fund’s demand for domestic exits significantly changes the logic of incentives for founders. This shifts founders’ incentives into creating businesses that will prove appealing for local institutional investors, versus the metrics that Silicon Valley looks for.
2026 outlook and the Danantara era
The most significant development for the 2026 landscape is the operational maturity of Danantara (Daya Anagata Nusantara). Often compared to Singapore’s Temasek, Danantara is designed as a super-holding company to consolidate Indonesian state assets. It is reported that Danantara will centralise investment decisions in the coming year, with assets expected to play a significant role in national development.
According to a recent analysis by the Asian Business Review, Danantara has set a tighter investment plan for 2026, targeting projects with distinct commercial value. This centralisation enables the state to mobilise money at a coordinated level that private companies cannot bring to bear, funding high-priority infrastructure and the digital transformation into projects that benefit society.
This massive consolidation represents a shift from fragmentation to unity. Previously, state banks and telcos operated their venture arms in silos. The new structure creates opportunities for investment corridors where a state-backed startup can slip easily into the supply chain of different SOEs. A state-backed agri-tech company funded by Danantara could now immediately tie up with state fertiliser firms and logistics giants as part of the broader supply chain.
What does this mean for the VC scene in 2026?
A shift to national interest verticals is upon us. The days of funding cash-burning consumer apps are fading. In 2026, state capital will flow disproportionately toward sectors that align with government targets, specifically the downstreaming (hilirisasi) of natural resources and green energy. According to trends in Southeast Asia seen in recent years in TechCrunch, investors are increasingly looking for startups that can solve fundamental infrastructure problems rather than just digital convenience.
This shift is having a visible effect on the deal flow pipeline. Even founders pitching pure-play eCommerce marketplaces are finding it harder to secure funding, while those pitching battery management systems for electric vehicles or IoT solutions around nickel smelting for optimising demand are discovering big audiences inside state-backed offices.
Furthermore, state-backed investors are exposed to public scrutiny and audits by the Audit Board of Indonesia (BPK). Therefore, they require more explicit paths to profit than the private sector. For startups, that means the 2026 fundraising landscape will favour camels, sustainable and resilient organisations over unicorns, which depend on rapid growth and high cash burn. The focus is shifting from Gross Merchandise Value (GMV) to EBITDA and sustainable unit economics. This new discipline is healthy for the ecosystem long-term, reducing the risk of massive bubble bursts seen in previous cycles.
Additionally, rather than squeezing capital out from a private investor, the state CVCs are acting as de-risking agents. They anchor late-stage rounds (Series C and D) via structures like the Merah Putih Fund and offer foreign investors the stability they need to re-enter the market before they lose their investment opportunities. There is an increase in Public-Private Partnerships (PPP) where state funds jointly invest with global VCs to support infrastructure-focused tech plays. Global companies are not afraid to make deals where a state institution has done its due diligence. The state’s stamp of approval is a signal that the startup is regulatory-compliant and has access to government contracts.
In a nutshell
By 2026, the distinction between state innovation and the private startup ecosystem will blur. State-owned corporate venture capital has graduated from being a passive participant to becoming the market maker. All the startups and investors will have to play by the rules and follow the strategic roadmap of these big states, particularly for digitalisation, green transition and financial inclusion. This will ensure that Indonesia’s next decade of growth will be able to provide liquidity to the Indonesian market as these state giants emerge as the leaders.
As the ecosystem matures, giants like Danantara help to keep Indonesia’s digital economy anchored to local value creation. Danantara is expected to emerge as an important hub in the global sovereign wealth landscape, reinforcing confidence in Indonesia’s long-term financial trajectory. In this new era, the startups that thrive will be those able to align commercial ambition with national priorities, as state-backed capital becomes a defining force in the country’s venture ecosystem.