A B S T R A C T
Start-ups play a pivotal role in improving economic efficacies and a significant source of many groundbreaking innovations. Start-ups are different from small medium enterprises (SME) as they are also bounded by the liability of newness. The scarcity of resources compels start-ups to look for external partners in various stages of development and commercialization of their ideas or technologies. The existence of start-up itself, whether it will grow succeed or not, tend to rely on the availbility of financial and technical support despite their potential ideas, therefore known an alternate financing support model as venture capital investment (VC). Which is an investment that occurs by an equity participation including technical support to an emerging business partners, leading their business to emerge in a market. Venture Capital Investment held by a VC company or venture capitalists. However, comparing to the world leading industrial nations, venture capital investments in Indonesia are more likely stray apart from the true purpose of a venture capital investment. The purpose of this study is to explain and break down the deviations made by Indonesia Governing regulation regarding venture capital investments and or Venture Capital company.
Keywords :
Venture Capital, Venture Capital Company, Start-up, Investment
Introduction
The theory that i will use will be "law as tool of social engineering", It was developed by Roscoe Pound which is now re-introduced by Mochtar Kusumaatmadja, as an attempt to assimilate the theory to Indonesian law. Rather than the original statement which is considered to be more suitable in common law system country, it was used to study the purpose of a law implementation that ought to be appropriate based on the law that live within a society[1] . The theory indicates that the purpose of the law is not always to be formed based on society interests, however it must also be upheld in such a way by the jurists as social control efforts. As applied to my study the theory holds that i would expect my Independent variable (s) The "law as a tool of social engineering" theory to influence or explain my dependant variable (s) the "current Indonesia's Venture Capital implementation of regulation" because those regulation should provide a good environment that are appropriate and well suited for Start-up company as Inventor and large company as their Investor's in Indonesia.
Those current Indonesia's implementation of regulation as i mentioned earlier consisting ; Regulation of the Minister of Finance Number 18 / PMK.010 / 2012 and Regulation of Financial Services Authority Number 35 / POJK.05 / 2015. Referring to those regulation, this study will specify the implementation of current regulation to Start-up company and not small and medium enterprise (SME). Thus, the main concern from the author in this study is why there are rarely potential Start-up company and / or Inventor , succeed in cultivating their invention and establishing their business in Indonesia .Furthermore, How does a regulation should provide an environment that support Indonesia's potential Start-up company and /or Inventor.
Start-ups play a pivotal role in improving economic efficacies and are a significant source of many groundbreaking innovations. [2] The start-up is referred to as a new venture with limited technical and financial resources, Blank, defines a start-up as "an organization formed to search for a repeatableand scalable business model". They are bound by their liability of newness and smallness [3] and therefore lack access to adequate resources. The scarcity of resources compels start-ups to look for external partners in various stages of development and commercialization of their ideas or technologies [4]. The start-ups are different from SME's as they are also bounded by the liability of newness. However, they are similiar to SME's since they both face scarcity of resources usually labelled as liability of smallness. Start-ups also share many commonalities with SME's in terms of strength and challenges but their complexities are exacerbated due to their liability of newness.[5]
Black Law's Dictionary defines that Venture Capital is a funding for new companies or others, embarking on new or turnaround ventures that entails some investment risk but offers the potential for above average future profits. Other definition identifies Venture Capital (VC) is a financing model by a Venture Capital Company in the form of equity participation in a company which receives financing assistance for a specified period, whereby after that period, the investor will divest the shares. Venture capital financing system is quite unique because this financing system has multidimensional function such as; as a financial institution and as a corporate institution since there are equity participation.There are many large companies, that grew larger because the existence of venture capital financing assistance, such as Apple Computer, MTV, Microsoft, Kentucky Fried Chicken,etc[7]. Furthermore, Regulation of Financial Services Authority Number 35 / POJK.05 / 2015 identify 2 form of VC company which are Venture Capital Company and Islamic based VC company / Sharia. First, VC company defined as a business entity which effectuate on Venture Capital Business, venture capital funds management, fee based services, and other business activity that has been approved by Financial Services Authority. Then, for the Islamic based VC company, it is defined quite similiar as a common VC company, in addition, it implemented islamic principle or so called Sharia.
Venture capital investments and technology-based Industry in Taiwan
As a comparison in the 1980's, Taiwan imported the know-how of VC investing from the US and developed a strategic investment strategy to promote growth of Taiwan technology-based industry. This strategy includes the ground rules for the development of VC industry and investments in technology firms, for almost three decades, the Taiwanese venture capital program and the technology-based industry have been remarkably active and successful. As a result, their VC investments have been highly focused on the development of technology-based firms. Until 1989, the scope of these investments was regulated by the "Regulations Governing Venture Capital Investment Enterprises"and only allowed for developing technology-based firms. Even though the government relaxed the restriction of VC investments in 1989, the majority of their VC investments now still go to the technology-based industry. Up to date,the "big five" industries in Taiwan are semiconductors, electronics, telecommunications, information, and optoelectronics. The number and the amount of VC investments in these industries account for 71 percent and 72,84 percent respectively of the current total Taiwanese VC investments[8]