What KoinWorks Says About Indonesia’s Startup Ecosystem
The KoinWorks case highlights the dangers of weak governance, poor hiring, venture capital hype, and unchecked growth in Indonesia’s fintech ecosystem.
There’s a Southeast Asian startup story that begins with a founder on a conference stage saying “financial inclusion” and ends, several years later, with prosecutors saying “manipulated invoices.” Somewhere in between, a venture capital firm issues a press release, a bank signs a partnership, and everyone agrees that this is definitely the future of finance… provided nobody asks what the collateral actually is.
Enter KoinWorks, once presented as one of Indonesia’s brighter fintech stars: a platform for small businesses, productive lending, digital financial access, and all the other phrases that sound magnificent in a Series C announcement. In January 2022, KoinWorks announced a US$108 million Series C round led by MDI Ventures, with the round split between US$43 million in equity and US$65 million in debt capital. The company positioned itself around helping underserved Indonesian SMEs access financing. Very noble. Very “please do not check the loan files too closely.”
Then, in November 2024, Indonesia’s financial regulator, OJK, said it was placing PT Lunaria Annua Teknologi, the operator of KoinP2P/KoinWorks, under strict supervision after reports of delayed payments to some lenders linked to alleged misuse of funds by a borrower. OJK summoned management, asked for explanations, demanded concrete resolution steps, and sought commitments to protect affected customers.
And now, in May 2026, prosecutors have detained three KoinWorks executives in connection with an alleged Rp600 billion credit fraud involving BRI. Prosecutors allege that financing was channeled unlawfully using manipulated invoice collateral and without required insurance.
And so we return to the central question: why is it apparently so difficult for some of these people to run a company properly?
Culture, Ego, and Control
One of the underrated pleasures of working around startups is meeting senior people who have developed the confidence of wartime generals. They speak in phrases like “ecosystem,” “flywheel,” and “strategic alignment,” usually while ignoring the person in the room explaining how hiring, risk, operations, and organisational structure actually work.
You suggest a proper hiring model. They respond as if you have proposed communism.
You recommend a senior risk operator. They explain that “culture fit” is important, which often means “someone from our WhatsApp circle.”
You suggest building actual governance before scaling credit. They smile in the way people smile when they are already mentally composing a post about being “humbled” to win an award.
Then, three years later, the company appears in the news beside phrases like “gagal bayar,” “strict supervision,” and “alleged credit manipulation.” At which point, naturally, everyone is shocked. Shocked that the system consisting of social capital, investor logos, and a heroic disregard for basic controls has encountered a negative outcome.
The arrogance is structural. In some venture-backed companies, especially in frothy markets, management confidence becomes a substitute for competence. A young executive team raises money, gets profiled, joins panels, meets ministers, hires a comms agency, and begins to mistake external validation for internal capability. The company becomes less a business than a stage production called We Are Building The Future, with the CFO occasionally interrupting to ask whether anyone has seen the cash-flow report.
Credit businesses are especially unforgiving of this.
You can fake momentum in many industries for a while.
You can subsidise growth. You can buy users.
You can massage engagement metrics.
But lending has a nasty little habit: the truth matures on a schedule.
Venture Capital’s Credit Problem
The venture capital model loves scale. It loves
Repeatability
Platforms
Asset-light growth
The idea that software can eat the world… while invoicing the world afterward.
But lending is balance-sheet risk, fraud risk, borrower risk, collateral risk, collections risk, regulatory risk, and, in emerging markets, occasionally “your borrower’s borrower was a cousin of a man who says the invoice was spiritually valid” risk.
We know that banks are slow, SMEs are underserved, data can improve underwriting, digital platforms can widen access, and technology can make capital more efficient. But it is also true that invoice financing has been vulnerable to fraud since approximately the invention of paper. Fake invoices, duplicate invoices, circular transactions, inflated receivables, related-party games. These are not new problems.
The danger comes when venture logic invades credit logic.
Venture asks: how fast can this grow?
Credit asks: should this grow?
Venture asks: what is the total addressable market?
Credit asks: who exactly owes us money, and what happens when they don’t pay?
Venture asks: can we increase disbursement volume this quarter?
Credit asks: why is that invoice printed in a font only used by criminals and wedding invitations?
In the KoinWorks case, the alleged misconduct involves manipulated invoice collateral and financing from BRI through the platform, according to prosecutors. Again, these are allegations, not established facts. But the alleged pattern points to the mismatch at the heart of many fintech failures:
People wanted the economics of lending without the discipline of lending.
The boring people in credit departments exist for a reason. They are there because somebody must ask whether:
the collateral exists
the borrower can repay
the documentation is real
insurance is in place
In healthy financial institutions, paranoia is actually a control function.
In venture-backed lending, paranoia is treated as cultural misalignment.
Social Proof and Its Limits
There is a particular ecosystem disease where pedigree gets mistaken for performance.
Good school? Impressive.
Big consulting firm? Excellent.
Family office nearby? Wonderful.
Knows the right people? Fantastic.
Can run a regulated credit business with operational discipline, independent risk controls, and a robust governance structure?
…let’s not get bogged down in negativity.
This is where the “mates and connections” problem becomes dangerous.
A serious financial company needs people who can say no. It needs:
Independent operators.
Risk leaders with authority.
Finance people who are not treated as clerks.
Compliance with teeth.
Boards that understand the difference between “growth is temporarily messy” and “we may have built a machine for laundering bad decisions.”
But in status-driven ecosystems, the people who should be challenged are often protected by what should invite scrutiny.
They went to the right university.
They know the right investors.
Their cap table looks respectable.
They speak fluent McKinsey.
And so the incentives become warped.
Hiring becomes a social exercise.
Board oversight becomes a hospitality ritual.
Strategic partnerships become proof of seriousness.
Investor participation becomes a credibility shield.
Everyone assumes someone else did the diligence.
The VC assumes the bank checked the credit.
The bank assumes the platform checked the borrower.
The regulator assumes the company has systems.
The company assumes the founder is a genius.
The founder assumes the next round will solve everything.
Then the music stops, and there is a room full of adults pointing at each other like a corporate Renaissance painting.
This is not unique to Indonesia, but Indonesia does have a particularly rich environment for this kind of theatre, because it’s of the relationship-heavy business culture, state-linked capital, prestige-driven hiring, regulatory complexity, and opaque networks.
And when it goes wrong, people ask: was it stupidity or corruption?
Good Mission, Hard Business
A key part of the fintech lending story is that it was not supposed to be grubby consumer lending. It was productive lending.
SMEs.
Working capital.
Real economy.
Mothers opening shops.
Entrepreneurs buying inventory.
Digitisation.
Nation-building.
A PowerPoint slide probably had an illustration of a smiling warung owner standing next to a bar chart.
This is the emotionally powerful version of the story. And it is not entirely false. Indonesia’s SMEs do need capital. Many are underserved by traditional banks. A well-run fintech lender could genuinely help solve a real problem.
But “real problem” does not mean “easy business.” In fact, it often means the opposite. Underserved borrowers are underserved for reasons.
Some lack formal records.
Some have volatile cash flows.
Some operate in informal supply chains.
Some are good borrowers trapped outside traditional systems.
And others are bad borrowers who have correctly identified fintech as a faster route to money.
Separating those groups is the business.
That is the whole business.
Not the app. Not the brand. The business is knowing who should receive money, on what terms, secured by what, monitored how, and recovered under what scenario when things go wrong.
By late 2024, OJK data showed stress across Indonesia’s P2P lending industry. The number of P2P lenders with TWP90 above the 5 percent threshold rose from 15 in April 2024 to 21 by November 2024, and then 22 by December 2024. OJK cited factors including borrower credit scoring quality and collections processes.
That matters because it suggests KoinWorks sits inside a wider sector problem. Productive lending was sold as a cleaner, more socially useful version of fintech credit. But productive lending is difficult precisely because it requires real underwriting.
The sad thing is that the more noble the mission sounds, the easier it becomes to suspend scepticism.
Who wants to be the boring person opposing financial inclusion?
Who wants to slow down lending to small businesses?
Who wants to tell the founder that the underwriting engine is crap?
But financial inclusion without credit discipline is not inclusion.
The Boardroom Problem
The most fascinating thing about these scandals is not that bad things happen. Bad things happen in finance constantly. The fascinating thing is how long prestigious ecosystems can look at obvious fragility and call it momentum.
The company raises money.
The investors celebrate.
The media writes it up.
The senior people become “ecosystem leaders.”
Junior staff are told they are lucky to be part of something transformational.
External advisers raise concerns and are met with the serene expression of people who believe governance is something you add after Series D.
Then, suddenly, everyone discovers prudence.
Regulators ask for explanations.
Lenders want repayment.
Banks issue statements.
Investors become “not involved in day-to-day operations.”
Founders become “cooperating fully.”
Andd the company says it remains committed to customers, stakeholders, transparency, and other endangered species.
BRI, for its part, reportedly said it would respect and support the legal process around the alleged KoinWorks-related credit case, and prosecutors said they were continuing to examine witnesses, experts, suspects, and trace assets for recovery of state losses.
But yes… same old, same old.
Nobody saw it coming… except perhaps the people who did.
Nobody was responsible… except perhaps the people who were.
Lessons will be learned,
Reforms will be implemented,
And everyone will agree that the real villain was “process gaps.”
But the deeper issue is that many startup boards and investors are not built for the businesses they fund. In a consumer app, that may be tolerable for longer. In lending, it is lethal. A credit platform’s board should be obsessed with arrears, recoveries, borrower concentration, fraud controls, internal audit, exceptions, underwriting overrides, insurance, and related-party exposure.
Instead, too many boards behave like the company is a rocket ship. The problem with rocket ships is that when the engineering is bad, they explode.
“Good investors” are not the same as “good governors.” A prestigious cap table can help a company raise money, but it cannot:
Make bad loans good
Turn weak controls into strong ones
Make arrogant leadership humble
Protect an ecosystem from the consequences of mistaking social proof for institutional competence
That is how you get the great emerging-market fintech cycle of big round, big promise, big problem, big silence.
So why is it so difficult for these guys to run a company properly?
Because running a proper company is not the glamorous bit.
Running a proper company is:
Hiring the annoying person who says no
Building systems before scale
Letting risk people block revenue people
Designing an organisation where authority and accountability match.
It is not treating compliance as a decorative plant.
And above all, it is understanding that finance is not made legitimate by technology. Finance is made legitimate by trust, controls, repayment, governance, and consequences.
The KoinWorks case, if the allegations are proven, will be a story about an ecosystem that rewarded the appearance of sophistication while underinvesting in the substance of it. It will be a story about how venture capital can distort financial businesses when growth is treated as proof, pedigree as competence, and connections as diligence. It will be a story about what happens when people who should be building boring, conservative, well-controlled credit institutions instead decide they are building the future.
The future, unfortunately, has arrears.
And somewhere in Jakarta, one imagines, a very serious person is still explaining that the:
Hiring model was not the problem,
Org design was not the problem,
Governance was not the problem,
Board was not the problem,
Underwriting was not the problem,
Incentives were not the problem,
Culture was not the problem
…and everything would have been fine if only the market had understood the vision.
Yes, mate.
Absolutely.
The vision was perfect.
It was just the invoices that were (allegedly) fake.
At StratEx - Indonesia Business Advisory we help businesses operating in Indonesia understand the people, culture, and governance realities. Contact us to build the leadership structures, hiring models, and accountability systems needed to operate properly.