Back in 2015, Slack CEO Stewart Butterfield told The New York Times, “It might be the best time for any kind of business in any industry to raise money in all of history, like since the time of the ancient Egyptians.”

It sounded dramatic, but he might have been right. Venture capital investment in the United States tripled between 2016 and 2021, fueled by rock-bottom interest rates and investors desperate for outsized returns.

With money sloshing around, due diligence became an afterthought. WeWork raised US$12.8 billion, mostly from SoftBank, before its 2019 IPO filings exposed a governance circus that ended in bankruptcy in 2023. FTX lured heavyweight investors like Sequoia Capital, only to implode in 2022 under the weight of Sam Bankman-Fried’s massive fraud.

Indonesia had its own version of this gold rush, which peaked in 2021, and its own reckoning.

Prosecutors recently detained ex-TaniHub CEO Ivan Arie Sustiawan and former director Edison Tobing over suspicious investments.

The investment at the center of the investigation was made by MDI Ventures and BRI Ventures, the venture capital arms of state-owned PT Telkom Indonesia and Bank Rakyat Indonesia (BRI), respectively. Telkomsel Mitra Investasi (TMI), the VC unit of Telkom’s cellular operator Telkomsel, was also among TaniHub’s investors.

While prosecutors have not specified which funding round is under scrutiny, records show that MDI Ventures led TaniHub’s $65.5 million Series B round in 2021, with participation from BRI Ventures and TMI.

What makes the case interesting is the involvement of MDI Ventures CEO Donald Wihardja, suggesting that the rot may not only be on the founders’ side but also on the investors’ side.

BRI Ventures, along with Bank Mandiri’s VC unit Mandiri Capital, also invested in another fraud-ridden peer-to-peer (P2P) lending firm, Investree.

The firm’s former CEO, Adrian Gunadi, is currently a suspect in financial services-related crimes, accused of illegally collecting funds from the public. He stepped down in February last year when the firm was facing a high ratio of bad loans before the Financial Services Authority (OJK) revoked its P2P lending license eight months later.

Even aquaculture darling eFishery was not immune, as CEO Gibran Huzaifah was detained for allegedly embezzling Rp 15 billion ($919,664), with the company admitting to “double-booked” finances.

Law enforcers deserve credit for cleaning up, but they may need to dig deeper to find every problem that started during the boom.

At the same time, we cannot let fraud scandals blind us to the importance of technological progress, especially in fields like artificial intelligence, where Indonesia has plenty of users but far too few developers.

Yes, these fraud cases and high interest rates have tainted investor confidence. But walking away now would be like abandoning a fertile field because of a few poisonous plants. The lesson is not to stop sowing, but to choose the seeds and farmers carefully.

Last week, the government revealed a draft AI road map for public consultation, outlining plans to use AI for strategic projects such as the free nutritious meal program, food sustainability initiatives, Red and White cooperatives and even Sekolah Rakyat (community schools), with implementation targeted as soon as next year. However, the draft also flagged financing challenges, citing a plan to leverage the state asset fund Danantara.

That said, despite the need for tech investment, the state and private investors must carefully navigate the risky path ahead, resisting both the hype and herd mentality. Apply more scrutiny. Strengthen governance. Avoid complacency.

And above all, never step in the same hole twice.