Legal Mechanism of Venture Capital Cooperation for Small and Medium Enterprises at the Regional Level

The government is trying to overcome the funding problems of micro, small and medium enterprises (MSMEs) due to collateral problems, or financing institutions in order to achieve an increase in the country's economy through the development of MSMEs. For this reason, capital assistance in the form of financing is needed for MSMEs so that they can develop. In the financing problem of MSMEs, if the company does not have sufficient assets as collateral for the proposed bank loan, financing institutions are considered as one way to solve the problem. So venture capital is one type of financing that is friendly to small entrepreneurs. They are usually referred to as long-term investments with the main purpose and generate profit, not interest or dividend income, as compensation for the high risk of investment. Many provisions, rules or laws related to the functioning of the business world are still considered detrimental to small businesses. That is why they remain poor despite their hard work. They find it difficult to move, even though they have tried hard to develop their activities. It is not enough to solve this problem through capital assistance or business leadership, without restructuring and reforming the structure of society. Although legal institutions and other regulations have existed for a long time, this situation has reduced investor interest in the development of private equity companies, because the business involves aspects of return and risk, as well as high risk. This research is a normative juridical research with a statutory approach. The author uses secondary data using primary, secondary, and tertiary legal materials. The method of analysis used is qualitative method. The author concludes that in venture capital management, there are two approaches. The One-Tier Approach uses one company to manage the funds directly; the Two-Tier Approach uses different funding and management companies. In Indonesia, the law does not distinguish between management and venture capital, so there are flexible management options. The agreement between a Business Partner Company (PPU) and a Venture Capital Company (PMV) to make an investment is known as a venture capital agreement. The relationship in Indonesia is based on freedom of contract, company law, and government regulations. PVM complies with Law No. 40 Year 2007 on Limited Liability Companies, as well as other laws and regulations. Legal changes are needed to increase the role of venture capital in venture funding as venture capital firms in Indonesia tend to operate like banks and often provide greater credit. To support the growth of venture capital and the availability of funds for the creative sector and MSMEs, OJK as the regulator must work closely with other ministries and stakeholders. To achieve this goal, political support from the DPR is required.