A Study on Investment in Ecosystem for Agri-biotech Start-ups in Indonesia: Based on Option-games Approach

Abstract

Indonesia is endowed with a rich and unique biodiversity, including many important food and economic crops. Utilizing these biological resources properly in sustainable ways is important for Indonesia for the purpose of improving the welfare of the nation. Indonesia is taking the development of Biopark, a kind of Science Park that focuses on biotechnology, into consideration but to date it has not been realized. The establishment of Biopark is expected to be a stimulus for foundation of start-up or value growth of established company. The possible reason of investment delay is that the project seems to have a negative net present value (NPV). It needs appropriate way to assess the value of investment in Biopark. Real options analysis (ROA), especially growth option, can be a useful framework to value the investment in Biopark. ROA valuation of investment in Biopark is expected to encourage the stakeholders to start the project as soon as possible. Meanwhile, Indonesia has problem in lack of funding and insufficient human resource capability. Indonesia is better to invite funding as well as technology from another country, which is more advanced in this field. Option-games could be a useful framework to analyse what kind of condition is necessary for Indonesia to invite funding and technology from another country in the frame of win-win relationship. This research is expected to give an illustration and conception about investment planning on potential project, which is Biopark to encourage the founding of ecosystem of Agri-biotech start-ups. Keywords: Agri-cultural biotechnology, start-ups, real options, game theory, option-games.