Back in 2023, Indonesian agritech start-up eFishery raised $200 million in Series D funding, pushing the company into unicorn status with a valuation of around $1.4 billion. With big backers like Softbank and Temasek, eFishery was one of Indonesia’s big tech success stories. Co-founder and CEO Gibran Huzaifah, a very accessible and media-friendly personality, was constantly promoting the company and championing a wholesome vision whereby technology would boost efficiency in Indonesia’s fish and shrimp farming industry, improving the lives of thousands of rural agriculture workers in the process.
eFishery was founded in 2013, and its primary innovation was an automated fish feeder system. Basically, the device can be programmed to feed fish at regular intervals which is supposed to be more efficient than traditional hand-feeding methods. Naturally, as a tech company, these feeders were connected to a network of some kind to record and analyze data on weather, feeding patterns, fish size, and so forth. As eFishery began attracting more investment, it started branching out into adjacent activities, such as developing a distribution network to help fish farmers bring their product to market. More recently, they started offering credit facilities.
Part of the appeal of the eFishery story is that it was using technology to improve the lives of rural farmers. Many of Indonesia’s big tech unicorns, like GoTo, are aimed pretty squarely at middle and upper class consumers with disposable income, the type of people who shop online or order food from restaurants or need to book a ride to the office or mall.
eFishery’s vision was different. It was about using technology and data to help farmers improve output through more efficient techniques, and then helping them get their product to market and access credit to invest in their business. And they were able to do this in a way that not only improved the livelihoods of fish farmers around Indonesia, but in a way that investors felt was sufficiently profitable to make the company worth over $1 billion.
Except, it turns out, that last part wasn’t true. In the middle of December 2024, Deal Street Asia broke the story that co-founders Gibran Huzaifah and Chrisna Aditya had been removed by the board and an investigation into improper activities was launched. An interim CEO was appointed, but he too stepped down within a few weeks. Some very large investment funds hold stakes in eFishery, and although the investigation remains in progress preliminary information has started to make its way into the press.
According to reports, in its financial statements eFishery claimed to have made a $16 million profit in the first nine months of 2024. In reality, the firm lost $35.4 million. The firm also vastly over-stated its revenue, claiming to have brought in $750 million when the actual revenue figures as of September 2024 were closer to $150 million. That means through the first nine months of 2024, eFishery created about $600 million in fictitious transactions. The company had apparently been propping itself up with these types of fictitious transactions for years.
So why did this happen? Many have been quick to point the finger at weak regulatory supervision and governance standards in Indonesia, with especially lax oversight of the tech industry. eFishery had not yet gone public, which means it did not have to disclose its financial statements and was arguably under less scrutiny. But the accounting firms that prepared their financial statements were still signing off on them and the investors would have been monitoring things, which has left some obvious questions about the quality of the due diligence here.
There are also some larger systemic forces at play here. Indonesia’s tech sector, until very recently, has been awash in venture capital. Until the end of the COVID-19 pandemic, interest rates around the world were pretty low. Low interest rates tend to push investment into more speculative assets, like tech companies in emerging markets. The big appeal of tech start-ups in the region has been that they were growing really fast and breaking new ground on the way goods and services were bought and sold.
When a nascent tech sector is being carried by venture capital, profitability is often secondary to growth. Firms with an appealing idea (like using technology to help farmers improve productivity) can attract the support of deep-pocketed investors willing to underwrite growth, even if the soundness of the underlying business model has not been tested as strenuously as it should. That happens with tech start-ups all the time, both inside and outside of Indonesia.
eFishery was of course actively committing fraud, which places it in a different category from other tech start-ups that have failed to make a profit in an honest way. But we shouldn’t be that surprised that once private investment flows thinned out in the post-pandemic period, it laid bare the fact that a $1.4 billion valuation for a company that sells fish feeders was perhaps a tad optimistic.
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