EFishery, an Indonesian aquaculture technology startup backed by prominent investors like SoftBank and Temasek, is on the brink of liquidation following allegations of significant financial fraud. The company has initiated massive layoffs, impacting approximately 90% of its 1,600 employees, as it grapples with the fallout of an internal investigation.
The investigation, launched by the company’s board, uncovered potential revenue and profit inflation spanning several years, potentially reaching nearly $600 million in the first nine months of 2024. This staggering figure suggests that over 75% of eFishery’s reported financial figures may have been falsified. This revelation has sent shockwaves through the Indonesian startup ecosystem and globally, raising concerns about due diligence and corporate governance practices.
EFishery, once hailed as a success story with a valuation of $1.4 billion following investment from UAE’s G42, offered smart feeding solutions for fish and shrimp farmers. Its integrated platform provided farmers with technology, feed supply, and a guaranteed market for their harvest, promising to revolutionize traditional aquaculture practices in Indonesia. The company’s rapid rise and subsequent downfall serve as a cautionary tale for investors and entrepreneurs alike.
FTI Consulting Singapore Pte, appointed by eFishery’s board to manage the crisis, is advising stakeholders on the future of the company. Options on the table include liquidation or a comprehensive restructuring plan. Simultaneously, eFishery employees have formed a trade union, advocating for the cancellation of the mass layoffs and a continuation of the company’s operations. The fate of eFishery remains uncertain, pending a final decision from investors this month. The outcome will significantly impact the Indonesian tech sector and could influence investor confidence in Southeast Asian startups.
Indonesian workers tend to fish farms
The potential collapse of eFishery underscores the risks associated with rapid growth and aggressive fundraising in emerging markets. The alleged fraud raises critical questions about the effectiveness of internal controls and the responsibility of investors in ensuring transparency and accountability. This situation highlights the need for robust due diligence processes and ongoing monitoring of portfolio companies, especially in high-growth sectors like agritech.
The consequences of eFishery’s potential liquidation extend beyond the immediate job losses. The company’s innovative technology and business model held promise for transforming the Indonesian fishing industry and improving the livelihoods of local farmers. Its failure could stifle innovation and discourage investment in the sector, hindering efforts to modernize and improve the efficiency of aquaculture practices in the region. The unfolding events at eFishery serve as a crucial lesson for the global startup community, emphasizing the importance of ethical practices, sustainable growth, and robust governance structures.
