Investigators hired by the board of eFishery have determined the Indonesian startup is in far worse shape than they previously thought, and that investors are likely to get back less than 10 cents for every dollar they invested.
Substantial Losses - The company, which deploys feeders to fish and shrimp farmers in Indonesia, incurred several hundred million dollars in losses between 2018 and 2024 and misrepresented its financial figures for years.
The fallen startup, whose financial backers include SoftBank Group and Singapore’s Temasek Holdings, had been a star of Indonesia’s startup scene. eFishery was valued at US$1.4 billion in 2023 after it raised US$200 million from Abu Dhabi’s 42XFund and some of its earlier investors.
Poor Management - In all, global investors ploughed around US$315 million into eFishery’s preferred shares over five funding rounds. In late 2024, the company was rocked by allegations of misconduct and inflated sales and profits, which led to the dismissal of its co-founders Gibran Huzaifah and Chrisna Aditya.
It is estimated that eFishery had around US$50 million in cash as of around mid-February, and recommended that much of the business be wound down. That’s bad news for preference shareholders, all of whom would be paid back on an equal, or pari passu basis in the event of a liquidation. The investors could get back 9.5 cents on the dollar under an “optimistic scenario,” and just 8.3 cents on the dollar under a “conservative scenario, according to the presentation. That would mean Abu Dhabi’s G42, which invested US$100 million in the April 2023 round, may get just US$8.3 million back less than two years later.
eFishery business revolved around installing AI-driven smart fish feeders, sensors and automated supply chains that connected farmers to buyers via smartphone apps. It also helped farmers obtain financing from peer-to-peer lenders and financial institutions to pay for their feed and operational costs.
Bad Debts - The company had claimed to have more than 400,000 fish feeders deployed, and investigators initially estimated the number was closer to 24,000. The current estimate is just 6,300, of which only 600 are sending back data.
The investigators also found that there was a high default rate on the financing arrangements, and that eFishery bears all losses when farmers fail to repay their loans.In theory, the proceeds from the harvest or cash collected from farmers should be repaid back to the lenders. In practice, however, eFishery faced significant challenges when it comes to collection from borrowers.
Hampering the debt collection process were the huge distances and fragmented nature of Indonesia’s developing economy, where almost 10 per cent of the population lives below the poverty line. About 76 per cent of eFishery’s US$68 million in accounts receivable were deemed as bad debt more than 60 days overdue, with the company ultimately liable for the bulk of loans it facilitated with banks.
Substantial costs would need to be incurred to realize or recover these outstanding amounts from borrowers who are scattered all across the country. The company’s fish and shrimp businesses were operating on thin margins and severely loss making. Key apps were not connected to eFishery’s accounting systems, and many farmers were manually matched with buyers.
No Magic Apps - Much of the advanced technology that the firm touted did not work as claimed. None of eFishery’s PondTag sensors that were supposed to help remotely judge water quality and automate fish and shrimp feeders had been deployed. The limited data collection meant fish feed predictions were wrong almost half the time.
In essence, eFishery was “operating like a traditional trading business without technology. This explain the company’s large workforce of almost 2,600 employees at its peak in early 2024. Following mass job cuts since the start of this year, the company has roughly 200 staffers.
