EFishery “was presupposed to be reflective of what the native ecosystem may do, what Indonesian founders may do. This was presupposed to be one of many higher corporations from Southeast Asia. This was presupposed to be a winner,” Justin Corridor, associate at Golden Gate Ventures, instructed CNBC.
Dimas Ardian | Bloomberg | Getty Photographs
Southeast Asia’s startup ecosystem has been braving a multi-year funding drought, and a latest scandal has delivered yet one more blow to investor sentiment within the area.
Indonesian agritech unicorn eFishery — backed by buyers akin to SoftBank Group and Temasek Holdings — was amongst Indonesia’s high startups, however a preliminary, ongoing probe means that the corporate could have been concerned in monetary malpractices.
The corporate didn’t instantly reply to a CNBC request for remark.
EFishery’s board of administrators introduced on Tuesday that it has appointed enterprise advisory agency FTI Consulting as appearing administration of the corporate, in line with an official firm assertion obtained by CNBC.
FTI Consulting additionally issued an announcement saying that it “goals to assist ongoing efforts to conduct a radical and goal enterprise evaluate of the corporate’s true monetary and operational place.”
That comes amid an ongoing investigation, initiated by a whistleblower’s declare concerning the firm’s accounting, which estimates that administration inflated income by virtually $600 million within the 9 months to September 2024, Bloomberg reported.
The corporate additionally reportedly offered a revenue of $16 million over the identical interval to buyers, however the investigation alleges the startup really made a $35.4 million loss, in line with the report.
“[EFishery] was presupposed to be reflective of what the native ecosystem may do, what Indonesian founders may do. This was presupposed to be one of many higher corporations from Southeast Asia. This was presupposed to be a winner,” Justin Corridor, associate at Golden Gate Ventures, instructed CNBC.
The firm, which deployed a sensible feeding system for fisheries, reached unicorn standing in 2023 after a $200 million Sequence D funding spherical. Nevertheless, at this time, backers of the corporate are reportedly contemplating liquidation or buyout, amongst different choices, in line with Bloomberg.
An ecosystem beneath water
Southeast Asia’s startup ecosystem had already been dealing with years of painful and expensive recalibration for the reason that Covid-19 pandemic, when funding within the area soared.
In 2024, whole deal quantity within the area fell 10.3% from the earlier yr to 633 offers, whereas deal worth sank by 41.7% to $4.56 billion, in line with a January 2025 report by Deal Avenue Asia.
“To place this in perspective, the 2024 determine represents simply 54.6% of the capital raised in the course of the first yr of the Covid-19 pandemic in 2020, and a mere 19.5% of the 2021 peak,” in line with the report.
So the place did issues go fallacious?
For context, some will think about the area’s startup scene to be comparatively younger, having solely begun to develop extra quickly within the final decade and a half.
“We’re simply initially of this whole asset class, if you’ll,” mentioned Jx Lye, founder and CEO of Acme Know-how and former COO of Endowus. “I might say that the early 2010s have been the golden ages of Silicon Valley … all the things was taking place — Uber, Airbnb, Dropbox are all taking place there.”
“However what occurred within the mid 2010s was that out of the blue, Southeast Asia turned fascinating as a progress story,” mentioned Lye.
That was additionally when the primary wave of startups within the area started to emerge. Firms akin to Gojek, Carousell and Seize have been among the many first to supply sturdy alternatives for buyers to exit, or a method to promote their stake for a revenue.
You could possibly say that Southeast Asia noticed what was successfully unabated progress up till the crash in post-Covid.
Justin Corridor
Companion, Golden Gate Ventures
Together with the primary wave of profitable startups, different elements surfaced throughout this time-frame that accelerated the expansion of the area’s tech and startup ecosystem, which consequently introduced an inflow of investor curiosity.
“There was an enormous explosion of the center class … within the early 2000s to the mid-teens,” Kevin Aluwi, co-founder of Gojek and enterprise associate at Lightspeed, instructed CNBC. “There have been a variety of projections that the buyer market in Southeast Asia will appear like a mini China, however that did not pan out.”
Traders have been anticipating a really “vibrant, excessive spending energy client market to emerge” and thus, overshot their predictions on the pricing energy that corporations would have, the frequency of transactions that may happen, and total, the typical income that startups would be capable of usher in, mentioned Aluwi.
“There have been enterprise fashions that many thought can be viable, however weren’t viable,” he added.
Finally, buyers started to understand that some corporations within the area could have been overvalued, and it turned clear that exit alternatives have been few and much between.
“The most important downside is … there are only a few exits on this market, so buyers don’t have any manner of getting their cash out,” Krish Sridhar, founder and CEO of Know, instructed CNBC.
“It is actually laborious to do enterprise in Southeast Asia, as a result of there is no such thing as a such one factor. In Southeast Asia, we now have seven totally different languages, seven totally different governments, seven totally different [systems of] regulation,” mentioned Sridhar.
“It isn’t like doing enterprise in India or China, the place the native market is 1.4 billion folks, or 1.2 billion folks,” Sridhar added.
From 2011 to 2022, the area noticed an enormous spike in consideration and in useful resource allocation, mentioned Corridor. “You could possibly say that Southeast Asia noticed what was successfully unabated progress up till the crash in post-Covid,” Corridor instructed CNBC.
“You had funds that raised an excessive amount of cash too rapidly, you had founders that raised an excessive amount of cash too rapidly, and sadly, capital formation outpaced the event of the native markets,” mentioned Corridor.
Affect of the scandal
At present, the allegations of fraud and misconduct by eFishery have reverberated all through the area.
“Past our personal Group, we might additionally prefer to acknowledge the broader implications for Indonesia’s startup ecosystem and the communities it serves,” eFishery’s board mentioned in an announcement.
“The latest revelations of alleged misconduct (together with fraud) throughout the Group have been deeply disheartening to us all and will jeopardize the boldness within the Indonesian funding local weather the place the principal subsidiaries of our Group is positioned,” the assertion added.
The aquaculture firm was heralded as one of the vital outstanding examples of what a superb startup seems to be like within the area.
“There was a variety of hope pinned on [eFishery] being the following technology … Having that [bubble] burst, as a result of the poster youngster of that improvement turned out to be [allegedly] fraudulent, I feel it is actually disappointing for the ecosystem,” mentioned Aluwi.
I feel this might have a chilling impact for, conservatively, 12 months, however most likely longer.
Justin Corridor
Companion, Golden Gate Ventures
“I feel Southeast Asia positively took a success in its notion … However the ones that may endure essentially the most can be the expansion stage corporations in Indonesia,” mentioned Corridor. “I feel it’ll topic each good firm in Indonesia to much more scrutiny, to the purpose the place I can see buyers saying, it isn’t definitely worth the trouble to put money into Indonesia.”
“I feel this might have a chilling impact for, conservatively, 12 months, however most likely longer. It is very unfavorable proper now,” mentioned Corridor.
Business specialists additionally echo that if the allegations are confirmed to be true, this scandal wouldn’t solely have a unfavorable influence on investing within the area — significantly in Indonesia — but in addition largely on the mid-to-large fundraising levels. This is able to have an effect on not simply buyers, however founders as effectively.
“I do not suppose that it’ll influence the early stage lots, as a result of, firstly, your test sizes are small,” mentioned Acme Know-how’s Lye. “However I feel within the center to later levels, that is the place buyers shall be much more stringent … as a result of that is the place the larger rounds are.”
“And that is the issue, as a result of then each funding spherical will get much more sophisticated … Now, they need proof, they need auditability, however a variety of occasions you simply can’t present that. In order that’s going to extend the price of fundraising. That is going to extend the hassle,” mentioned Lye.
“It is unsaid and unseen, proper? As a result of then, a fundraising spherical may actually kill your organization,” Lye mentioned.
The silver lining
Finally, though this scandal has despatched shock waves by means of Southeast Asia’s startup scene, business specialists agree that there’s a silver lining: the teachings realized.
“If I am being very pessimistic, I might say that that is going to scale back the {dollars} invested. If I am being extra optimistic, it isn’t that it’ll cut back the {dollars} — it is simply going to take longer for these {dollars} to be unlocked,” mentioned Corridor.
“I feel in the long run, this can be a good factor. Firms must scrutinize governance. Traders must be extraordinarily diligent with that,” Corridor added.
Together with having higher due diligence and governance, buyers agree that seeing extra profitable exits occur shall be key to bettering the funding drought.
“There must be native exits. There must be international exits. There must be corporations that may really return cash to buyers after which not directly to their restricted companions,” mentioned Corridor.
At present, founders and buyers alike notice their predictions have been overly optimistic and now the market is adjusting and recalibrating to what’s realistically doable.
“This reckoning kicked off a very long time in the past. EFishery didn’t try this … [people] have been merely unrealistic of their expectations. I feel if and when these expectations are rational, then, sure, this can be a excellent place to construct a enterprise,” mentioned Corridor.
Finally, Southeast Asia is “nonetheless the third most populous area on the earth. Indonesia is the fourth largest nation on the earth,” mentioned Lye. “All of those setbacks and challenges will solely make the following wave of enterprise house owners, entrepreneurs and buyers much more savvy … we’ll all bounce again stronger.”
