Investigators hired by the board of eFishery Pte. 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, according to documents seen by Bloomberg News.
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, according to the documents and a person familiar with the matter who asked not to be identified because the information isn’t public.
“eFishery is not commercially viable in its current form,” said a presentation prepared for the firm’s investors by FTI Consulting Singapore Pte., the adviser hired to review the business and take over management of the company.
The fallen startup, whose financial backers include SoftBank Group Corp. and Singapore’s Temasek Holdings Pte., had been a star of Indonesia’s startup scene. eFishery was valued at US$1.4 billion ($1.87 billion) in 2023 after it raised US$200 million from Abu Dhabi’s 42XFund and some of its earlier investors.
In all, global investors ploughed around US$315 million into eFishery’s preferred shares over five funding rounds, according to the presentation. 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.
The FTI presentation 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. “The cash balance continues to deplete without a restructuring plan in place,” it said.
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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.
A spokesperson for FTI Consulting declined to comment. SoftBank didn’t immediately respond to a request for comment outside regular business hours, while a Temasek spokesperson declined to comment. G42 didn’t immediately respond to an emailed request for comment.
Debt problems
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Before its downfall, eFishery said its 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.
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, according to the presentation.
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,” the presentation said. “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% of the population lives below the poverty line. About 76% 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, according to the presentation.
“Substantial costs would need to be incurred to realise or recover these outstanding amounts from borrowers who are scattered all across the country,” it said.
Manual matching
The company’s fish and shrimp businesses were operating on thin margins and “severely loss making,” the presentation said. Key apps were not connected to eFishery’s accounting systems, and many farmers were manually matched with buyers, the investigators found.
Much of the advanced technology that the firm touted did not work as claimed, according to the presentation. 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, the document said.
In essence, eFishery was “operating like a traditional trading business without technology,” the presentation said, noting that this helped 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.
