🐟 The Dark Secrets Behind eFishery’s $1.4B Collapse

Hey Founders,

Welcome to The Runway Ventures — a weekly newsletter where I deep dive into failed startup stories to help you become the top 1% founder by learning from their mistakes with actionable insights.

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Today’s story is about how the biggest agritech startup in Indonesia imploded after its financial misconduct got exposed by a whistleblower. Let’s get to it! 🚀

☠️ 1 Failed Startup: eFishery

🚀 The Rise of eFishery

🇮🇩 Founded in 2013 by ITB graduates Gibran Huzaifah (CEO) and Chrisna Aditya (CPO), eFishery started with a noble mission to revolutionise Indonesia's aquaculture industry.

• The Problem — 🐟 Most fish farmers in Indonesia lack access to technology and capital, leading to inefficiencies in traditional fish farming.

  • Indonesia is the world's 3rd largest aquaculture global producer, behind only China and India.

  • However, over 80% of the country’s 3.34 million aquaculture fishers and fish farmers still use manual methods.

  • For example, fish feeding, which accounts for 60–90% of aquaculture costs, is mostly done manually, leading to underfeeding, overfeeding, waste, and environmental harm.

• The Solution — 🎣 eFishery built a smart feeding device that helped fish and shrimp farmers optimise their operations, reduce operating costs, boost yields and increase their income. Here’s how it works:

  1. eFeeder — Smart feeding device uses sensors to detect fish and shrimp appetite and automatically dispenses the optimal feed amount. The sensors collect and transmit data (e.g., feed volume, consumption, and transactions) to the cloud for storage and analysis.

  2. eFisheryKu — Farmers could access real-time insights to track and optimise feeding efficiency.

  3. eFarm — Farmers could also manage their ponds remotely via their phones using eFishery’s technology.

  4. eFisheryFund — Beyond that, eFishery also provides financial assistance to fish and shrimp farmers.

From there, eFishery was unstoppable 🐟🐟🐟

In 2022, the company contributed 1.55% to Indonesia’s GDP in the aquaculture sector. By July 2023, eFishery served 70,000 fish and shrimp farmers in 280 cities across Indonesia.

🦄💰 At its peak, eFishery's valuation reached $1.4 billion in 2023 — making it Indonesia's first agritech unicorn — after raising $200 million in Series D from UAE’s 42XFund, KWAP (Malaysia’s largest public sector pension fund), 500 Global, Northstar Ventures, SoftBank and Temasek.

eFishery appeared to be crushing it as they:

• Claimed to have over 400,000 smart feeders deployed

• Reported revenue of $752 million with $16 million profit (pre-tax) in 2024

🇮🇩🫡 Gibran became a national hero after he was featured on Forbes’ 30 Under 30 while politicians praised eFishery as proof of Indonesia’s tech ascendancy.

eFishery became a darling of the nation’s startup scene and almost became a successful startup story in Indonesia.

📉 The Fall of eFishery

🎣 Yes, almost… Because the fish story started smelling… well, fishy.

💣 Everything collapsed when:

• A whistleblower approached eFishery's board with allegations of financial misconduct.

• This prompted an internal investigation by FTI Consulting, revealing that the company's management had been inflating revenue figures since 2018 (during its Series A fundraising).

• eFishery imploded and the scandal sent huge shockwaves across the startup ecosystem in Indonesia.

📌 Here’s what happened to eFishery:

😮 This is, by far, the biggest alleged fraud that I’ve ever come across as it’s one of the most sophisticated and systemic in my experience.

🙏🏻 My 2 cents:

After writing about how other Indonesia’s agritech startups (TaniHub, Pitik, Octopus) collapsed, it’s quite sad to see another agritech startup (eFishery) died because the founders got blinded by fame and hyper-growth as well as the lack of financial integrity, corporate governance and due diligence, leading to an irreversible downfall.

• It’s bad for investors’ confidence to continue supporting founders.

• It’s bad for future founders to fundraise from investors.

• It’s bad for employees who believed in the vision and the first ones who sacrificed and got laid off.

• It’s bad for the whole startup ecosystem and VC funding in Southeast Asia (especially for future agritech companies).

eFishery was the example of a successful startup in Southeast Asia. How could an unstoppable empire crumble down so fast?

Want to learn more about eFishery’s downfall?

• Exclusive: eFishery’s board suspends co-founders Gibran Huzaifah, Chrisna Aditya amid probe

• The unravelling of a unicorn: What went wrong at eFishery

• eFishery saga serves as a wake-up call for investors, startups

• Forensic audit alleges Temasek-backed eFishery inflated revenue nearly 5x

• FTI Consulting takes over as eFishery’s acting management amid alleged fraud probe

⚠️ 2 Mistakes

Mistake 1: Systemic financial fraud with dual accounting books

The alleged fraud wasn't a recent panic move — it was systematic and started way back in 2018 during their Series A fundraising based on the preliminary findings from a forensic audit by FTI Consulting according to DealStreetAsia.

Here's how they did it:

• Gibran Huzaifah (ex-CEO) maintained 2 sets of accounting books since 2018:

  • 📕 Internal Books — Real company performance for operations

  • 📗 External Books — Another book with inflated numbers for fundraising and board meetings (sent to the board, shareholders, banks and auditors)

• Created fake transactions using a network of shell companies

  • 🥷🏻 Ex-CEO established 5 nominee companies to enable round-tripping of funds.

  • 🤦🏻‍♂️ Employees ordered to edit invoices and documents for the external books.

• Start small, then big:

  • 1.25x inflation of revenue in 2018-2020

  • 1.7x inflation of revenue in 2021

  • 1.4x inflation of revenue in 2022

  • 1.8x inflation of revenue in 2023

  • Finally, 4.8x inflation of revenue in 2024 😱😱😱

    • Internal Books — The company generated ~$161 million in revenue between Jan-Sep 2024

    • External Books — Its external record reported the revenue as $750 million, inflating the revenue figure by 4.8x.

Here’s a snapshot of how reports and reality differ significantly (Jan-Sep 2024):

• 🟢 Reported Revenue — $752 million

  • 🔴 Actual revenue → $157 million (this means more than 75% of the reported revenue was fake 😮)

• 🟢 P&L Statement — $16 million profit (pre-tax)

  • 🔴 Actual result → $35.4 million loss

• 🟢 Quantity of feeders deployed — 400,000

  • 🔴 Actual quantity → 24,000

🤦🏻‍♂️ If you think alleged fraud isn’t bad enough, it gets worse. While burning through investors’ cash, the company also:

• Distributed employee bonuses based on inflated financial figures to artificially boost employee morale while hiding continuous financial losses:

  • For example, the company disbursed $1.5 million of bonuses in 2024 for 2023 performance.

• Created elaborate schemes to hide the declining cash position

  • To be attractive to investors while fundraising, gathering bloated amounts of funding and pumping up their valuation.

• Focused on maintaining the illusion instead of fixing fundamental issues

⁉️ Now, you may ask — How could this alleged fraud go on for 6 years and nobody noticed?

2 main factors combined that made the perfect storm:

• Systemic, company-wide fraud that involved many other higher-ups from various departments to enable the double-booking,

• Lastly, the funding climate rushed investors through the due diligence process (Usually 5-6 months down to only 1-2 months).

The tragic thing is, there is absolutely no need for this charade of financial performance. If eFishery had the good wits to play the long game and be a real company, it could potentially be a dominant aquatech incumbent in Indonesia / SEA in 15-20 years time.

Instead, it chased short-term funds by investors, setting up a house of cards situation that eventually crumbed… and it did.

Mistake 2: Lack of corporate governance

As eFishery scaled, it never built the financial controls, oversight mechanisms, or accountability systems needed to sustain a billion-dollar company.

📈📉 Instead, what unfolded was one of Southeast Asia’s biggest startup frauds, spanning 6 years of fabricated financials.

Here’s why eFishery collapsed due to the lack of corporate governance:

1. 💨 Investor due diligence was rushed – Many investors, eager to back a promising agritech unicorn, might rely on trust-based investing instead of conducting a deep forensic analysis of eFishery’s finances.

   • With soft financial oversight from VCs, the company was able to manipulate revenue numbers and secure more funding rounds (Series A → Series D).

2. ✊🏻 Founders had too much control – Key financial decisions and reporting were concentrated within the founding team. There was no strong CFO to challenge questionable numbers, and board members trusted the founders blindly instead of scrutinising financial reports (until a whistleblower approached eFishery's board with allegations of financial misconduct).

3. 👮🏻 No independent audits – While investors received polished reports, eFishery operated 2 sets of financial books — one with real numbers, another with inflated revenue and fabricated profits. Without an independent, third-party audit, these manipulations went unchecked.

🧠 3 Lessons Learned

Lesson 1: Financial integrity and transparency are non-negotiable

Trust is built over 100 days, and broken in 1.

As a founder, you are your startup’s culture. What you do, everyone can do.

When you set up the precedent for fraud, and involve (those who are willing) and implicate (those who aren’t) others in your illegal doings, you’re building a legacy of deception and sucking out value, instead of adding value to the shareholders (investors, employees, clients, and community) you promised with.

Lesson 2: Sustainable growth beats flashy hyper-growth

eFishery’s pursuit of hyper-growth — bolstered by fake numbers — led to multiple funding rounds and skyrocketing valuations that didn’t match reality.

In the startup world, it's easy to get caught up in the allure of impressive growth numbers. But as we've seen time and again, not all growth is created equal. Many startups fall into the trap of what we call "growth theatre" — creating the appearance of rapid expansion without building sustainable foundations.

Companies often resort to tactics like aggressive expansion without proper market validation, leading to impressive short-term metrics but long-term instability. This approach might attract initial investor attention, but it's like building a house of cards — one wrong move and everything collapses.

Lesson 3: What you do, doesn’t just affect you

When startups fail due to mismanagement or fraudulent practices, the impact ripples far beyond the company itself. These failures create a domino effect that touches investors, employees, customers, and even the broader startup ecosystem.

Many people came forward with their trust shaken for the region, and as an effect of this massive alleged fraud, future investor mistrust and reluctance will only hinder SEA’s startup ecosystem. 

The consequences aren't just financial. They erode trust and make it harder for legitimate companies to succeed.

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See you again next week.

- Admond

Disclaimer: The Runway Ventures content is for informational purposes only. Unless otherwise stated, any opinions expressed above belong solely to the author.