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- 🧑🏻🌾 The agri-party ended
🧑🏻🌾 The agri-party ended
How TaniHub went from farm-to-table to farm-to-failure (a $82.5M mistake)
Admond Lee
July 21, 2024
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 issue is about a failed story of an agritech startup in Indonesia that went from $82.5M to bankruptcy. Let’s get to it! 🚀
Today at a Glance:
☠️ 1 Failed Startup → TaniHub
⚠️ 2 Mistakes → Too ambitious
🧠 3 Lessons Learned → Focus on what you’re good at
🔗 The Runway Insights → The 3 jobs of a CEO
💰 Southeast Asia Funding Radar → Partior, backed by Temasek, raises over $60M for Series B to transform how money moves globally
☠️ 1 Failed Startup: TaniHub
🚀 The Rise of TaniHub
🇮🇩 TaniHub is a B2B platform that connects Indonesian farmers with businesses that use or sell their products. It was founded by 3 founders in 2015, including Miftahul Choiri, Michael J. Sugianto (fresh data graduate), and William Setiawan (web/product designer).
The Problem — Indonesian farmers face significant challenges, including uncertain harvests, fluctuating prices, and inadequate storage facilities.
🧑🏻🌾 With about 26.5% of the workforce in agriculture contributing to 13.45% of the GDP, farmers are the backbone of the economy but are often exploited by middlemen.
The Solution — TaniHub connects farmers directly to customers without the need for middlemen.
The company helped farmers earn more for their crops by streamlining distribution channels.
 | 🤝🏻 As the business grew, TaniHub also provided logistical support through TaniSupply and financial backing through TaniFund (a peer-to-peer lending platform to support farmers financially), creating an end-to-end solution for the agricultural supply chain. |
💰 Guess what? TaniHub grew rapidly, and by 2020, they had secured $65.5 million in Series B funding in May 2021. They supported over 110,000 farmers, 1,339 SMEs, and 350,000 retail customers.
🇮🇩 The climax came when President Joko Widodo mentioned TaniHub in the 2019 presidential debate as an example of Indonesia’s Industry 4.0 future. This endorsement catapulted TaniHub into the spotlight, making it a household name in the agritech space in Indonesia.
📉 The Fall of TaniHub
Well… The agri-party didn’t last long. Despite their initial success, things started to go downhill quickly.
🥵 TaniHub faced high operational costs, especially in logistics and marketing for their B2C segment. In March 2022, they decided to focus solely on B2B, but it was too late.
📌 Here’s what happened to TaniHub:
☀️ The Good Days
Oct 2015 — TaniHub was founded by 3 founders, including Miftahul Choiri, Michael J. Sugianto, and William Setiawan.
Aug 2016 — Ivan Arie Sustiawan joined as a co-founder and Pamitra Wineka joined as CEO.
Apr 2020 — Raised $17M in Series A+ round co-led by Openspace Ventures and Intudo Ventures.
Mar-May 2021 — TaniHub secured $65.5M in Series B funding, including MDI Ventures and BRI Ventures.
Surprisingly, Ivan (new co-founder) quit the company in Mar 2021 and Pamitra (new CEO) quit in Apr 2021 — right before the Series B round was closed.
⛈️ The Bad Days
Mar 2022 — TaniHub closed all B2C services to focus on B2B due to high operation costs in B2C and the surge in B2B demand after the COVID-19 pandemic.
Jul 2022 — Johnny Widodo, former CEO of OLX Indonesia, was appointed as the new CEO.
Dec 2022 — 💸 The company was sued for loan defaults through TaniFund, with only 36% of their 90-day loans being repaid successfully.
Many lenders incurred significant financial losses due to TaniFund’s bad credit.
Johnny quit the company.
2023 — ⚠️ Legal troubles and investigations continued:
Financial Services Authority of Indonesia (OJK) sanctioned and required TaniFund to settle the funding in the default category and improve its financial management.
However, TaniFund failed to meet these requirements.
Even worse, TaniFund faced allegations of potential fraud.
The OJK's investigation revealed that TaniFund was entangled in payment issues with around 128 investors, with a total defaulted investment value of approximately Rp 14 billion ($897,691).
May 2024 — TaniFund's business license was officially revoked by the OJK.
TaniFund has given up entirely. They are not doing any action plans [to refinance], not doing anything at all.
🧑🏻🌾 In the end, TaniHub’s ambitious vision couldn’t withstand the harsh realities of the agricultural sector.
💀 At the point of this writing, the main TaniHub website is still online, but the state of the business is unclear. It is pretty safe to say that the startup is dying, or probably breathing its last air inside the graveyard.
Want to learn more about TaniHub’s downfall?
⚠️ 2 Mistakes
Mistake 1: Too ambitious
TaniHub started with a noble mission of connecting farmers to businesses, but they quickly expanded into logistics (TaniSupply) and financing (TaniFund). It's like they were trying to grow corn, raise chickens, and run a farmers' market all at once! 🤦🏻♂️
☀️ Their great numbers during 2020 are due to the Covid-19 pandemic, when local middlemen and wet markets couldn’t operate and TaniHub’s online platform was perfectly positioned to weather through the pandemic.
⛈️ But when the pandemic died down and businesses returned as usual, TaniHub found that they lost their market share and had over-leveraged on new expensive infrastructure and hires.
This overambitious expansion led to high operational costs and complexity that eventually crushed them.
Mistake 2: Mismanagement of risk in lending
With only 36% of 90-day loans being repaid, TaniFund's loan default rates were so high that they were basically throwing money into infertile soil.
While the idea of financing farmers is good as many farmers are largely considered unbankable, farming is notoriously uncertain, with fresh produce needing to be sold as soon as possible or else they will rot away.
💰 For example:
• Let’s say I’m a farmer and I want to borrow money from lenders through TaniFund to finance my farming.
• However, I might face crop failures due to natural factors like rain and pests.
• Without crops, I can’t sell and repay the loans. Eventually, I have no choice but to default on my loans.
As a result, many farmers end up defaulting on their loans, resulting in unsustainable lending.
🧠 3 Lessons Learned
Lesson 1: Focus on what you’re good at
TaniHub's initial success came from connecting farmers to businesses. They should have perfected this before branching out to TaniSupply and TaniFund.
🌟 Key Takeaways:
📍 Don’t be a jack of all trades
Start with one thing and do it exceptionally well. Before diversifying, ensure your main offering is rock-solid and profitable. It's better to be a master of one trade than a jack of all trades.
In short, stay focused on solving one problem well instead of solving many problems half-baked. Get to know the problem you are solving intimately, or it’ll cost you millions of dollars.
💰 Raise money from VCs only when it’s absolutely necessary
When you raise money from VCs, you’re expected and pressured to grow 10x faster. And guess what? You might bite off more than you could chew.
In the end, you might expand and hire too fast without having a strong foothold in any market.
This is exactly what happened to TaniHub.
Don’t chase VCs. Chase profitability and sustainability. Think and act long-term. I guarantee you’ll thank yourself 10 years later down the road.
Lesson 2: Understand your market deeply
TaniHub underestimated the complexities of agricultural financing, leading to unsustainable default rates in their lending arm (TaniFund).
🌟 Key Takeaways:
🧪 Start small, experiment, learn, and adjust.
Before entering a new market or offering a new service, do extensive research and testing.
Start with a small pilot program to understand the risks and challenges.
In lending, for example, start with conservative risk assessments and gradually adjust based on real-world data.
💰 Throwing money at a problem won’t help you understand the market deeply.
Instead, go on the ground, talk to your users or customers, learn deeply about the problem and market.
If the problem is due to market inefficiency, you have a chance.
However, if the problem is structural, institutional, or generational, the odds are stacked against you as the real problem might be deeper than you think.
Lesson 3: Ensure leadership stability
When co-founders and top management started quitting, it was a flashing neon sign that something was not right. And when leadership keeps changing, it’ll affect employees’ morale and cause disruptions in the company.
🌟 Key Takeaways:
🧠 Find the right co-founders
It seems that the co-founders are inexperienced in the farming industry as 2 co-founders joined as a recent data fresh graduate and web/product designer.
Without a strong understanding of the agricultural or farming business, it’s hard to understand the problems faced by farmers and the structural issues in this space.
That’s probably also one of the reasons why they brought in Ivan (new co-founder) and Pamitra (CEO).
🙏🏻 Communicate with your management team
Implement regular, honest retrospectives with your team.
Create a culture where concerns can be voiced without fear. If top talent is leaving, find out why and address the root causes before they become systemic issues.
🔗 The Runway Insights
💰 Southeast Asia Funding Radar
Partior, backed by Temasek, raises over $60M for Series B to transform how money moves globally (Link)
Kindred raises $5.5M Pre-Series A led by Integra Partners (Link)
Wittaya Aqua bags $2.8M to expand its feed-to-farm platform in APAC (Link)
Lhoopa raises $80M to make it accessible for anyone to own a house in the Philippines (Link)
Tictag raises Series A led by Telkomsel Ventures (Link)
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That’s all for today
Thanks for reading. I hope you enjoyed today's issue. More than that, I hope you’ve learned some actionable tips to build and grow your business.
You can always write to me by simply replying to this newsletter and we can chat.
See you again next week.
- Admond
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