The financial scandal at Indonesian Tech Unicorn Ephishery, explained

In 2023, the Indonesian Agritech started start-up Ephishery $ 200 million in series D financing, which pushed the company with a rating in unicorn status of around $ 1.4 billion. With large backers such as Softbank and Temasek, Ephishery was one of the great technical success stories in Indonesia. Co-founder and CEO Gibran Huzaifah, a very accessible and media-friendly personality, constantly promoted the company and defended a healthy vision in which technology would stimulate efficiency in the industry of the fish and shrimps of Indonesia, causing the lives of thousands of agricultural workers The process would be improved in the countryside of Indonesia.

Efishery was Founded in 2013And the primary innovation was an automated fish feeding system. In short, the device can be programmed to feed fish regularly, which are deemed to be more efficient than traditional hand -feeding methods. Of course, these feeders were connected as a technology company to a kind of network to record data and to analyze about weather, dietary patterns, fish size, and so on. As Efishery started to attract more investments, it began to branch into adjacent activities, such as developing a distribution network to help fish farmers to market their product. More recently, they started offering credit facilities.

Part of the attraction of the Efishery story is that it used technology to improve the lives of rural farmers. Many of the Big Tech – a horns of Indonesia, such as GOTO, are quite aimed at consumers from the middle and higher class with disposable income, the kind of people who shop online or eat from restaurants or have a ride to the office or shopping center.

Ephishery’s vision was different. It was about the use of technology and data to help farmers improve production through more efficient techniques, and then helping them bring their product to the market and gaining access to credit to invest in their company. And they were able to do this in a way that not only improved the livelihood of fish farmers in Indonesia, but in a way that investors found that the company was sufficiently profitable to make the company worth more than $ 1 billion.

Except, it turns out that the latter part was not true. In the mid -December 2024, Dealstraat Asia broke the story That co-founders Gibran Huzaifah and Chrisna Aditya had been removed by the board and an investigation into incorrect activities was started. An interim -CEO was named, but he also arrived within a few weeks. Some very large investment funds have interests in Evalhery, and although the investigation remains in the course of the execution, provisional information has begun to find its way to the press.

According to reportIn his financial statements, Efishery claimed to have made a profit of $ 16 million in the first nine months of 2024. In reality, the company lost $ 35.4 million. The company also transferred its income enormously and claimed to have yielded $ 750 million when the actual income figures from September 2024 were closer to $ 150 million layers. That means that Efishery created around $ 600 million in fictional transactions during the first nine months of 2024. The company apparently has been bothered by this kind of fictional transactions for years.

So why did this happen? Many have quickly focused on weak legal supervision and administrative standards in Indonesia, with particularly lax supervision of the technical industry. Ephishery had not yet become public, which means that it did not have to make his financial statements known and to be demonstrably under less supervision. But the accountancy firms who prepared their financial statements still signed themselves and the investors would have followed things, which has left some obvious questions about the quality of the Due Diligence here.

There are also some larger systemic forces that play here. The technical sector of Indonesia is until recently flooded in risk capital. Until the end of the COVID-19 Pandemie, interest rates around the world were quite low. Low interest rates tend to push investments into more speculative assets, such as technology companies in emerging markets. The great attraction of technical start-ups in the region is that they grew very quickly and break new site in the way goods and services were purchased and sold.

When an emerging technical sector is supported by risk capital, profitability is often secondary in growth. Companies with an attractive idea (such as the use of technology to help farmers improve productivity) can attract the support of investors with a deep bag that are willing to endorse the growth, even if the solidity of the underlying business model is not that powerful tested if it should. That always happens with technical startups, both inside and outside Indonesia.

Efishery naturally actively committed fraud, which places it in a different category than other technical start-ups that did not make a fair way there. But we should not be so surprised that as soon as private investment flows in the post-Pandemic period have been thinned, the fact that a valuation of $ 1.4 billion for a company that sells fish feeders was perhaps a bit optimistic.