Whistleblower Exposes $600Mn Revenue Inflation by SoftBank Backed Startup eFishery

eFishery, one of Indonesia’s most prominent startups, is under scrutiny for allegedly inflating its revenue and profit over several years. This development stems from an internal investigation triggered by a whistleblower’s claim regarding the company’s accounting practices, Bloomberg reported.

A preliminary and ongoing probe into the aquaculture startup, which is backed by major investors including SoftBank Group Corp. and Temasek Holdings Pte, estimates that the company’s management inflated its revenue by almost $600mn during the nine months through September last year.

This information comes from a 52-page draft report circulated among investors which alleges that more than 75% of the company’s reported revenue figures were fabricated.

The investigation was initiated after a whistleblower approached a board member with allegations of inaccurate accounting. Following these claims, the board commissioned a formal investigation in December. Subsequently, co-founder and Chief Executive Officer Gibran Huzaifah was dismissed after accounting inconsistencies were uncovered, according to sources cited in Bloomberg’s report.

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Prior Investments

eFishery, an Indonesian aquaculture startup, raised $200mn in a Series D funding round in July 2023, achieving a valuation of over $1bn. This round was led by Abu Dhabi-based 42XFund, with participation from investors including Kumpulan Wang Persaraan (Diperbadankan), Swiss asset manager responsAbility, and 500 Global. Existing investors Northstar, Temasek, and SoftBank also participated.

Prior to the Series D funding, eFishery secured $90 mn in a Series C round in January 2022. This round was co-led by Temasek, SoftBank Vision Fund 2, and Sequoia Capital India, with additional support from existing investors such as the Northstar Group, Go-Ventures, Aqua-Spark, and Wavemaker Partners. In October 2022, eFishery also obtained a short-term loan of Rp 500 bn (approximately $32.7 mn) from Bank DBS Indonesia to support its business expansion.

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eFishery’s Response

In an emailed statement, eFishery said, “We are fully aware of the gravity of the market speculation, and we take this matter with the utmost seriousness. We remain dedicated to upholding the highest standards of corporate governance and ethics in all of eFishery’s operations.”

An eFishery employee also addressed the allegations on LinkedIn to clarify that the entire agritech company is not involved in fraudulent activities.

Elsa Vinietta, eFishery’s product manager, wrote on Wednesday that the company’s IoT, AI, and apps are genuine products actively used by farmers. “Real farmers are actually using them,” Vinietta stated, adding that the team is willing to prove their usability through live demos and on-site visits. “Not all employees are aware of or involved in fraud. I don’t know the exact number, but using common sense, surely more employees are not involved than those who are,” she wrote.