It's Not About eFishery

The Startup Reporter: 20 January 2025

Okay, I lied. This piece is about eFishery, but it’s also about the entire startup ecosystem in Indonesia.

Rather than diving into the technical details of the case—which you’ve probably already read in DealStreetAsia or elsewhere—I want to take a step back. Let’s explore how the Indonesian startup ecosystem arrived at this point and, more importantly, where it goes from here.

Scrolling through discussions in Indonesia’s tech circles in recent weeks, I noticed two dominant narratives.

On one side, local VCs expressed concern about the potential impact of eFishery case on the investment climate, waving off the incident as just a “bad apple” in an otherwise thriving orchard. On the other, industry skeptics took the opportunity to declare, “I told you so. This whole industry was bound to fail.”

Both sides make valid points, but they miss some crucial blind spots.

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For local VCs, it’s time to face the fact that, if the media reports are accurate, eFishery isn’t an isolated incident. Similar cases have happened before—some publicly, like Investree, and others quietly, never making headlines.

After chatting with several founders and investors, a common theme emerged: a lack of rigorous auditing during the due diligence process. Investors also tend to place too much trust in founders, which opens the door to failures—whether caused by the founders’ inexperience or unethical intentions.

And let’s not forget, this trust issue extends to investors themselves. Some blindly follow the lead of others, which can be equally problematic (looking at you, FOMO culture).

Yes, our startup ecosystem is still maturing, and there’s no single formula for success. But doing simple audit practices—like unannounced, on-the-ground check with end customers or business partners—could help reduce unpleasant surprises.

It’s time to ask tough questions: Are investors prioritizing portfolio management as much as deal-making?

Side note: Back when I was with Tech in Asia, I occasionally conducted random checks on startups’ operation, even during the pandemic. Some findings turned into stories, while others didn’t. If i could do this with limited resources, surely investors can do the same with their deeper pockets.

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Now, to the industry’s naysayers: I get your point, but it does not mean that i agree with that.

Morgan Housel, author of The Psychology of Money, said in one podcast episode, “Why Pessimism Sounds So Smart,” that pessimists often come across as more intelligent. They appear to understand the risks and realities, while optimists seem like daydreamers detached from the real world. It’s also an evolutionary instinct, as we’re wired to stay alert to danger.

Progress, after all, unfolds slowly, almost imperceptibly, while setbacks happen suddenly and demand attention. For instance, advances in health and life expectancy often go unnoticed, but events like Pearl Harbor or 9/11 dominate headlines.

The same logic applies to Indonesia’s startup ecosystem.

Since 2015, I’ve written extensively about startups being founded, raising funding, and gaining traction. Progress has been gradual, even boring at times. That’s why some critics accused startup media of being little more than cheerleaders for the industry.

But let’s zoom out. Can we really imagine life without e-commerce, ride-hailing, or digital payments? At the same time, aren’t these innovations attracting more people to join and expand the digital talent pool?

Yes, there are setbacks, like the topic of this piece. But setbacks happen in every industry, such as manufacturing (layoff and safety incidents), healthcare (COVID-19 pandemic), even the stock market (price volatility). While overall, the trend points upward, right?

Some players, including the media, have tried to raise red flags over the years. But uncovering these “bad apples” isn’t always easy. It’s challenging to access reliable data, and early-stage startups often fly under the radar. While journalists, constrained by the need for verified facts, can’t report on hearsay, speculation or hunches.

But despite that, you can still find stories about those cases in the media, right?

Thus, with a proper commitment and control, i believe Indonesian startup ecosystem would continue its positive progression in the long run.

A bad apple

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I think it’s time to acknowledge that something is broken in how startup investing works in Indonesia. We need greater scrutiny—of both startups and investors—to weed out the bad actors still lurking in the system.

That said, let’s keep things in perspective.

I know that, for some people, the issues surrounding eFishery and other startups seem like a big deal. But in the grand scheme of things, it’s not that huge—especially when compared to the trillions of rupiahs at stake in government programs funded by the state budget, if you know what I mean.

For all the headlines about eFishery and other struggling startups, these losses primarily impact their investors, typically wealthy individuals.

As far as I know, no local pension funds have invested their money in those startups, which could hamper their ability to give returns. It’s also not taxpayer money at risk, unless you want to bring sovereign wealth funds like Temasek or Khazanah into the discussion.

Yes, some regular guy have suffered due to startup mishap, for example in P2P lending. But these cases are being addressed by authorities, as they should be. Labor layoff is another significant problem, but it also happens everywhere in the country due to the government’s inability to create new job opportunities.

So, let’s take a deep breath and reflect: What do we want this ecosystem to look like moving forward?

Cheers!

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You’ve just read The Startup Reporter, a newsletter covering the hottest topics in Indonesia’s startup scene, along with behind-the-scenes stories that often don’t make it into mainstream media coverage.

This newsletter is written by me, Aditya Hadi—a journalist at The Jakarta Post and former writer at Tech in Asia. It’s published every Monday.

To subscribe, visit adityahadi.substack.com