Once seen as champions of sustainable innovation, agritech startups in Southeast Asia are navigating turbulent waters.
The latest high-profile casualty is Indonesian unicorn eFishery, currently the subject of a forensic audit for alleged financial fraud by its former CEO.
Leaked details of the ongoing probe into the Softbank and Temasek-backed startup, which was first reported by DealStreetAsia, revealed massive cooking of its accounts, with management allegedly inflating revenues by almost $600 million in the first nine months of 2024. eFishery could not be reached for comment at the time of publication.
Meanwhile, other agritechs in the region like Indonesia’s EdenFarm, TaniHub, and Pitik, as well as Singapore’s Apollo Aquaculture Group and indoor farming startup I.F.F.I, have shuttered in recent times due to intense competition and an inability to sustain financially.
According to experts spoken to by MONIIFY, these failures reflect both the systemic governance failures blighting the sector, unrealistic expectations of agritech startup founders to deliver results, and the complexities of marrying tech with a deeply traditional industry.
It’s a sector that’s still struggling to get things right.
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A tough nut to crack
Farmers and fishermen in Southeast Asia face shared challenges: limited support, price volatility, inefficient supply chains, and poor storage facilities. Many rely on intermediaries, who dictate unfair prices.
“This dependency on middlemen often hurts incomes, as prices don’t reflect true market value,” says Miftahul Khausar of the Indonesian Traditional Fishermen’s Association.
Many startups have attempted to solve these issues with tech-driven solutions to boost productivity and simplify supply chains. Yet adoption remains slow as farmers, often with limited financial and tech literacy, struggle to embrace new systems.
“Building a sustainable ecosystem demands heavy investment in educating farmers, equipping them with the skills to adopt modern technologies and systems,” says Rahmad Supriyanto, a researcher at the Center for Indonesian Policy Studies.
Meanwhile, agritech startups in Singapore face unique challenges like limited land, high operating costs, and a dearth of talent. With only 1% of land available for agriculture, firms must innovate with space-efficient solutions like vertical farming.
Addressing these issues will require government policies, investment into R&D, and public education initiatives, says Paul Ong, partner at Innoven Capital SEA, which has backed a few agritech startups in the region, including eFishery.
Read more: Are startups in Southeast Asia really all that?
Susceptible to fraud
While fraud isn’t unique — think Theranos, Wirecard and Enron — the agritech sector is particularly vulnerable.
In Indonesia, agriculture remains a highly traditional sector, with personal relationships driving business and most transactions in cash. Under-the-table deals are common, posing another challenge for agritech startups.
To address these challenges, startups need to ensure that procedures are well-designed and strictly enforced. For example, agritech startup Semaai has surveillance and monitoring systems in place to track field activities, ensure cash accountability, and close operational gaps, its CEO Yoga Anindito tells MONIIFY.
The sector is also highly fragmented with heavy ground operations, meaning founders need to take a hands-on approach to daily operations. Identifying trustworthy partners to detect potential fraud is also crucial. Effective oversight begins with real-time data monitoring, Anindito adds.
Read more: Indonesia P2P mess: Lending a hand or losing it all?
Governance and expectations in the spotlight
“The rot starts at the top,” the saying goes, and that’s especially true for startups.
According to Innoven Capital’s Ong, many of agritech’s struggles today stem from both sector-specific challenges and broader governance issues.
Investors need to manage their expectations about the speed of progress of their portfolio companies. “We should recognize that agritech is not consumer internet,” says Ong.
Companies in this space likely need more time to mature, so investors should appreciate that the company’s priority should be focusing on sustainable growth instead of chasing early profitability.
Patrick Walujo is a managing partner at investment firm Northstar, which was an early backer of eFishery. He says that the alleged fraud committed by the scandal-embroiled agritech’s management was “systematic” and a “total embarrassment”.
“The damage they have done to Indonesia, [the] startup community, and to our credibility is massive. We all will get to the bottom of it, and we take this very seriously,” he says.
Read more: SingPost drama shows why whistleblowing matters
Show me the numbers
Agriculture, including forestry and fishing, accounted for 12% of Indonesia’s GDP in 2023, employing more than 39 million people, according to Statista. Yet agritech funding in the country has declined sharply — from a high of $377.6 million in 2022 to $135.6 million in 2023, plunging further to $33.2 million in 2024, according to Tech in Asia.
While the funding drought is in line with the overall funding downturn plaguing startups worldwide, Indonesian agritech startups have experienced a steeper decline in investment in recent years. The doldrums highlight the significant challenges facing the sector.
In Singapore, agriculture contributes less than 1% to GDP. While the government has a “30-by-30″ goal, aiming to produce 30% of its food locally by 2030, many say that target is a moonshot.
Read more: Southeast Asia needs billions to hit its climate goals. Will investors deliver?
How is the future looking?
But despite its recent turbulence, Southeast Asia’s agritech sector is too important to fail, industry players insist. For tiny Singapore, it’s a matter of food security, while agriculture underpins Indonesia’s GDP and rural growth.
“Agritech offers vast opportunities, but success requires leaders who can collaborate with stakeholders — investors, governments, and rural communities — to modernize the sector,” says Innoven Capital’s Ong.
In Indonesia, tech startups have sought to do that by connecting fishermen to markets and providing real-time data on catch locations and prices, boosting incomes for those who are responsible for the catch, says the Indonesian trade association’s Khausar.
But the impact remains uneven in remote regions with limited internet and infrastructure. It’s a familiar scenario: great idea, but the execution’s not quite there yet.
Read more: Can angel investors save the day in this funding drought?
Lessons from a thriving agritech startup
If you’re an entrepreneur seeking opportunities in this space, Semaai’s Anindito shares key lessons he has gained from seven years of experience in the field.
- Watch your cash flow
While pursuing growth, startups may be tempted to work with big buyers and accept payments after a deal is completed, instead of during or before the project’s progress. However, this often results in late payments, a common issue in agriculture, which can strain cash flow. Instead, focus on smaller, manageable transactions and gradually build your portfolio.
- Stand firm under investor pressure
In agriculture, timing is critical, and waiting for the harvest period may be necessary to showcase product quality to consumers. Don’t rush the process.
- Get in the mix
Agriculture remains a traditional, ground-intensive business where trust and relationships with farmers, suppliers, buyers, and other ecosystem players are important. Being hands-on is essential.
- Have patience
Balancing relationships while disrupting traditional models takes time and patience, so hang in there.
Edited by Tim Hume and Victor Loh. If you have any tips, ideas or feedback, please get in touch: talk-to-us@moniify.com
