How did eFishery burn $445 Million into thin air?

Did you know that HP Touchpad is claimed to be the fastest hardware failures?, as the product was put on a fire sale in just 49 days after its launch!

Gibran Huzaifah and Chrisna Aditya founded eFishery in 2013.

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They set out to create a smart aquaculture solution that automates fish feeding, monitors water conditions, and optimizes fish growth, all via IoT (Internet of Things) technology.
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​eFishery offered smart feeding technology that optimized feed distribution, reducing waste and improving yields for farmers. It expanded to provide financing and market access, creating an end-to-end platform.

Initial Market Reaction:

• Cost Savings: Reduced feed expenses by minimising overfeeding and waste, this allowed small-scale farmers to save up to 30% on annual feed costs (hypothetically reported).
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• Productivity Increase: Claimed fish growth rates increased by 20% through data-driven feeding cycles.
• Accessible Technology: Provided easy-to-install devices and an intuitive mobile application, additionally offered multi-language support and local customer service.
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• Environmental Benefits: Promoted sustainable practices, reduced feed runoff, and improved water quality.

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Key Financial Indicators & Events

• In 2016, secured a $2 million seed round and reached 1,000 initial users, fueling interest among aquaculture cooperatives and government agencies.
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• In 2018, company claimed over 10,000 devices installed, forming partnerships with new partners further in South East Asian Farming community. Raised $10 Million in additional funds to reach valuation of $40 Million.
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• In late 2021, farmers complained about inconsistent hardware quality and delayed shipments, while some whistleblowers claimed eFishery’s software artificially inflated fish growth metrics to appear more successful.
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• Auditors discovered the said “irregular accounting practices” in hardware inventory and revenue recognition, this triggered a barrage of Investigative journalists publishing allegations that eFishery knowingly overstated device adoption and farming yields.
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• By Mid 2022, eFishery publicly announced it was ceasing operations, attributing reasons to “market conditions” but never fully acknowledging alleged misconduct.
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Did you know that both the founders of the company got suspended recently because of Financial misuse allegations? and the startup has lost its Unicorn status just in few months due to Investor trust deficit!!

Missed Opportunity:

• Reputational Damage: eFishery's reputation suffered significantly due to the scandal, impacting trust among investors, partners, and users.
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• Financial Losses: The company faced potential financial losses due to the alleged embezzlement and the erosion of investor confidence.
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• Restructuring and Governance Overhaul: eFishery initiated restructuring efforts and a governance overhaul to address the issues and restore trust.

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Did you know that eFishery founders attracted investments from notable investors like Softbank and 500 Global and still they managed to dupe investors of hundreds of millions of dollars?

5 Things to learn from eFishery's $450 Million Disaster

1. Transparency: Startups need to Invest in robust financial controls and transparent data practices from day one.
   When eFishery ignored these, allegations of inflated usage statistics destroyed investor and customer trust.
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2. Quality Control: The Challenge for startups has always been to balance growth with reliability and proven operational readiness.
   ​When eFishery founders underestimated its importance, they faced Inconsistencies in hardware manufacturing, leading to damaged user confidence.
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3. Marketing Expectations: We need to always align marketing narratives with tested, proven capabilities.
   ​eFishery did the total opposite and made Big statements about miraculous growth rates and near-perfect feed optimisation, this set up unrealistic expectations.
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4. Invest in Customer Experience: Companies need to invest in customer support teams, track feedback analytics, and fix issues proactively.
   ​If eFishery would have realised its importance, they would have acted on Farmers’ early complaints giving them a chance to rectify issues before escalation.
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5. Preserve Investor Trust: Investors simply need transparent reporting and honest disclosures when operational challenges arise.
   ​eFishery failed to keep a transparent communication with its investors, disclosing obstacles and remedial measures openly.