Venture capitalists bet big on Indonesia’s nascent fishery sector

Photo by Gregor Moser on Unsplash

Indonesia’s burgeoning maritime and fisheries industry has caught the interest of risk capital investors as startups operating in the sector carve out their expansion plans.

In the month of August alone, Aruna and eFishery snagged funding in the nascent sector. While Aruna secured $5.5 million in a pre-Series A round from East Ventures, AC Ventures, and SMDV, eFishery raised an undisclosed amount in its Series B funding round led by Go-Ventures and Northstar Group.

These are not the only ones. Peripheral sectors linked to the mainstream fishery space has also attracted VC funding over the past few years. In 2019, for instance, JALA, an IoT based water management system for shrimp farmers, raised an undisclosed amount from 500 Startups. Prior to that, in 2018, two investments took place in Alune Aquaculture, a fintech firm that supports aquaculture farmers in Asia, and Growpal, a fishery-focused crowdlending platform.

Expand Table

Indonesia's fishery and aquaculture startups

NameEstablishedFoundersFocus areasFunding status
Aruna2016Farid Naufal Aslam,
Indraka Fadhillah, Utari Octavianty
Integrated fishery platform, connecting fishermen to buyers, and connecting banks to fishers.Pre-series A round
eFishery2013Gibran El Farizy,
Chirsna Aditya, and M Ikhsan Akhirulsyah
Provides IoT feeder, feed product for fish and shrimp, grocery, and funding.Series B round
JALA2015Aryo Wiryawan,
Liris Maduningtyas, Hanry A Prestianto
Help farmers understand farm conditions based on IoT and machine learning.
Seed round
Laut Nusantara2018XL AxiataProvides real-time information to help fishers locate their catch
through sattelitte image analysis.
-
Alune Aquaculture2018Alexander Farthing A fintech company funding aquaculture farmers in Asia and Indonesia-
GrowPal2017Noorbaskoro P, Rizki AkbarAquaculture/fishery crowdlending platform in IndonesiaSeed

For VCs, it is still the early investment days as there are still few startups that operate in the fishery sector even as the industry sees significant growth.

Despite the adverse impact of the coronavirus pandemic, Indonesia’s fish exports have grown both in terms of volume and value. In the first half of 2020, as much as 596,000 tonnes of fish were exported for $2.4 billion, compared to the same period in 2019 when 528,000 tonnes of fish were exported worth $2.25 billion. Indonesia’s main export markets are the US, China, Japan, the Southeast Asia region, and the European Union.

According to the Food and Agriculture Organization of the United Nations, total fish production in the archipelago increased from 6.67 million tonnes in 2015 to 7.3 million tonnes in 2018.

“Although Indonesia is a maritime country, it is almost difficult to find young people who want to be fishermen,” Pandu Sjahrir, general partner at AC Venture told DealStreetAsia.

Revenue multiplying

However, this may be changing with startups coming up to cash in on the early days of the boom.

Aruna, established in 2016, claims to have witnessed a whopping 86-fold jump in revenue in the first half of 2020 from the same period in 2019. This is even as the COVID-19 pandemic disturbed its export income from China, which contributes to its revenue significantly.

“Our export income is currently rebounding, and we’ve got more new markets from domestic groceries,” said its co-founder and chief executive officer Farid Naufal Aslam.

Prior to the latest round of funding, Aruna raised an undisclosed amount last year from East Ventures and SMDV, which helped it ramp up the number of branches across the archipelago.

The startup, that connects fishermen with buyers on its platform directly in a bid to ensure fair trading opportunities, currently has as many as 11,000 fishermen on board in the archipelago.

“We think the sector is exciting, specifically in Indonesia, given our majority of the territory is the sea, yet the distribution is still very scattered and fragmented. We see the basic issue to bridge the gap on access from fishermen to consumers,” said Aldi Adrian Hartanto, vice president of investments at MDI Ventures.

The other challenge plaguing aqua farmers is “the feed, which is 70 to 90 per cent of the total cost. From the feeder solution, we captured more data and information to accommodate farmers. Therefore, we came to bring more product lines, such as feed product, loan access for farmers, and connect them to customers,” said Gibran El Farizy, founder of eFishery that focuses on end-to-end aquaculture service across the country.

Founded in 2013, the firm is currently in the process of expanding its branch network with the latest round of funding.

By 2021, Farizy expects eFishery’s revenue to grow four-fold from this year. Based on the ACRA document, the company’s revenue in 2018 stood at $59,675, up 81 per cent from $32,892 in 2017.

Meanwhile, JALA tech, founded in 2017 by Liris Maduningtyas, has diversified to shrimp trading as the pandemic has hit shrimp farmers. JALA plans to develop a user base and is in talks with potential investors for its next fundraising.

According to experts tracking the sector, the latest funding in Aruna and eFishery can open up funding opportunities in the sector.

Hartanto believes that fishery startups have the potential to gain attractive margins as production and export value are witnessing steady growth, much in line with domestic consumption every year and even during the pandemic.

Local empowerment, intuitive technology

Founders of both Aruna and eFishery are planning to hire more local people, and will approach fishers or aqua farmers as their exposure to more sophisticated technology is rather low.

“The local empowerment and local approach are important. It’s not how sophisticated the technology, but how the features are simple and reliable for them,” said Aruna’s Aslam.

Echoing the same sentiment, eFishery’s Farizy pointed out to the challenges the firm faced when it tried to approach farmers to use its feeders.

Both firms realize the importance of branches that help engage with more fishermen and farmers across Indonesia. That probably explains why they plan to use the funding to expand the number of branches across the island nation to engage with more customers and build communities for fishermen.

This year, Aruna has expanded its operation to add more branches – the number went up from 14 in 2019 to 31 this year. Meanwhile, eFishery plans to have 50 units by September and 100 units by the end of this year.

 

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.

Singapore Reporter/s

In Singapore, we are looking to double our reporting team by this year-end to comprehensively cover the fast-moving world of funded startups and VC, PE & M&A deals. We want reporters who can tell our readers what is really happening in these sectors and why it matters to markets, companies and consumers. The ability to write precisely and urgently is crucial for these roles. Ideal candidates must have to ability to work in a collaborative, dynamic, and fast-changing environment. We want our new hires to be digitally savvy and ready to experiment with new forms of storytelling. Most importantly, we are looking for hard-hitting reporters who work well in a team. Collaboration and collegiality are a must.

Following vacancies can be applied for (only in Singapore).

Following vacancies can be applied for (only in Singapore).   

  • A reporter to track companies/startups that have raised private capital, and have the potential to become unicorns. SEA currently has over 40 companies with a valuation of over $100 million and under $1 billion.
  • A reporter who can get behind the scenes and reveal how funding rounds are put together, or why they’ve failed to materialise. She/he in this role will largely focus on long-format stories. 
  • A journalist to track special situations funds, distressed debt and private credit (from the PE angle) across Asia.