AI Investor Confidence Wanes in Indonesia as More Unicorn Startups Face Liquidation

In February 2025, allegations of fraud and financial misreporting surfaced against one of Indonesia’s startup unicorns, eFishery, as the agritech firm laid off approximately 90% of its workforce, while considering a potential liquidation. In a preliminary ongoing probe triggered by a whistleblower’s claim about the company’s accounting, the findings estimated that management inflated revenue by almost US$600 million in the 9 months leading up to September 2024, meaning that more than 75% of its reported figures were falsified. The probe also revealed that eFishery had posted a US$35.4 million loss, compared to the US$16 million profit it had reported.

The agritech startup’s outlook has been promising over the past decade, as it has leveraged technology to sustainably transform the aquaculture industry across developing countries. The high-profile startup, backed by investors including SoftBank Group, Temasek, and, most recently, the United Arab Emirates’ (UAE) G42, achieved a valuation of US$1.4 billion following its various funding rounds, which raised hundreds of millions.

A once-shining example of a successful technology unicorn startup amid the ongoing tech winter in 2024 and 2025, eFishery’s alleged financial fraud is not the first Indonesian startup to be embroiled in controversy, as the mismanagement of several startups pose a significant and far-reaching impact across the entire tech startup investment landscape, which includes Artificial Intelligence (AI) and other emerging technologies. Instances across several startup industries, such as financial technology (Investree’s fund misuse in 2024 and UangTeman’s announced bankruptcy in 2023), education technology (Zenius’ shutdown in 2025), and e-commerce (Bukalapak’s downsizing in 2025), have also shaken investment confidence in the country's startup ecosystem. These factors further exacerbated Indonesia's tech winter, as the country’s tech startup landscape secured only US$323 million in funding in 2024, a 75% drop from the US$1.3 billion raised in 2023.

Likely, the added controversy brought about by eFishery’s news in February 2025 will further erode confidence in the country’s startup investment landscape, potentially halting investment outlook from international technology players such as SoftBank and Temasek Holdings. With mounting challenges in Venture Capital (VC) investments, such as market fragmentation, regulatory complexity, and the lack of large-scale exit opportunities across the region, limited partners in investment firms have shifted their focus away from Indonesia and the region toward alternative emerging markets like India. Other countries also encounter challenges, especially in providing AI-driven technology and innovation. For instance, Malaysia’s HappyFresh, Vietnam’s PangoCDP, and Singapore’s BuzzAR found it challenging to distinguish themselves from less expensive alternatives or failed to fulfill their promised AI tools, ultimately resulting in their downfall, despite having secured substantial funding rounds. Consequently, if investment confidence in technological innovation in Southeast Asia (SEA) remains unaddressed, investor trust in the region may continue to diminish, significantly restricting its ability to achieve growth as an AI-driven technology hub.

Identifying the roots of declining investment confidence during the current tech winter is essential, as significant slowdowns in technology startup investments have been observed globally, not just in Indonesia and the SEA region. Investments are no longer predicated on hype cycles and the promise of the “Next ChatGPT” moment, but instead are increasingly focused on actual deliverables, including the profitability of business models, the accountability of founders, and the prioritization of genuine growth.

To repair investor confidence across the region and stimulate a continued cycle of healthy investments in the SEA region, emerging startups seeking funding for their versions of disruptive technologies should embody several key principles and practices. These include:

• Focus on Profitability and Financial Discipline: By shifting their focus away from rapid expansion, startups looking to expand should prioritize sustainable avenues of growth and recalibrate their approach from traditional revenue-based valuation metrics to profitability-focused measures, such as Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) multiples. Startups should also reassess overly optimistic projections about market size and purchasing power to avoid a bullish team and regional expansion without clearly understanding customer acquisition models and spending patterns.
• Build Strong Fundamentals Through Thoughtful Innovation: Developing a clear value proposition that effectively addresses its defined set of problems should be the key innovation model for startups. By prioritizing the product’s core offerings and Unique Value Proposition (UVP), further innovation should focus on refining core offerings by doubling down on current products, rather than diversification. This roadmap will help build investor confidence through a clearly-defined vision and product UVP.
• Leverage Regional Strengths and Trends: Seeking partnerships and developing innovation sandboxes with regulatory authorities will continue to build investor confidence through validation and result-driven deliverables. Additionally, sectors that can align with emerging trends to address challenges such as climate change, digital transformation, and financial inclusion will be a key consideration for investors in SEA-based technologies. Several key verticals significant in the region include fintech, healthtech, the circular economy, gender diversity, new energy, and the silver economy.