Indonesia’s seafood farming business faces a ‘know-how hole’ — and startups are elevating large bucks to fill it

Indonesia’s tech startups are reeling in large cash in seafood farming. That should not come as a shock — the archipelago is residence to one of many world’s longest coastlines and over 18,000 islands and islets.

However there’s another excuse: A “know-how hole” is holding the business again from realizing its huge potential, in keeping with traders and startups that CNBC spoke to.

Final yr, a number of startups raised thousands and thousands of {dollars} from large title traders to fill that hole: eFishery ($90 million in Sequence C), Aruna ($30 million in follow-on Sequence A), Delos ($eight million in seed extension) and FishLog ($3.5 million in pre-Sequence A).

“Indonesia is the second largest wild catch producer on the earth after China. And we’re third in aquaculture manufacturing after China and India. But when we discuss exports by way of worth, we’re solely 12th place on the earth,” mentioned Farid Naufal Aslam, co-founder and CEO of Aruna, a fisheries e-commerce startup. Aquaculture is the managed cultivation of aquatic organisms similar to fish and shellfish, particularly for human consumption.

“A variety of selections made are based mostly on intestine feeling or what ancestors have been doing for the previous 60 years,” mentioned Guntur Mallarangeng, co-founder and CEO of shrimp farm administration firm Delos.

And he is not alone in considering that.

“Indonesia’s fisheries business has a number of old-style gamers which have handed on standard enterprise practices from era to era,” mentioned Yinglan Tan, founding managing associate and CEO of Singapore-based Insignia Ventures Companions, which invested in FishLog.

These in Indonesia’s fisheries business want extra environment friendly know-how and higher processes, in keeping with Tan.

“The one manner that the business can develop is when the farmers develop. If the farmers do not develop and broaden their companies, we won’t actually produce extra fish,” mentioned Gibran Huzaifah Amsi El Farizy, founder and CEO of eFishery, an aquatech startup.

eFishery helps farmers optimize their processes by means of computerized feeders and cellular apps. The automated feeders detect the starvation ranges of fish and shrimp by means of their actions, which prevents an issue extra widespread within the handbook course of: over- and under-feeding.

Farizy began his personal catfish pond in 2009 whereas he was a pupil to complement his household’s earnings. By the point he graduated, he was managing 76 ponds, and began exploring how he may use tech to assist farmers.

He then constructed the prototype for the automated feeder in 2012 and launched it in 2013.

“The feeding prices encompass 70%-90% of the overall prices. So [automatic feeding] can enhance the productiveness and cut back the prices,” Farizy mentioned. He claimed that the automated feeders can cut back the feeding prices by 28%.

Aruna, for its half, helps to attach Indonesia’s small-scale aquaculture farmers to consumers. It claims it really works with 40,000 fisherman throughout 170 areas.

Small-scale fisheries make up about 90% of the overall variety of fishers, in keeping with the Marine Coverage journal of ocean coverage research.

“By way of productiveness and effectivity, they’re nonetheless very conventional,” Aslam mentioned.

He claimed that farmers who labored with Aruna have been in a position to promote their catch by as much as 50% extra. And in keeping with a report by the Centre for Affect Investing and Practices, Singapore Administration College and Accenture, fishermen have achieved a three- to 12-fold enhance in earnings by means of Aruna.

“Farmers will produce what the market wants. It makes the availability chain extra environment friendly, and will increase the earnings of the fishermen as a result of they know the kind of fish they must catch and what they’ll promote at the next worth,” Aslam mentioned.

Although the nation makes use of solely 7.38% of its complete potential space for aquaculture, it already ranks among the many best international locations in aquaculture manufacturing, in keeping with a 2016 report by market analysis agency Ipsos.

“With the precise switch of data and know-how of greatest aquaculture practices, Indonesia could be very properly positioned to consolidate its standing as one of many prime aquaculture nations on the earth,” the report mentioned.

Aayush Kapoor, vice chairman at Sequoia Southeast Asia — which invested in eFishery — can be “bullish” on the business.

“Indonesia being one of many largest exporters of fish and shrimp on the earth is arguably the next margin alternative. And the federal government can be supportive in the direction of Indonesia turning into an export financial system in lots of sectors together with aquaculture,” he mentioned.

“Indonesia has the puzzle items to grow to be a worldwide chief in aquaculture and seafood manufacturing. As soon as we work out tips on how to put them collectively, we should always be capable of grow to be a seafood powerhouse within the international market,” mentioned Delos’ Mallarangeng.