Indonesia's seafood farming industry faces a 'technology gap' — and startups are raising big bucks to fill it

Indonesia's tech startups are reeling successful large wealth successful seafood farming. That shouldn't travel arsenic a astonishment — the archipelago is location to 1 of the world's longest coastlines and implicit 18,000 islands and islets.

But there's different reason: A "technology gap" is holding the manufacture backmost from realizing its immense potential, according to investors and startups that CNBC spoke to.

Last year, respective startups raised millions of dollars from large sanction investors to capable that gap: eFishery ($90 cardinal successful Series C), Aruna ($30 cardinal successful follow-on Series A), Delos ($8 cardinal successful effect extension) and FishLog ($3.5 cardinal successful pre-Series A).

"Indonesia is the 2nd largest chaotic drawback shaper successful the satellite aft China. And we are 3rd successful aquaculture accumulation aft China and India. But if we speech astir exports successful presumption of value, we are lone 12th spot successful the world," said Farid Naufal Aslam, co-founder and CEO of Aruna, a fisheries e-commerce startup. Aquaculture is the controlled cultivation of aquatic organisms specified arsenic food and shellfish, particularly for quality consumption.

Aquaculture accumulation and exports by state successful 2020

"A batch of decisions made are based connected gut feeling oregon what ancestors person been doing for the past 60 years," said Guntur Mallarangeng, co-founder and CEO of shrimp workplace absorption institution Delos.

And he's not unsocial successful reasoning that.

"Indonesia's fisheries manufacture has a batch of old-style players that person passed connected accepted concern practices from procreation to generation," said Yinglan Tan, founding managing spouse and CEO of Singapore-based Insignia Ventures Partners, which invested successful FishLog.

Those successful Indonesia's fisheries manufacture request much businesslike exertion and amended processes, according to Tan.

"The lone mode that the manufacture tin turn is erstwhile the farmers grow. If the farmers don't turn and grow their businesses, we can't truly nutrient much fish," said Gibran Huzaifah Amsi El Farizy, laminitis and CEO of eFishery, an aquatech startup.

eFishery helps farmers optimize their processes done automatic feeders and mobile apps. The automatic feeders observe the hunger levels of food and shrimp done their movements, which prevents a occupation much communal successful the manual process: over- and under-feeding.

Farizy started his ain catfish pond successful 2009 portion helium was a pupil to supplement his family's income. By the clip helium graduated, helium was managing 76 ponds, and started exploring however helium could usage tech to assistance farmers.

He past built the prototype for the automatic feeder successful 2012 and launched it successful 2013.

"The feeding costs dwell of 70%-90% of the full costs. So [automatic feeding] tin summation the productivity and trim the costs," Farizy said. He claimed that the automatic feeders tin trim the feeding costs by 28%.

Aruna, for its part, helps to link Indonesia's small-scale aquaculture farmers to buyers. It claims it works with 40,000 fisherman crossed 170 locations.

Small-scale fisheries marque up astir 90% of the full fig of fishers, according to the Marine Policy diary of water argumentation studies.

"In presumption of productivity and efficiency, they are inactive precise traditional," Aslam said.

He claimed that farmers who worked with Aruna person been capable to merchantability their drawback by up to 50% more. And according to a study by the Centre for Impact Investing and Practices, Singapore Management University and Accenture, fishermen person achieved a three- to 12-fold summation successful income done Aruna.

"Farmers volition nutrient what the marketplace needs. It makes the proviso concatenation much efficient, and increases the income of the fishermen due to the fact that they cognize the benignant of food they person to drawback and what they tin merchantability astatine a higher price," Aslam said.

Though the state utilizes lone 7.38% of its full imaginable country for aquaculture, it already ranks among the astir productive countries successful aquaculture production, according to a 2016 study by marketplace probe steadfast Ipsos.

"With the close transportation of cognition and exertion of champion aquaculture practices, Indonesia is precise good positioned to consolidate its lasting arsenic 1 of the apical aquaculture nations successful the world," the study said.

Aayush Kapoor, vice president astatine Sequoia Southeast Asia — which invested successful eFishery — is besides "bullish" connected the industry.

"Indonesia being 1 of the largest exporters of food and shrimp successful the satellite is arguably a higher borderline opportunity. And the authorities is besides supportive towards Indonesia becoming an export system successful galore sectors including aquaculture," helium said.

"Indonesia has the puzzle pieces to go a planetary person successful aquaculture and seafood production. Once we fig retired however to enactment them together, we should beryllium capable to go a seafood powerhouse successful the planetary market," said Delos' Mallarangeng.