Asia is home to some of the world's most promising startups, as it grapples with a multitude of problems arising from rapid economic development. Starting this week, the Nikkei Asian Review will bring to you profiles of these innovative companies on a regular basis.
JAKARTA -- It was the Islamic holy month of Ramadan in 2007. Gibran El Farizy, a student at the Bandung Institute of Technology in West Java in Indonesia, was starving.
Farizy's parents were late sending his monthly allowance of 600,000 rupiah (about $45 at the current exchange rate), and he barely had enough money to buy the cheap soft drink he wanted to break his fast with. For three days, he relied on a few dates and water to break the fast, and just water before dawn prior to resuming his fast the next day.
He eventually received the money from his parents, but his experience, along with an article he read in a local paper about children dying of starvation, led him to try to tackle the problem of world hunger.
Farizy went on to establish eFishery, an Indonesian startup aimed at making fish farming more efficient, and, crucially, more productive. He founded the company, which primarily produces automatic fish-feeding machines, in 2013.
The device allows fish and shrimp farmers to schedule feeding times through a monitoring app on their smartphones. For example, a farmer could release 150 grams of feed at 7 a.m., 50 grams at 3 p.m., and 100 grams at 11 p.m., and the motorized feeder will disperse the food pellets evenly across a fish pond.
The feeder, which can cover ponds of up to 100 square meters, is sold in two sizes. The 12kg container costs 6.7 million rupiah ($490), and a 65kg container is priced at 7.9 million rupiah, including the charge for the monitoring software. EFishery also offers a rental option for 300,000 rupiah a month.
"[The autofeeder] is good," said Petrus Rumambi Gumantio, who has been farming catfish for the past seven years, aside from his job as a low-rank civil servant in Lampung province. He uses six small ponds in the backyard of his home to harvest the fish, and he said the process usually took three to four months. Since he began using eFishery's feeder less than a year ago, Gumantio has been able to use less feed -- 700kg from the previous 1 ton -- and he said it now takes less time to harvest the catfish.
"I only had to arrange [the feeding times and volumes] using a smartphone once, and now I don't have to rush home from the office every time to feed [the fish]," he said.
The company is currently developing an in-pond sensor, which it hopes to release before the end of this year, which will track how hungry the fish are by their movement and the ripples in the water. According to the company, fish swim "more aggressively" when they are hungry, creating more waves. The sensor will be activated during feeding times to detect the ripples or lack thereof in the water, and will automatically stop feeding if the fish are no longer hungry.
Gibran El Farizy, CEO of eFishery (Photo by Shinya Sawai)
Through accumulated use of eFishery's solution, the fish farmer will be able to optimize the breeding and rearing of fish. "We call eFishery the IoT ["internet of things"] for shrimp and fish farmers," Farizy told the Nikkei Asian Review.
Farizy, 27 years old, came up with his idea for a feeding system after encountering problems with his small catfish farming business, which he ran during his second year of college. "The biggest problem that happened to me ... [was] actually the feeding cost. That is a very simple problem, but no one [could] solve it."
The company says that feeding accounts for 70% to 80% of the total cost of aquaculture. It is also often done by unskilled workers, which in many cases leads to overfeeding or uneven distribution. This means that larger, more aggressive fish get most of the food and the rest go hungry.
Employees at eFishery test its products at a research center in Bandung. (Photo by Shinya Sawai)
"There [was] no technology to enable monitoring. That makes the business less profitable -- uncontrollable -- because your biggest cost is just spread on the water. ... The idea is to solve the main problem, to make the feeding more efficient and controllable," Farizy said. Efishery says its system can reduce the cost of feeding by up to 21% and improve the growth of the fish because the water is less polluted by overfeeding.
Finding customers
It has not been all smooth sailing for the startup. At first, Farizy approached farm managers at big agribusiness companies, thinking that if large companies used the product it would be easier for eFishery to sell to small-scale fish farmers. But, as is often the case with startups lacking a track record, he was repeatedly turned away.
He persevered, however, building up contacts and perfecting the product. The company says it now has more than 500 customers raising freshwater fish and shrimp in Indonesia, mostly in West Java and Lampung provinces.
The company declined to disclose its financial data, but it has raised more than $1.2 million in funding from the likes of Aqua-Spark, a Dutch aquaculture investment fund, and Indonesian venture-capital company Ideosource, according to online database Crunchbase.
The mission of eFishery -- to make fish farming more efficient -- is growing more relevant. The United Nations projects the world's population will reach nearly 10 billion by 2050, up from 7 billion today. To feed these people, it is estimated the world needs to double food production, and fish farming is increasingly seen as a valuable source of protein.
The emphasis on aquaculture comes in response to overfishing. According to the U.N.'s Food and Agriculture Organization, or FAO, 31.3% of world marine fish stocks were overfished in 2013, that is, harvested at biologically unsustainable levels. A further 58.1% were fully fished. Fish are indeed a valuable source of protein, but aquaculture will play a major role in making sure there are enough to go around.
Farming fish is also more economical than other types of animal husbandry, such as raising cattle, poultry or pigs. One reason is that land is scarce, and clearing forests to make more land available is not always feasible or sustainable.
Fish are also more effective at turning feed into meat. The FAO calculates that a chicken requires 2.5kg of feed for every 1kg of weight increase, while pigs require 5kg and cattle 10kg in a typical U.S. production system.
Nile tilapia, a favorite fish in Southeast Asia, by contrast, only require around 1kg to 2kg. "[This] is an important issue as well [as] water scarcity [and] land scarcity," Farizy said. "If [we] can produce a protein source that is affordable and easy, and needs less resources, that will be the future we want to pursue."
The company says its own research has shown that after a fish farm has deployed eFishery's automatic feeder, the feed conversion ratio -- that is, the feed given as compared to fish weight gain -- was reduced to 1.14 compared with 1.39 for the traditional method of humans feeding fish by hand. EFishery said that translated into a 12% lower production cost per kilogram, and eventually a 92% increase in profits.
Regional advantage
According to the FAO, Asians consumed 99 million tons of fish in 2013, or about 70% of the 140 million tons that were available for human consumption. Asia is also the center of aquaculture: The Association of Southeast Asian Nations made up 22.7% of global aquaculture production in 2015, and China was at 58%.
There are competitors to eFishery, such as Eruvaka Technologies in India, which provide similar solutions, but given eFishery's geographic proximity, it has better access to this huge market and a deeper understanding of how it works. Farizy said the company will focus on Indonesia, Thailand, Vietnam, Bangladesh, China and India over the next three years, as they are major exporters of aquaculture products, as well as big consumers.
The company's office in Bandung (Photo by Shinya Sawai)
The startup has received numerous honors, including the Indonesia ICT award run by the country's Ministry of Communications and Informatics, and most recently the Tech4Farmers Challenge run by the U.S. Agency for International Development. It was also a part of Google's Launchpad Accelerator program, which focuses on startups in emerging markets.
Although eFishery's goal is to "decrease hunger in the world," according to Farizy, he thinks it can achieve much more. As with other internet of things companies, he thinks the value of the business will be in the statistics it gathers.
"EFishery is a channel to getting data," he said. "The data would be the most interesting part of the business because from the data, we can do a lot. We can do prediction. We can connect farmers to the buyer. We can connect the farmers to manufacturers, and we can even build some kind of credit scores."
He noted that one of the difficulties fish farmers face is a lack of credit because aquaculture in its current form is unpredictable. "There is a lot of potential for things to go south," Farizy said. Using the credit scores his company compiles, Farizy believes eFishery can collaborate with banks to make loans and with insurers to create products for fish farmers.
"We will be the only company that will get the feeding data, the production data, fish behavior data. And there is no other company that can do that," he said. "That will be our advantage ... to hold the market share and maintain our market leadership. We want to be a platform for fish farmers ... the Google of aquaculture."
Q&A with Gibran El Farizy, founder of eFishery
Gibran El Farizy, CEO of eFishery (Photo by Shinya Sawai)
Q: Can you explain what eFishery does?
A: We call eFishery the IoT [internet of things] for shrimp and fish farmers. I came up with this idea because I was a fish farmer myself. The biggest problem that happened to me ... [was] the feeding cost, which is 70-80% of the total cost. That is a very simple problem but no one [could] solve it. There [was] no technology to enable monitoring [of fish]. That makes the business less profitable -- uncontrollable -- because your biggest cost is just spread on the water. The idea is to solve the main problem, to make the feeding more efficient and controllable.
Q: How does your product work?
A: You put the machine by the side of the pond, and this machine feeds the fish. It is connected to a sensor that senses the fishes' appetite. It is connected to the cloud as well, so you can monitor the feeding process directly on your smartphone, anywhere. The direct impact is in the feed conversion ratio. It makes the feed conversion ratio [higher] and the feeding cost lower. Because there is no overfeeding -- and [excess] feed, as we know, is the biggest pollutant in the water -- we can maintain the water quality as well. That way we can increase the daily growth of the fish and reduce the mortality rate. You can produce more fish in a [shorter] time.
Q: How have things gone?
A: In the first year and a half we were focusing on building the technology. We were testing. We were collaborating with consumer companies, farmers, just to prove this technology can really work. Then [we spent] a year and a half just selling this product. We've sold hundreds of units across Indonesia, especially in Java and Sumatra, and little part of Bali. The farmers were a bit resistant to the new technology, but after they tried the technology they loved it because it improves their business. It increases their margin.
Q: What other countries are you trying to expand into?
A: Our focus is on the six biggest producers. Globally, 84% of fish farming production is in Asia. For me, that is the most interesting part of the sector as well. Asia is the fastest-growing region in the world. So it is really interesting, and it is 84% of total production. And six countries account for 70% of total production: China, India, Thailand, Indonesia, Vietnam and Bangladesh. [For] the next three years we will focus on these six countries because they already [have] the biggest market share; also because they consume fish and [are] also the biggest exporters to the West.
Q: Are there any advantages or disadvantages being based in Indonesia?
A: It has been an advantage. Asia is the biggest market in the world. We have the biggest market. If we say we are an Indonesian startup, then [potential partners] know that we are in the right place. And this is also the right time: Startups are growing, consumption is growing, income is growing, so it is really a good time.
Q: EFishery is based in Bandung, not Jakarta, which is 150km away. Why is this?
A: I was born in Jakarta and I really hated it because of the traffic and the weather. That is the first reason. The second reason [is] Jakarta is too centralized. Yes, it is the financial and the business center. Yes, there are a lot of startups and all of the VCs [venture capital companies] are there.
But we cannot let that happen anymore. The startups need to be decentralized. Bandung is close to Jakarta, and that is where the talent is. We have the best universities in Jakarta, the best talent. [But in Bandung] it is pretty similar, in some cases Bandung talent is better. ... To start [a] new company, the costs are lower to get a new office. Also the salary costs are lower in Bandung. We can get the company running without sacrificing too much ... and it is more comfortable.
