'Chilling effect': Here's what an Indonesian startup scandal means for the region struggling with fundraising

Southeast Asia's startup ecosystem has been braving a multi-year funding drought, and a recent scandal has delivered yet another blow to investor sentiment in the region.

Indonesian agritech unicorn eFishery — backed by investors such as SoftBank Group and Temasek Holdings — was among Indonesia's top startups, but a preliminary, ongoing probe suggests that the company may have been involved in financial malpractices.

The company did not immediately respond to a CNBC request for comment.

EFishery's board of directors announced on Tuesday that it has appointed business advisory firm FTI Consulting as acting management of the company, according to an official company statement obtained by CNBC.

FTI Consulting also issued a statement saying that it "aims to support ongoing efforts to conduct a thorough and objective business review of the company's true financial and operational position."

That comes amid an ongoing investigation, initiated by a whistleblower's claim about the company's accounting, which estimates that management inflated revenue by almost $600 million in the nine months to September 2024, Bloomberg reported.

The company also reportedly presented a profit of $16 million over the same period to investors, but the investigation alleges the startup actually made a $35.4 million loss, according to the report.

"[EFishery] was supposed to be reflective of what the local ecosystem could do, what Indonesian founders could do. This was supposed to be one of the better companies from Southeast Asia. This was supposed to be a winner," Justin Hall, partner at Golden Gate Ventures, told CNBC.

The company, which deployed a smart feeding system for fisheries, reached unicorn status in 2023 after a $200 million Series D funding