These companies may project an image of success but often face collapse when confronted with storms, whether from investor demands, fierce competition or internal mismanagement. Such issues highlight the hypergrowth mindset that has dominated Indonesia's start-up ecosystem over the past decade.

The recent scandals at eFishery and KoinWorks have highlighted the critical importance of governance in Indonesia's start-up ecosystem. Once celebrated for its innovative aquaculture solutions and valued as a unicorn in 2023, eFishery is now facing allegations of inflating its revenue by nearly US$600 million in the first nine months of 2024. The internal investigation revealed substantial inconsistencies, such as exaggerated operational metrics, with reports claiming 400,000 fish feeder units, while only 24,000 could be confirmed.

Meanwhile, KoinWorks’ subsidiary, KoinP2P, is dealing with a major fraud case resulting in around Rp 365 billion ($23 million) in losses. This scandal has underlined weaknesses in its financial oversight and risk management processes.

The hypergrowth model many start-ups embrace is driven by an obsession with rapid expansion, often at the expense of sound business fundamentals. It is akin to a tree forced to grow quickly using excessive fertilizer, appearing lush but with weak roots, susceptible to being uprooted at the slightest gust of wind.

To achieve rapid growth, start-ups frequently focus on acquiring users through heavy subsidies, attractive employee incentives and aggressive marketing campaigns. Burning through investor money is often considered a justified strategy to demonstrate impressive growth metrics.

Yet, the pursuit of growth has hidden pitfalls. Behind the scenes, key economic indicators such as profitability and revenue sustainability are often in poor shape. Many start-ups rely heavily on financial metrics to attract further investment, even as their business models remain untested and unsustainable.