#17 GKC | 🐓 Pitik: $59M Valuation, $0 Revenue?

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💛 This story is a collaboration with Admond Lee from The Runway Ventures, a weekly newsletter to help you become top 1% founders by learning from startup failures.

🚀 The Rise of Pitik 🇮🇩

Pitik was founded in 2021 by Arief Witjaksono and Rymax Joehana. Arief, with a background in poultry farming (former COO at a traditional poultry farm), and Rymax, with extensive experience in finance (consulting and M&A), aimed to revolutionise Indonesia’s poultry farming industry.

• The Problem — 🐥 Chicken farmers struggle with inefficiencies in farm management, high costs, and volatile demand​.

  • The poultry industry in Indonesia was ripe for disruption with chicken consumption projected to grow by 13.5% to reach 9.3 kilograms per capita by 2029.

  • However, Indonesia’s poultry production lagged behind global standards by 20-30%.

  • This means the demand is massive, and there’s an urgent need for improvement.

• The Solution — 🐓 Pitik is an agritech startup that empowers Indonesian chicken farmers through technology to produce chickens more efficiently.

  • It provides farmers with smart farming applications, farm inputs, and financing solutions to enhance productivity and efficiency.

  • With its farm management system equipped with IoT devices and a smart farming app, it gives farmers real-time insights into their operations, helping them optimise chicken production.

  • Pitik also offers financing to farmers who need capital to expand their operations.

🐥 And guess what? It works. Chicken farmers love Pitik. By October 2022, Pitik had achieved incredible traction:

• 20x revenue growth from just $600K the previous year to an impressive $12.2 million.

• Installed 500 IoT systems across Java Island, which allowed farmers to monitor their flocks more effectively.

Not just that, Pitik’s transparent payment processes differentiate them from competitors as payments are processed within 7 working days, unlike other distributors who delay payments for months.

💰 In May 2022, Pitik raised $14 million in Series A funding including investors like Alpha JWC Ventures and Wavemaker Partners. The game plan? Expand across Indonesia.

🐓🐓🐓 At this point, Pitik was seen as a rising star in Indonesia’s agritech scene. It was probably Indonesia’s largest poultry tech company. It was flying high…

📉 The Fall of Pitik

🍗 Well… Pitik actually started sinking 1 year after raising fund.

The downfall of Pitik began to unravel as quickly as it rose to fame due to a tangled mess of aggressive expansion, over-reliance on investor funding, and failure to adapt to the challenges of Indonesia’s volatile poultry market.

📌 Here’s what happened to Pitik:

• 2021 — Pitik was founded by Arief Witjaksono and Rymax Joehana.

• Oct 2022 — Achieved $12.2M in revenue with 500 IoT systems installed across Java island.

• May 2022 — 💰 Raised $14M in Series A funding from Alpha JWC Ventures and Wavemaker Partners.

  • According to DealStreetAsia, Pitik has so far raised $15.76M at an estimated valuation of $59.5M.

• Feb 2023 — Held back its expansion plans due to economic conditions.

  • Pitik’s plans to expand to Sumatra were put on hold.

  • ⛈️ This was the beginning of the storm…

• Dec 2023 — 💸 Situation became worse. Pitik reported $0 revenue and $6.52M net loss.

  • Failed to raise an additional $10M in convertible notes.

  • Tried to seek funding from existing investors like Alpha JWC Ventures and MDI Ventures — but failed.

• Feb 2024 — 🪓 1st layoff → Laid off more than half of its employees (employed around 250 staff members back then) to stay afloat.

  • 2nd layoff → The entire tech department was dismissed on 1st April 2024.

  • 🤯 Management reportedly decided to revert to traditional methods without tech support (agritech → agri ??)

  • Amidst these layoffs, employees reported that severance pay was delayed, and one of the co-founders was allegedly vacationing in Australia, fuelling concerns about management’s commitment to the company​.

• Apr 2024 — ⚠️ Operations ceased and the company’s website became inaccessible.

  • Social media accounts went silent after March 2024.

  • Their last Instagram post on 31 March 2024 featured 2 distressed comments from former employees seeking clarity on severance pay (no reply from Pitik yet).

• Jul 2024 — ⚰️ Pitik officially died after the confirmation from DealStreetAsia.

🐓 Pitik’s downfall is a classic case of over-expansion and over-reliance on external funding. Their aggressive hiring and expansion, fuelled by investor money, left them vulnerable when the market conditions shifted.

🍗 In the end, they could not adapt quickly enough, leading to layoffs, lost investor confidence, and the eventual shutdown of operations.

Want to learn more about Pitik’s downfall?

• Pitik dikabarkan lakukan PHK

• Indonesian chicken startup’s 20x revenue jump sees it take off

• Indonesian poultry startup Pitik said to have laid off more than 50% staff

• Indonesian poultry startup Pitik said to have ceased operations

⚠️ 2 Mistakes

Mistake 1: Over-reliance on investor funding with aggressive expansion

Word on the street said Pitik was overhiring…

Pitik raised a whopping $14 million in Series A funding in May 2022, which fuelled their aggressive expansion plans across Indonesia. However, they became overly dependent on this influx of cash without establishing a sustainable revenue model.

When market conditions shifted, they found themselves unable to adapt. By 2023, when they attempted to expand to Sumatra, they faced economic challenges that forced them to hit the brakes. Besides, words on the street said Pitik was overhiring. They hired too many people with high salaries beyond the normal market rate.

📈📉 In short, Pitik grew rapidly after the pandemic and raised tons of cash when the interest rate was low (easy money). As they expected to grow even more quickly, they hired more people to scale faster. And when shit happened, they were burning cash and bloated with headcount that ultimately led to massive layoffs.

Mistake 2: Failed to adapt to market shifts

In an interview with Tech in Asia, Rymax said that one of the biggest challenges in Indonesia’s poultry industry is demand volatility.

Typically, demand volatility is due to:

🧑🏻‍🌾 Internal Factors:

• The demand fluctuates as many Indonesians still consider chicken a luxury food.

• When harvest time comes, prices fall far below contract prices agreed between most startups and their farmers.

🔥 External Factors

• Price hikes in chicken feed due to the ongoing Ukraine crisis have pressured margins in this industry, as any rise in chicken meat prices hurts demand.

• Besides, Arief said that the poultry industry in Indonesia was hit by the fuel price hike in October 2022, causing the demand to be lower at that time.

Yet Pitik was unprepared for the economic downturn that hit in early 2023. Their business model relied heavily on predictable growth, but when market conditions shifted, they couldn't pivot quickly enough to stay afloat.

By the time they realised that, it was too late.

🧠 3 Lessons Learned

Lesson 1: Be optimistic long term, and pessimistic short term

Being optimistic about the future is important to maintain a long-term vision, but it’s also important to be aware of the short-term realities that could derail your plans. Always think a few steps ahead and foresee potential disasters in the future.

In the context of Pitik, the founders raised significant funds and expanded aggressively without fully preparing for potential market fluctuations or operational hurdles. Expansion looked good for the short term, but bad for the long term when shit happened.

🌟 Key Takeaways:

• ☔️ Have a short-term financial buffer

  • Always maintain at least 6-12 months of operating expenses in reserve, even during high-growth phases.

  • This gives you breathing room if market conditions change or if funding dries up.

• ✍🏻 Conduct scenario planning

  • Regularly conduct “what-if” scenarios where you assess what could go wrong over the next 6 months — whether it’s losing a key client, a dip in market demand, or rising costs.

  • Use these scenarios to adjust short-term operations and strategies.

• 📈 Incremental and sustainable growth

  • Instead of scaling rapidly across multiple regions or markets, grow incrementally.

  • Focus on making your core market or product offering bulletproof before venturing into new territories.

Lesson 2: Build a self-sustaining business (not just a fundraising machine)

While investor capital can accelerate growth, relying too heavily on external funding is risky. Pitik’s aggressive expansion, hiring spree, and reliance on investor money left them in a vulnerable position when they couldn’t secure more funding.

🌟 Key Takeaways:

• 🤑 Focus on profitability

  • Prioritise a path to profitability early, even if it means slower growth.

  • Instead of using investor capital as a crutch, use it to supplement and amplify revenue generated by the business.

• 🔥 Control burn rate

  • Closely monitor and control your burn rate, especially during periods of high growth.

  • Make sure your company can survive lean times when additional funding may not be available.

• 💵 Measure unit economics

  • Track key metrics like customer acquisition cost (CAC) and lifetime value (LTV) to ensure that you’re making money on each sale and that your business model scales efficiently.

  • The industry standard is that your LTV should be at least 3 times your CAC – otherwise, you're probably spending too much to get customers.

  • Here are the steps to calculate unit economics for your business.

Lesson 3: Adapt quickly to market shifts

Pitik’s failure to adapt to Indonesia’s volatile poultry market was a major cause of its downfall. This shows the importance of being nimble and proactive when market conditions shift.

If you move slowly you’ll die. It’s brutal, but that’s the reality.

🌟 Key Takeaways:

• ⚡️ Be agile and responsive

  • In industries with fluctuating demand or external pressures, you need to anticipate and prepare for downturns.

  • Have contingency plans in place, such as cost-cutting measures or alternative revenue streams, to ensure survival when the market changes.

•  👀 Monitor market trends closely

  • Regularly analyse market trends and customer behaviour.

  • This helps you identify early warning signs of potential issues, enabling you to act quickly.

  • In my opinion, the best way to “monitor” market trends is to keep talking with your customers to know their problems better than they do, understand their behaviours, and identify potential gaps that you can solve.

Hope this is helpful! :)

Feel free to reach out via LinkedIn or email if you have more questions.

P.S. Stay tuned to our next Impact Learning Circle by the end of each month!

P.P.S. Here’s the video recording for those who interested in our last session, “How to Manage Investor Relations Pre and Post Investment”.

❤️ More failed startup stories to learn from …

🌾 TaniHub - From farm-to-table to farm-to-failure, a $82.5M mistake to learn from for startup founders! (link)

🐙 Octopus - $5M valuation gone, waste management startup riddled with fraud and sexual harassment (link)

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