Fave’s investors are getting all their money back, says CEO

Singapore-based startup Fave was recently acquired by Indian merchant platform Pine Labs for over US$45 million in a cash-and-stock deal. Congratulatory notes on social media promptly followed once the deal was announced.

But is the deal a win for Fave, its investors, founders, and employees, considering that the startup took a significant cut to its valuation? We dive deeper to find out.

Fave founder Joel Neoh / Photo credit: Fave

As per VentureCap Insights data, Fave had a “total equity funding” of US$46.8 million from prominent investors such as Sequoia Capital India, 500 Startups, and Susquehanna International Group (SIG). This amount also included US$4 million from Pine Labs.

However, Fave co-founder and CEO Joel Neoh tells Tech in Asia that the total money put in by investors was actually between US$30 million and US$35 million. The remaining US$12 million or so mentioned by VentureCap included shares from non-cash acquisitions of a few companies, he says.

This refers to Fave’s acquisition of Groupon’s businesses in Singapore, Malaysia, and Indonesia between 2016 and 2017.

While he didn’t disclose how much the company’s investors have made out of the sale, Neoh says that they are getting all cash in this deal, and that they’ve recovered their initial capital.

He further explains that it is hard to give out a specific number as early investors would have received more returns from their initial investment than those that have invested later on in the company.

Fave’s investors declined to comment for this article.

To be clear, this deal certainly isn’t the slam dunk that Fave’s investors hoped for. That said, it seems founders and key employees aren’t leaving empty-handed: they’re getting a mix of cash and stocks from the deal, with Neoh himself getting a 50-50 split, he says. Key employees, meanwhile, are also getting a new pool of stock options. He did not reveal specifics beyond that, however.

If investors sought only to recoup their initial investment, this could leave founders and key employees with at least US$3 million in cash split between them (taking out the US$6 million worth of shares attributed to Groupon). Of course, Fave’s investors may very well have asked for a bigger share.

Photo credits: Fave

The founder further discloses that the company is far from being in a distressed situation.

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