Lessons from the Fave deal

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Hi readers,

Lately, I’ve been hooked on the show Silicon Valley. Based on the fictional journey of four self-sabotaging tech entrepreneurs working in Silicon Valley in the US, it portrays their attempts at scaling their startup Pied Piper into a tech giant by creating a new internet.

For those of you who haven’t seen the show, spoiler alert: In the end, despite numerous attempts by Google- or Facebook-reminiscent tech giant Hooli to acquire Pied Piper, the startup ultimately ends up acquiring the former.

While the show presented a story about a protagonist winning over the antagonist, in reality, an acquisition deal is not only about the acquirer and the acquired. It’s also about the latter’s investors, founding team, and employees.

Case in point: the recent acquisition deal of Singapore-based fintech company Fave by Indian firm Pine Labs. With the US$45 million acquisition amount coming with a significant drop from Fave’s 2018 valuation of US$73.8 million, it got me thinking whether the deal was a win, especially for the company’s investors?

Fave co-founder and CEO Joel Neoh told me that investors had recovered their initial investment and will all be leaving with cash.

While that seems good, this deal certainly isn’t the slam dunk that Fave’s investors had hoped for.

What was more interesting about it was that Fave’s founders and key employees aren’t leaving empty-handed either, since they’re getting a mix of cash and Pine Labs stocks from the deal.

And with the Indian startup looking to go public in the US by March 2022, these stock options could be worth a lot more pretty soon.

— Collin Furtado, news editor at Tech in Asia

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