Why this startup failed

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Hello readers,

With pajamas being the new jeans in this work-from-home lifestyle, it’s no surprise that the fashion industry has been crippled — hundreds of physical stores from known brands like H&M and Zara have already closed down. Fashion ecommerce startups like Sorabel, which was growing its revenue by 2.4x and was on the path to profitability last year, weren’t spared either.

Read the full story of the shutdown behind Sorabel here or scroll down for a summary.

Here are your quick bytes for today:

1️⃣ Tesla continues its search for employees in Singapore – from a country manager to a “Tesla advisor” who will be tasked with supporting customers through their purchase journey. Just last week, the US-based company was hiring staff in the city-state like service technicians and parts advisers.

2️⃣ TikTok might get banned in the US, and its investors, including Sequoia Capital and General Atlantic, are not having it. So the investment firms stepped up with a proposal: Transfer the majority ownership of TikTok to them at a valuated takeover bid of US$50 billion. That’s 50x of TikTok’s 2020 projected revenue of about US$1 billion. To put that in perspective, the US$33 billion market cap of Snap Inc. is valued at 15x of its projected 2020 revenue.

3️⃣ In Thailand, Grab has a new competitor: ride-hailing firm Bolt. The Estonian company is backed by China’s Didi Chuxing – which is also a shareholder in Grab – and is a popular ride-hailing system in Eastern Europe and Africa.

4️⃣ The Philippines has proposed a bill to tax tech giants like Facebook, Alphabet’s Google and Youtube, and Netflix. This followed similar moves in India, Indonesia, and Thailand.

5️⃣ TikTok is facing Facebook head on — Kevin Mayer, the CEO of TikTok, has written a blog post telling Facebook to “bring it on” with its copycat product, Reels, calling out the social media giant as a platform “disguised as patriotism.” What will we see next from this newly appointed CEO?

6️⃣ The founder of hospitality startup Oyo has launched an early-stage VC fund which will focus on growth-stage startups in consumer, technology, and leisure infrastructure sectors. This comes as Oyo conducted furloughs and layoffs across the globe.

Going out of fashion

Indonesian fashion ecommerce startup Sorabel was seeing healthy growth in early 2019. It was even on a path to profitability as its CEO had mentioned. But now, it’s under administration and is looking for a new buyer. How did it get to this point?

• At the drop of a hat, Covid-19 ended its series C round, which the startup was “very close” to wrapping up with some potential China-based investors. The round would have given Sorabel US$30 million in extra capital.
• The cost of being “too lean”: Sorabel never had more than six months of runway since 2016. Without the cash cushion, the startup wasn’t able to pivot as quickly as other players like Zilingo, which began selling personal protective equipment during the pandemic.
• A hole in the pocket: With Sorabel’s main customers – Indonesia’s middle and lower middle class – reeling from layoffs and furloughs due to the pandemic, it’s website visits had plunged from a peak of over 1.1 million visits in March 2020 to 410,000 by April.

Cashing in your chips