Two Singapore-based startups led by tech alumni raise US$76m
Singapore
TWO Singapore-based startups founded by former Fave, Carousell and foodpanda executives on Thursday separately announced a combined US$76 million in seed funding and debt to acquire e-commerce brands.
Una Brands bagged US$40 million, comprising majority debt financing from an international debt fund, in a seed round led by Kingsway Capital.
Maximilian Bittner, the founder of Lazada and CEO of e-commerce platform Vestiaire Collective, was an investor in the round. Other backers include 500 Startups, 468 Capital, Presight Capital and Global Founders Capital.
E-commerce aggregator Rainforest launched with US$36 million to buy and grow Asia-based brands that sell on Amazon.
The round comprised US$6.5 million in equity financing led by Nordstar, with participation from Insignia Ventures Partners. A US$30 million committed debt facility was raised from a US-based debt fund.
The debt is not convertible but involves a single-digit percentage of warrants attached. Covenants include the requirement to acquire profitable brands with sufficient track record, and that Rainforest maintains a healthy interest coverage ratio.
The startup was co-founded by JJ Chai, who formerly led growth and strategy for Carousell and was Airbnb's South-east Asia managing director. Chief financial officer (CFO) Jason Tan was former CFO at fintech companies Fave and Ovo.
Una Brands was co-founded last year by Kiren Tanna, the former CEO of Rocket Internet Asia and co-founder of foodpanda and budget hotel chain ZEN Rooms.
Both startups have already made acquisitions in the region. Mr Tanna told The Business Times that the deal values for the acquisitions were in the range of US$600,000 to US$3 million. All transactions were funded through the seed round.
Una Brands will focus on acquiring companies with strong independent branding and which have annual revenue of between US$300,000 and US$20 million.
The company sees enormous potential for e-commerce growth in the region, with an estimated more than 10 million third-party sellers on platforms in the Asia-Pacific.
"When a business gets beyond a certain size, the business owners find that they do not have the time to do what they love as they get bogged down in the operational process," said Mr Tanna. "They also often do not have the capital or expertise to take the brand to where they want it to go. By partnering with Una Brands, brands can turbocharge their growth into new markets and channels."
He said the company can complete the end-to-end transaction process for acquisitions in under five weeks. The deal structure includes continued engagement with the seller over an extended period of time after the acquisition, where the seller also shares upside from the growth of their brand.
Rainforest has acquired three brands. It acquired the first two brands in the home/beddings category for about US$1.1 million from a Singaporean entrepreneur. The third brand is in the personal health category for about US$800,000.
The final deal value depends on the performance of the brands post-acquisition as there is an earn-out component, said Mr Chai. The initial acquisitions were financed from the startup's balance sheet, but will be refinanced with debt. Subsequent acquisitions will be mostly financed via debt. "At the moment we are focused on brands that sell predominantly on Amazon and have a strong brand position on the Amazon platform in lifestyle categories (home, pets, personal care). We don't do highly seasonal, fast-evolving product categories like fashion and electronics," Mr Chai said.
Amazon's third-party gross merchandise value was US$300 billion in 2020, growing at 50 per cent year on year with over 30 per cent of the top third-party sellers based out of Asia.
