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Southeast Asia’s online-to-offline (O2O) space is hot. Platforms linking online customers with offline services are now part and parcel of daily life, from the likes of well-backed Go-Jek and Grab, to Fave – one of the region’s most exciting new O2O companies.
Fave started out in 2015 as a fitness sharing platform called KFit before stepping into multi-category local commerce with the launch of Fave. The company is connecting millions of customers with thousands of local service businesses including restaurants, cafes, salons, spas, hotels, gyms and more.
Founder and CEO, Joel Neoh, talked to us about their journey and how they have found working with Kindrik Partners.
the Fave story
Fave’s founders Joel Neoh and Yeoh Chen Chow are no strangers to O2O local commerce. Joel started Groupsmore, a daily deals site that was acquired by Groupon in 2011. Joel went on to head up Groupon’s business in APAC, alongside Chen Chow, who led Groupon’s regional operations.
Spotting an opportunity to disrupt the fitness business in APAC, Joel left Groupon to start KFit, the region’s first-ever fitness sharing platform, touted as an Uber style platform for gyms and fitness studios.
After a year of tremendous growth and raising a US$12m series A financing, the company set its sights beyond the fitness space and launched its multi-category platform. It went on to acquire Groupon’s businesses in Indonesia, Malaysia and Singapore.
According to Joel, the pivot to a broader O2O platform was a natural progression for the company, as multi-category local commerce presented a much larger business opportunity. Joel observed that apps with high-frequency use cases tend to succeed in a competitive landscape. Fave was launched with a focus on the food and drink category – a major part of life in Southeast Asia.
Whilst deals businesses have been around for a while, Fave is focused on merchant-first innovation via deeper product development and data science. All with a view to enhancing the customer experience with daily deals and rewards. Joel notes that the traditional deals model only brings in new customers to offline businesses and stops there. To truly add value to local businesses, Fave wants to create an ecosystem where businesses can acquire, retain and re-target customers in the online world.
working with kindrik partners
Lee Bagshaw started working with Joel from the set-up of what was the KFit business in 2015. As well as advising Fave on its VC financing rounds, Lee and Chris Wilson have helped Fave on the three M&A deals relating to the acquisitions of Groupon’s Indonesian, Malaysian and Singaporean businesses.
Joel says that Kindrik Partners provided insightful and comprehensive legal advice that played a key role in helping Fave reach some major milestones. He specifically notes Kindrik Partners team’s considerable expertise in VC and tech M&A, which helped the company efficiently navigate the documentation negotiating during its funding rounds and the Groupon transactions.
The future of O2O commerce in Asia looks bright in Southeast Asia as new generation of digitally savvy consumers come online. Kindrik Partners looks forward to helping Fave continue its rapid journey to become a leading O2O player in the region.
Explore Fave.
[Note: The firm’s name was changed to Kindrik Partners in July 2020 and references to the firm’s previous name have been updated.]
about X0PA.AI
Singapore-based X0PA.AI is a SaaS talent hiring and recruitment platform that uses AI and data science to match applicants to roles, as well as predict issues such as attrition, loyalty and performance.
CEO Nina Suri has scaled the team over three years to twenty-five employees, located across Singapore, India, and the UK, with plans to start in the UAE.
X0PA recently implemented an employee share option plan (ESOP) and Nina shared her experience.
why implement an ESOP
“Having had over twenty years of entrepreneurship, I knew I wanted to build a culture of ownership and inclusivity, and ensure that our team felt involved and satisfied”, says Nina.
“An ESOP is one way that our employees can feel like they’re a part of growing something – that our success is their success”, says Nina.
putting the ESOP in place
The company originally drafted some ESOP paperwork when they first incorporated, but as they grew, X0PA’s company secretary recommended that it be replaced with something more robust and market standard.
“We learned that the ESOP needed major amendments in order to be more in line with what is typically seen in the market in Singapore, and reflect what investors are likely to expect”, said Nina.
Nina reached out Kindrik Partners after the firm was recommended to them by their company secretary. XOPA worked with Sarah Yen in Kindrik Partners’s Singapore office, who was able to create the right framework for the startup.
“We were looking for a firm who advised a lot of startups in Southeast Asia. Sarah took the time to explain and really make sure that we understood the mechanics of how the ESOP operated. This made it easier for us to communicate that to our employees.”
“It’s important when putting together an ESOP to consider several different factors”, says Sarah. “What works for the company, what is standard in the market to attract quality talent, and what your investors and most importantly a future potential buyer might expect to see.”
about the ESOP
A X0PA employee is invited to participate in the ESOP once they have been with the team for twelve months, and if they’re considered a ‘high performer’.
“At the moment we have a rockstar team, and 100% of the people who we have hired have been invited to join”, says Nina.
“In my previous venture I also felt strongly about letting my employees be directly involved – but I gave them straight equity. It was a more traditional business with a partnership model.”
“This time, an ESOP seemed more appropriate – it was a more scalable model and more appropriate for the type of company we wanted to build.”
X0PA’s management team put aside 10% of the company’s equity towards the ESOP, with the expectation that this allocation would last at least five years. They set the exercise price by the valuation of the company at the time of allocation.
Allocations were not standardised per employee but were allocated according to the contribution and importance’ of the employee’s role in the organisation, according to Nina.
The X0PA team also included an acceleration clause in the ESOP – if the company exits before the vesting period, their employee’s options fully vest.
advice for other founders
“We weren’t familiar with the nitty gritty of putting in place an ESOP – it was a new experience for us”, says Nina.
“My advice would be to go with a lawyer who is experienced with startups and ESOPs, so you don’t have to go through the complications that we went through as we started to scale”, she says.
Nina also stressed that it was important to familiarise yourself with the mechanics of your startup’s ESOP so that management could communicate with staff effectively about how it worked.
Nina also had some tips about how to communicate with a team when implementing an ESOP.
“We kept it very simple for our staff. We broke down into the main points – what is the ESOP, what does it mean for them, what do they get, how much do they get. We didn’t want to get them worked up about the legal language.”
Nina also made sure that she sent each team member an individual email after the scheme was introduced to the company, confirming what the ESOP meant, how that individual’s options vested, and what would happen to their options in different scenarios.
“You need to make sure your team understands what the ESOP is. If you’re giving them something, and they don’t appreciate it, and then what’s the point? It’s best to spell it out and make sure that everyone understands – then you’re all working towards a common purpose.”
what’s next for X0PA?
“We’re starting to move from startup to scale up now. We’re experiencing massive acceleration and growth, with several Government departments, enterprises, polytechnics and universities as clients”, says Nina.
“Our product is ready, and strong, and we’re ready to grow and help our clients with their digital transformation. We are focused on growth both from increasing market share in the markets we operate in as well as market expansion point of view.”
[Note: The firm’s name was changed to Kindrik Partners in July 2020 and references to the firm’s previous name have been updated.]
Explore our other case studies here, or access our full library of ESOP guides and templates via our resources section.
Singapore based and venture backed food technology startup Grain has fed thousands of happy customers delicious and wholesome meals, delivered in a few simple clicks.
Yi Sung Yong, Co-founder and Head of Product, recently talked to Kindrik Partners about his company and how he has found working with Kindrik Partners on their first capital raise.
the grain story
With backgrounds in management consulting and previous experience in IT startups, the 4 founders of Grain (Sung, Rifeng Gao, Isaac Tam and Ernest Sim, all recently named in the Forbes Asia 30 under 30 list) wanted to start a new and ambitious business in 2014, so they settled on changing the future of food delivery.
Since its recent beginnings, Grain is now described as a restaurant in the cloud and Uber for food in Singapore. It provides a convenient web and app delivery service for affordable and tasty food that is also good for you, offering 4 different meals each day which rotate weekly. Customers in the busy Singapore areas don’t pay for delivery and have no minimum spend.
After securing significant Series A funding, they now have major plans to offer more meals, improve operational efficiency by adding mobile distribution hub vans, increase headcount namely on the developer side and eventually to expand the business into China, including Hong Kong, and also Indonesia.
challenges
Sung says that given the diversity of food and size of the global industry, competition in the food market is building but there is still plenty of opportunity in the market. Whilst food delivery giant Food Panda largely dominates the South East Asian food delivery scene, acting as a middleman between restaurants and hungry consumers, Grain differentiates itself by offering a complete full stack food service. The entire supply chain is produced and controlled by them from one Singapore site, from the website and app business to cooking and delivery.
He also notes that whilst establishing a business and raising funds can be stressful, post-funding, hiring, onboarding and ongoing people management is their biggest challenge as they continue to grow.
working with kindrik partners
Sung’s previous experience of lawyers was that they were slow moving and traditional type lawyers that did not understand the pace of startup life.
For their first capital raise, Grain were referred to Kindrik Partners partner Lee Bagshaw through 500 Startups managing partner Khailee Ng, along with another Singaporean law firm. The referral happened on a Thursday, Lee got in touch immediately via WhatsApp and the term sheet was ready to go on the Friday. Grain did not receive a response from the other firm until the following Monday at which point the deal was well and truly on its way.
Sung says that it was Kindrik Partners’s speed and execution, WhatsApp versus long emails, moving like a startup that impressed him the most.
Kindrik Partners went on to assist Grain implement several convertible notes to secure short term bridge financing and raise of SG$2,500,000 for their Series A funding round, including investment from NSI Ventures, 500 Startups, Digital Media Partners and Ivan Lee (who founded and sold Thai Express in Singapore).
In addition to maintaining the startup pace and charging extremely reasonable legal fees, Sung really appreciated that Kindrik Partners drafted the documents from a founder’s versus lawyer’s perspective, ensuring the documents reflected Grain’s commercial motives without overkill on the legal jargon; Lee just got everything we thought we required and also pointed out the things we didn’t know we needed.
summing up
Given Grain have already delivered over 100,000 meals to ravenous Singapore residents alone, it’s looking likely that this startup will continue to eat up the market. Kindrik Partners will certainly be ready to move at speed for what seems like an inevitable growth and success.
Explore Grain.
[Note: The firm’s name was changed to Kindrik Partners in July 2020 and references to the firm’s previous name have been updated.]
