The company's financing history is opaque and it is burning millions per month
Honestbee, the online grocery delivery service in Asia, is nearly out of money and trying to offload its business.
The company has held early conversations with a number of suitors in Asia, including ride-hailing giants Grab and Go-Jek, over the potential acquisition of part, or all, of its business, according to two industry sources with knowledge of the talks.
Founded in 2015, Honestbee works with supermarkets and retailers to deliver goods to customers using its store pickers, delivery fleet and mobile apps. The company is based in Singapore and operates in eight markets across Asia: Hong Kong, Singapore, Taiwan, Thailand, Indonesia, Malaysia, Philippines and Japan. In some markets it has expanded to food deliveries and, in Singapore, it operates an Alibaba-style online/offline store called Habitat.
The company makes its money by taking a cut of transactions from consumer transactions, while it also monetizes delivery services separately.
Despite looking impressive from the outside, the company is currently in crisis mode due to a cash crunch — there’s a lot happening right now.
From talking to several former and current staff, TechCrunch has come to learn that Honestbee is laying off employees, it has a range of suppliers who are owed money, it has “paused” its business in the Philippines, it has closed R&D centers in Vietnam and India, it isn’t going to make payroll in some markets and a range of executives have quit the firm in recent months.
Honestbee’s Habitat store includes a cashless and automated checkout experience, among other online-offline services
The issue is that the company is running out of money thanks to a business model with tight margins that’s largely unproven in Asia Pacific.
One source told TechCrunch that the company doesn’t currently have the funds to pay its staff this month. A source inside the company confirmed that Honestbee has told Singapore-based staff that they won’t be paid in time, but it isn’t clear about employees based in other markets. Previously, staff have been paid inconsistently — with late salary payments sent as bank transfers happening twice this year, according to the source.
One reason that the Philippines business has closed temporarily — as Tech In Asia first reported this week — is that it is out money, and waiting on Honestbee HQ in Singapore to provide further capital. Already, the saga has proven to be too much for Honestbee’s head of the Philippines — Crystal Gonzalez — who has quit the company, according to a source within Honestbee Philippines.
Gonzalez helped build Viber’s business in the Philippines, where it is a top messaging player, and she was previously with Yahoo before launching Honestbee. She is said to have grown frustrated at a lack of funds when the Philippines is the company’s best-performing market on paper.
Indeed, the situation is so dire that suppliers and partners have been paid late, or left unpaid entirely, in the Philippines and other markets. Honestbee takes payment for grocery deliveries, after which it is supposed to provide the transaction, minus its cut, to its supermarket partners. But it has been slow to pay vendors, with two in Singapore — FairPrice and U Stars — cutting ties with the startup.
Unclear financing
On the subject of financials, Honestbee looks to be toward the end of its runway.
The company has always taken a fairly secretive line on its financing. On launch, it announced a $15 million Series A investment from Formation8, a firm which included Honestbee CEO Joel Sng as a partner, but it has said nothing more since. (It appears that Honestbee stake has transferred to the firm’s successor, Formation Group, according to its website.) Tech In Asia dug up filings last year that show it has raised a further $46 million from more Korean investors, but the startup declined to comment on its financing when contacted by TechCrunch.
It looks like that capital is nearly gone, at least based on what has been declared.
Internal numbers for Honestbee in December 2018, seen by TechCrunch, show that it lost nearly $6.5 million, with around $2.5 million in net revenue for the month. GMV — the total amount of transactions on its platform before deductions to partners — reached nearly $12.5 million in December, but costs — chiefly discounts to lure new customers and online marketing spend — dragged the company down. A former employee said that monthly retention is often single-digit percent in some markets because of the “outrageous” use of coupons to hit short-term revenue goals.
That internal data showed that the Philippines business accounted for around 40 percent of Honestbee’s overall GMV, which backs up Gonzalez’ apparent frustration at a lack of investment. That said, the Philippines unit remains some way from profitability, with a net loss of more than $1 million in December.
High burn rate
Three markets — Singapore, the Philippines and Taiwan — accounted for more than 80 percent of GMV and net income, making it unclear why Honestbee continues to operate in other countries, including the expensive Japanese market, when its funding level is perilously low.
More pertinently, operating at that burn rate would give Honestbee less than 10 months of runway if it used the $61 million capital float that it is known to have raised. That suggests that the company has raised more money; however, none of the sources who spoke to TechCrunch were able to verify whether there has been additional fundraising.
Current and former employees explained that Honestbee doesn’t have a CFO and that all high-level decisions, and particularly those around budgets and spending, are managed by CEO Sng and his right-hand man, Roger Koh, whose LinkedIn lists his current job as a principal with Formation 8.
Filings in Singapore indicate that Honestbee has $55.9 million in assets through two registered companies. A common shareholder across the two is Brian Koo, a member of the LG family who founded the Formation 8 fund, and the Formation Fund which launched after Formation 8 was shuttered.
Full story at https://techcrunch.com/2019/04/25/time-maybee-running-out-for-honestbee/
Honestbee ex-staff, trade creditors won’t get any of the S$320 million owed
There is no money left to pay former staff, vendors and other unsecured creditors of failed grocery delivery startup Honestbee, who are owed S$319.9 million, The Business Times (BT) has learnt.
Honestbee’s sole secured creditor, Formation Group, has realised about S$700,000 from the startup’s assets, BT understands. The sum falls far short of the US$4 million worth of debentures that Formation Group held over Honestbee’s assets.
According to documents seen by BT, Honestbee’s liquidator BDO only managed to recover about S$720 from excess payments for “electrical supplies”.
BT understands several former employees of Honestbee are still owed salaries. One who is owed about S$8,000 told BT: “(I) would have liked the Ministry of Manpower to take harsher action on the company and its directors.”
More at https://www.businesstimes.com.sg/startups-tech/honestbee-ex-staff-trade-creditors-wont-get-any-s320-million-owed
Honestbee faces possible liquidation
https://www.straitstimes.com/business/companies-markets/honestbee-faces-possible-liquidation
Honestbee starts legal action against ex-CEO and ex-director
Amid mass layoffs and the shutdown of its supermarket, Honestbee announced that it has sought legal advice and sent letters of demand to ex-CEO Joel Sng and ex-director Jeffrey Wong over alleged breach of fiduciary duties.
The company has been investigating transactions that Sng entered into when he and Wong were still at Honestbee.
In a press release, the startup said it has “discovered numerous irregularities that call for further investigation.” The said probe and questionable transactions were first reported by Tech in Asia.
More at https://www.techinasia.com/honestbee-alleges-exceo-exdirector-breached-fiduciary-duties
Leaked Habitat CCTV Footage Reveals Execs' Alleged Looting - What Else Is Going On?
In light of the COVID-19 virus outbreak in Singapore, honestbee announced last month a temporary suspension of operations for its habitat supermarket at Pasir Panjang due to a “significant reduction in walk-in traffic.’
It said that it will close habitat until February 23, but later extended it to February 29.
Despite the closure, honestbee said that its online grocery delivery services will still remain operational. It added that while habitat remains closed, the company will take the opportunity to improve its technology infrastructure to enhance customer experience.
Separately, Kenneth Forbes, vice-president of habitat, resigned from the company in the last week of February. He was previously the general manager of habitat, and declined to comment on his reasons for departure.
Habitat Furniture Found At Honestbee CEO’s House
On March 2, Business Times reported that honestbee had cleared out its furniture and fixtures from habitat.
Honestbee’s lease is supposed to run until September this year, so reasons for the premature closure was unclear. However, what’s clear is that landlord LHN Space Resources is unwilling to extend the lease.
According to BT, honestbee has S$1.97 million worth of furniture and fixtures, S$3.87 million worth of store equipment and over S$84,000 in office equipment as of end-January.
It also reported that the furniture was transported to a warehouse in Genting Lane, which is a new space rented by honestbee from March 1.
However, Vulcan Post received an anonymous tip-off that furniture from habitat’s private dining room was transported to honestbee CEO Ong Lay Ann’s house instead.
These furniture were piled on a lorry, which was found parked in the driveway of his two-storey corner terrace. (Editor’s note: The house and road sign have been blurred out to protect his privacy)
So how did the furniture found its way to the CEO’s home?
An honestbee spokesperson told Vulcan Post that during the office move out of Delta House, surplus furniture from its headquarters had been shifted to habitat.
“As part of the move, the company was optimising the space and had found excess inventory, furniture, flatware and cutleries. These excesses were made available for employees to purchase.”
Honestbee Knee-Deep In Debt, But Its Goods Are Taken For Free?
Multiple sources close to habitat also revealed to Vulcan Post that honestbee management and executives were spotted freely taking goods belonging to habitat, such as groceries, cutleries and furniture, for their personal taking.
Based on their understanding, these key executives did not pay for any of these items.
Later on February 11, honestbee’s HR department sent out an email to all employees informing them of an “internal sales event”.
According to the e-mail, the Grocery team conducted a “staff sale” on February 14 to “reduce wastage of perishables and items with short shelf-life during the temporary suspension period.”
Employees could also purchase “excess equipment and office furniture” from the old office at Delta House such as laptops, tablets and office chairs.
On the other hand, a CCTV footage at habitat leaked to Vulcan Post showed Ong and wife helping themselves at the beef counter, personally cutting and packing meat. Anthony Ung, honestbee’s vice-president of corporate strategy, was also present.
The anonymous source shared that they had purchased the premium-grade beef at “way under cost value”.
In response to this, an honestbee spokesperson said that “pricier, specialty items such as larger cuts of meat were left behind (from the staff sale).”
“Only after the conclusion of the staff sale was it then purchased by members of the executive team. Remaining perishables were donated to Lion’s Home, the National Arthritis Foundation, and construction worksites to support foreign workers.”
Later on February 22 however, the couple was seen returning to habitat together with their family. The footage showed that they were leisurely browsing and picking out items from shelves.
The group was then seen pushing the trolley full of goods to the carpark and unloading them into a car.
According to the anonymous source, there were no records of purchases made on that date, which begs the question: did they pocket these groceries for free?
Honestbee did not share further comments on this.
A lot more at https://vulcanpost.com/691661/leaked-habitat-cctv-reveals-execs-alleged-looting/
Honestbee gets boost from key investor, makes offer to creditors
Struggling retail start-up Honestbee has secured further support from its key investor Brian Koo and his associates, and it is proposing a scheme that would see creditors paid in a mix of cash and equity.
The Straits Times understands that the start-up signed an investment agreement with FLK Holdings, a company incorporated in the United States, earlier this month.
FLK Holdings shareholders are Mr Koo, Honestbee's former chairman, as well as Formation Group Fund I and Formation Group (Cayman) Fund I, which are also associated with Mr Koo.
FLK Holdings is reportedly the only company that expressed firm interest in investing in the start-up and working on a scheme of arrangement to creditors, despite Honestbee seeking out several investors.
The US-based firm will incorporate a private entity in Singapore to which Honestbee's business, assets and liabilities will be transferred.
This Singapore entity will issue shares to Honestbee's scheme of arrangement creditors - this excludes those of its creditors owed $500 or less, who number around 1,000.
Full story at https://www.straitstimes.com/business/companies-markets/honestbee-gets-boost-from-key-investor-makes-offer-to-creditors
In addition........
https://www.straitstimes.com/business/companies-markets/honestbee-owes-ex-employees-almost-1m-in-unpaid-salary-brian-koo-resigns
Honestbee burnt through US$6.3m a month in H1 2019!!!!
https://www.businesstimes.com.sg/garage/honestbee-burnt-through-us63m-a-month-in-h1-2019
The grocery startup, which is seeking court protection from its creditors, suffered an unaudited net loss of US$98.7 million for its full financial year in 2018.
honestbee is understood to be in a negative equity position of US$211.4 million as of end-June, with US$235.8 million in liabilities due within a year. Its tangible assets included US$14.4 million in property, plant and equipment and about US$653,000 in cash. The company has raised at least US$202 million in debt financing since its 2015 founding.
Honestbee is asking the court for a six-month moratorium on its debt. Chief executive Ong Lay Ann previously told BT that he plans to restructure the company via a debt-to-equity swap.
Grab will welcome these 38 losers with open arms.
Honestbee lays off dozens of employees in Singapore!!!!!!!
SINGAPORE — Local start-up Honestbee said on Friday (Aug 2) that it was laying off 38 staff in its Singapore offices as part of a restructuring exercise.
This figure makes up approximately 10 per cent of its workforce in Singapore, said Honestbee.
It has also applied to the High Court to start a supervised restructuring process and to seek a moratorium against enforcement actions and legal proceedings.
“As a result of our reduced operations globally, the company has made a decision to right-size the company in order to cut costs and streamline its businesses,” said an Honestbee spokesperson in an email response to queries from TODAY.
A total of 38 employees, mainly in operations and engineering roles, will be affected, and they will be asked to serve out their notice period as per their contracts, the company added.
The spokesperson said that there is no severance package for the retrenched employees, but “we are honouring the salaries as per the notice period stated in each employee’s contract”.
“Their departures are not reflective of their performance, but rather due to the restructuring of our business operations in Singapore,” added the spokesperson.
The move, said Honestbee, was necessary to ensure the right structure for “long-term stability and success”.
Read more at https://www.todayonline.com/singapore/honestbee-lays-off-dozens-employees-singapore
Second that, I doubt he would make an iota of difference as far as pulling the company out of its current spectacular FUBAR is concerned.
Hmm this Ong fella doesn't strike me as being particularly suited for the job.
Honestbee names Ong Lay Ann CEO amidst management changes
Honestbee has appointed Ong Lay Ann (pictured) as the new CEO. He will be taking over from interim CEO Brian Koo, who took on the role in May after co-founder and CEO Joel Sng exited the company. Koo will remain as the chairman of the board at honestbee.
Ong brings with him close to two decades of leadership experience in IT, commodities, real estate and infrastructure. He currently holds directorships positions at an Australia-based industrial conglomerate holding company Weststar Industrial, and ISDN Investments, the investment and trading arm of SGX-listed ISDN Holdings.
According to Ong, it is a huge privilege to lead honestbee and while the company has faced recent setbacks, he believes there are still immense opportunities to be met. He added that the management team will focus on bringing value to its customers, shareholders and partners.
Koo said that Ong is an “exceptional business leader that has been brought on board due to his track record in turning ailing businesses around”. He said the team at honestbee has confidence that Ong has what it takes to restructure the business, build consumer confidence and employee morale, repair relationships and bring the brand to greater heights.
His appointment comes amidst co-founder and CTO Jonathan Low resigning from his positions. Low co-founded the company in 2015 and has been instrumental in the company’s growth over the last four years. He led the engineering team in both Singapore and Taiwan, supporting the development of honestbee’s products over the years.
“It is my privilege to have worked with some of the best talent during my time here. The decision to leave honestbee was made before Ong had come on board. However, I have full confidence that Ong will help honestbee enter its next phase and recover from its recent setbacks,” Low said.
The company recently has underwent several changes in management and operations. VP of marketing, Christina Lim exited the company couple of weeks ago. In her one-year stint with honestbee, Lim was tasked to lead the marketing team to ramp up its integrated efforts to drive brand awareness and loyalty across all its business verticals. Lim said to Marketing that in the interim, she will be focused on consulting work for companies which include start-ups.
Just last week, honestbee also confirmed that there have been delays in paying salaries but did not clarify if it was for existing staff members or those that have left the company, after about 10% of its global headcount were laid off in May this year.
Full story at https://www.marketing-interactive.com/honestbee-names-ong-lay-ann-ceo-amidst-management-changes/
Won't be surprised if they also shut down Habitat entirely in the coming months.
Honestbee to stop food delivery service in Singapore
An Honestbee delivery staff looking at a phone. (Photo: Honestbee)
SINGAPORE: Honestbee will stop its food delivery service in Singapore as part of a strategic review of its business, the company announced in a media advisory on Wednesday (May 15).
It will also suspend its laundry service, honestbee confirmed, with both services set to stop on May 20.
About 400 delivery staff, many who work part-time, will be affected by the company's latest move since co-founder Joel Sng stepped down as CEO earlier this month.
Its grocery delivery service and physical supermarket, habitat by honestbee, will continue to operate, the company said.
"The decision was made to optimise the business structure, and to drive better focus and alignment with honestbee’s current strategic priorities," the firm added.
More at https://www.channelnewsasia.com/news/business/honestbee-halts-food-delivery-service-singapore-laundry-11534662
Honestly, I can't be bothered about Honestbee. Shoo shoo shoo.
Honestbee CEO Joel Sng Fired? He Says It's Fake News: "I Am Not An Abandon Ship Person"
Honestbee has been receiving a lot of negative press lately surrounding its global layoffs and multiple announcements for its “temporary pause” in operations, partnerships, and food verticals in several markets.
They’ve also completely stopped all services in Hong Kong and Indonesia, as well as its food vertical in Thailand.
In addition, it was also reported that honestbee has closed its R&D centres in Vietnam and India.
Following this spate of news, the firm maintained that their “business [status] in the remaining markets stands unchanged”.
Yesterday (May 1), TechCrunch reported that honestbee CEO Joel Sng has been fired from the firm.
According to its sources, Sng has “vacated the office” on 30 April.
Responding to this news, Sng emailed all honestbee staff on the night of May 1 claiming that it’s “fake news”.
An anonymous source shared with Vulcan Post a screenshot of the said email:
He wrote: “I am not an abandon ship person and I will never leave the company to be rudderless. Our investors and board are absolutely aligned on that.”
Prior to this news, multiple senior executives across several markets have resigned from the firm.
In Singapore, honestbee co-founder Isaac Tay and managing director Chris Urban have already left the firm, though their reasons for departure are unknown.
For its global layoff, about 10% of its staff headcount are affected — an increase from the aforementioned 6% stated in honestbee’s previous media statement.
More at https://vulcanpost.com/663102/honestbee-ceo-fired-fake-news/
Never been to Habitat before, but I heard you need to download an app just to make purchases, it ain't cash and carry inside the store........hmmm.
Or pwned by GrabFood and Deliveroo?
Habitat was a brutal blunder and serious miscalculation. No idea which fucktard came up with this grandly nonsensical idea. Even when existing as a concept store, the bloody setup still needs to be able to attract crowds in order to stay afloat financially. But no, their management which apparently had asses for brains decided to implement this in a highly inaccessible industrial area and remains at best a well kept secret among office paper pushers who happen to work in the vicinity.