VCs’ newfound love for consumer brands

In The Checkout this week, we look at VCs’ growing interest in SEA’s consumer brands and discuss Qoo10’s potential demise. [Read from your browser]( The Checkout 🛒  --------------------------------------------------------------- Welcome to The Checkout! Delivered every fortnight, this free newsletter breaks down the biggest stories and trends in ecommerce. You can find past issues [here]( or [sign up here]( to receive future newsletters. Also, If you’re not a subscriber, get access by [registering here](. IN FOCUS In today's newsletter, we spotlight: - [Why Southeast Asia’s investors are increasingly betting on non-tech brands]( - Qoo10’s major layoffs --------------------------------------------------------------- Hello {NAME} My wife is a fan of Indonesia’s Rosé All Day Cosmetics (RADC). She uses the company’s lip tint and blush all the time, and the other day, I saw a Powerpuff Girls-edition mascara in her cart on Shopee. In addition to being a millennial with a soft spot for 90s cartoons, my wife insists that RADC’s products are both high-quality and affordable - even cheaper than the offerings of some other local brands. Despite its low prices, the company can make big bucks, and it’s been profitable since its second year of operations. RADC has also secured US$5.9 million of funding to date, with more than 90% of it raised in December 2023. The Indonesian cosmetics firm is just one of the growing number of consumer brands catching VCs’ attention despite the ongoing funding crunch in the region. While most of these brands don’t rely on cutting-edge technology, their clear path to profitability seems to be the main attraction for VCs seeking more calculated risks. I discuss more about this in this week’s Big Story. Meanwhile, in this week’s Hot Take, I discuss why Singapore-based Qoo10’s recent layoffs at its headquarters may hint at the company’s potential demise. The staff cuts are particularly critical as the company has had financial troubles with its South Korean subsidiaries in recent months. -- Glenn  --------------------------------------------------------------- THE BIG STORY [SEA VCs stray from tech for new bets]( Amid the tech winter, some VCs are betting on consumer brands that provide a more “predictable” path to profitability.  ---------------------------------------------------------------  THE HOT TAKE The beginning of the end for Qoo10? Here’s what happened: - Singapore-headquartered ecommerce company Qoo10 [laid off]( more than 80% of its workforce in the city-state. - Out of 110 staff members, 90 were affected and given no benefits “due to a lack of funds.” - The company has been hit with financial troubles in recent times. Here’s our take: The recent layoffs at its headquarters might well be the final nail in the coffin for Qoo10. Over the past couple of months, the company has been in dire straits following delayed payments by its South Korean subsidiaries, Tmon and WeMakePrice. Both have been unable to pay merchants on their platforms since early July and owe a total of [1.3 trillion won]( (US$970 million), according to figures released by the South Korean government on August 25. While Qoo10 founder and CEO Ku Young-bae has pledged to resolve the situation, it will be difficult for the firm to do so without resorting to drastic measures. During a parliamentary hearing on July 30, Young-bae said Qoo10 has only around [80 billion won]( (US$59.7 million) of available funds. Adding to the turmoil, Qoo10 may now lose one of its most valuable subsidiaries, Qxpress. The logistics company is set to [separate]( from Qoo10 - private equity firms that have invested in Qxpress reportedly moved to convert their bonds into equity, effectively taking direct control of the company. See also: [India’s duopoly breaker looks to shake up SEA ecommerce]( Young-bae previously [stated]( that he plans to use Qoo10’s remaining capital and assets, along with his personal stake in the company, to address the financial woes. But the [dilution]( of Qoo10’s 65.8% stake in Qxpress might significantly hamper those plans, especially considering that Young-bae also owns a 29.3% stake in Qxpress himself. The separation of Qxpress may mark the beginning of the end for Qoo10 as we know it. If the PE investors succeed, it could encourage other companies within the Qoo10 group to seek similar exits. This would leave the firm struggling to manage its remaining operations even as its assets are stripped away. These developments paint a bleak picture for the company’s future. The once promising ecommerce giant now seems to be teetering on the brink of collapse. ---------------------------------------------------------------  TECH IN ASIA’S FOUNDERS MEETUP: THAILAND ON SEPTEMBER 11 Get clarity on your funding prospects with VCs Don’t miss out on unfiltered, one-on-one advice from seasoned investors like Woraphot Kingkawkantong of Beacon Venture Capital, Ratchanon Supakit of Plug and Play Tech Center, and Jirapat Suvidejkosol of Vertex Ventures. On September 11, get the chance to ask them anything - from securing funding to navigating challenges to building a winning team - during our all-new VC office hour at Founders Meetup Thailand. Limited 1+1 bundle deals up for grabs. [Get your tickets now!]( ---------------------------------------------------------------  EVENTS HAPPENING You can also check out a curated list of trending tech events [over here]( and Tech in Asia’s signature events [here](. [Tech in Asia Conference Jakarta on October 23 - 24]( Get ready to be inspired at the upcoming #TIAConferenceJKT. We are bringing together the region's top minds for two days of in-depth discussions, groundbreaking ideas, and unparalleled networking opportunities. Hear from Edward Tirtanata on the D2C user preferences across SEA, what it takes to build an AI startup from Wiz.AI’s Jennifer Zhang, and Gibran Huzaifah shares how he built SEA’s first agritech unicorn. [Get your tickets at 45% off now!]( [Leadership Collective: Building at Scale on September 26]( Deeper integration between design and engineering - opportunity or headache? Explore proven strategies for effective communication, uncover the true potential and challenges of advanced design tools, and discover how to empower true collaboration that transforms your product development process. Seats are extremely limited - [apply now.]( [SYNC 2024 on October 08]( Elevate your startup journey at our exclusive founder’s roundtable at SYNC 2024. Expect candid conversations on topics such as turning AI ideas into viable products, the unique challenges of raising capital for AI startups, and strategies to attract potential investors. You’ll uncover insights on how to find and retain top AI talents and, most importantly, how to tailor your solutions to the needs of your market to achieve product-market fit. Find out more about [SYNC 2024]( today. [Startup Factory at Tech in Asia Conference Jakarta]( Are you a founder looking for inspiration, connections, and the latest tech insights? Look no further than the Startup Factory at #TIAConferenceJKT! This exclusive space, designed for founders like you, will showcase the region's most promising tech companies. Get up close and personal with the innovators shaping the future, discover the trends driving the tech industry, and connect with potential partners and investors. Competition is fierce and limited booth slots are available. [Apply now!]( --------------------------------------------------------------- That’s it for this edition - we hope you liked it! Do also check out previous issues of the newsletter [here](. Not your cup of tea? You can unsubscribe from this newsletter by going to your “edit profile” page and choosing that option in our preference center. See you soon! [ADVERTISE]( | [SUBSCRIBE]( | [HIRE]( | [FIND JOBS]( P.S. Don't miss out on the biggest tech news and analysis. Add newsletter@techinasia.com to your address book, contacts, or safe sender list. Or simply move us into your inbox. Too many emails? Switch to a different frequency or get new content through our [preference center]( or [unsubscribe](. 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