GoBear’s Closure Will Unlikely Leave A Dent In S’pore’s Finance Industry

Singapore-based financial services start-up GoBear said on Monday (January 4th) that it was going out of business and would begin an “orderly shutdown of the business.”

He cited the inability to raise additional funds from existing or new investors as the main reason for the shutdown, adding that the COVID-19 pandemic has made the operational and fundraising environment “very difficult”.

Other factors included a prolonged period of weakening demand for certain financial products and services, particularly travel insurance.

However, GoBear CEO Adrian Chng previously said that while the pandemic has indeed led to a drop in interest in travel insurance, they are still seeing growth in their insurance and other loan products.

He even added that despite the pandemic, GoBear has been “positive gross margin” since late 2019.

US $ 97 Million Funding Raised – What Happened?

According to Crunchbase, GoBear has had two funding rounds so far since its inception in early 2015.

In May 2019, it raised US $ 80 million from its main investors: Dutch venture capital firm Walvis Participaties and life insurance and asset management provider Aegon NV.

Following the funding, GoBear invested US $ 1 million in digital financial technology company CredoLab, of which Chng is the co-founder and director of the board.

The investment aims to develop Easy Apply, a mobile application that creates a predictive credit score card for credit card or loan applications from underbanked people.

gobear funding history
GoBear Funding History / Image Credit: Owler

Subsequently, in May 2020, it raised an additional $ 17 million from the same investors, bringing its total funding to US $ 97 million.

Questions have since arisen: what happened to the funding he has raised so far? Did they spend close to US $ 100 million to grow the business?

Did they invest money in too many markets and the pandemic ended up negatively affecting their diversification efforts? Or could it be that the funding cycle was never completed in the first place?

According to GoBear, its latest funding was dedicated to expanding its consumer financial services platform in Southeast Asia.

Specifically, GoBear had said it would focus on what it calls its “three pillars of growth”:

  1. An online financial supermarket from the aggregation / comparison service of the company’s financial products
  2. Online insurance brokerage
  3. Its digital lending business, which it expanded by acquiring the AsiaKredit lending platform in May 2020

Besides Singapore, GoBear was active in six other markets such as Malaysia, Indonesia, Vietnam, Thailand, the Philippines and Hong Kong.

In 2016, GoBear attempted to expand its market in Malaysia with limited success as it struggles to compete with local players.

The startup has changed two country managers since its launch, with its last country manager leaving to pursue other career opportunities.

gobear malaysia
Screenshot of GoBear Malaysia website

Its comparison features on their Malaysian site have also since been removed and replaced with a blog that has not been updated since 2019.

In addition, GoBear ceased its price comparison business in January 2020 after only one year of operation.

Granted, Indonesia can be a difficult market to capture as its level of financial literacy is not yet very high, as evidenced by its credit card penetration rate of less than 3%.

It is clear that its regional expansion plans were already showing cracks and it was only a matter of time before the company collapsed as a whole.

In an effort to save themselves, GoBear has probably spent a lot to attract new recruits. After two of her co-founders left the company in November 2019, she embarked on a hiring frenzy.

He added three new executives in May of last year: director of information technology Valeriy Gasratov; chief strategy officer Jinnee Lim; and Mike Singh of AsiaKredit as the new primary loan offering.

Subsequently, GoBear also hired new CFO Kent Huang in August 2020.

On the other hand, it implemented some cost cutting measures by laying off some of its staff, but this was not a significant reduction.

It laid off only 11%, or 22 staff, of its workforce in its offices in Singapore, Philippines, Vietnam and Ukraine.

However, with its recent shutdown, 165 GoBear employees in its six offices will now be laid off.

Will competitors benefit from the GoBear shutdown?

gobear competitors
Image Credit: Owler

There are other fintech companies in Asia that overlap with some of the services GoBear offers, like the comparison platform MoneySmart and CompareAsiaGroup.

According to Owler, GoBear ranks lowest among its two main competitors in terms of annual revenue estimated at US $ 17.6 million.

vinod nair moneysmart
Vinod Nair, Founder and CEO of MoneySmart / Image Credit: e27

Speaking to Vinod Nair, who is the founder and CEO of MoneySmart, he said he did not expect GoBear to “take such drastic action,” referring to his news of the shutdown.

“When they announced last year that they had laid off 22 employees, it seemed like a minimal downsizing, so they assumed they had to secure funding to continue operations, although a little lighter, ”he said.

However, he claimed that previous reports have shown that GoBear “does not have very high income compared to their expenses.”

Either way, he sympathized with GoBear’s fate. MoneySmart has also seen a decline in demand for some financial products, although it has been successful in creating “significant income streams across multiple categories.”

The startup has also reoriented its attention to products for which it is convinced it can develop its business.

In total, the COVID-19 pandemic had forced them to abandon their annual plan and reassess their business plans.

“As an oppressed society that has raised only a fraction of what others have raised so far, we have had to be lean and efficient to put capital to use,” Vinod said.

MoneySmart had anticipated a tough fundraising environment from the start and leaned into drastically cutting expenses where possible.

They were also fortunate that the entire company agreed to take a pay cut during this time so that they could help everyone keep their jobs during this difficult time. As their business took over, they gradually restored the salaries of their staff.

When asked how the shutdown of GoBear would affect the industry, Vinod said he didn’t think MoneySmart would have much to gain in terms of customers.

“To my knowledge, GoBear was not very strong in our core markets of Singapore and Hong Kong,” he explained.

He added that it was “unhappy and sad” to lose another player in the ecosystem, especially when everyone put in a collective effort to help clients make smarter financial decisions through the space of. financial comparison.

That said, he welcomes all GoBear employees who “still believe in the mission” to apply for vacancies at MoneySmart.

Ultimately, he believes there is no one right way to run a business. For him, a fundamentally healthy business rests on solid revenues and a unity economy.

Others may take the rapid growth approach with venture capital money to eventually be acquired by a larger company. There is not just one right answer, as there have been many successes with both approaches.

It’s just that the latter is much riskier and only lasts as long as people are willing to invest in this story, which ended abruptly in this case.

– Vinod Nair, Founder and CEO of MoneySmart

Vulcan Post has reached out to other industry players Seedly and SingSaver, as well as GoBear investors, but some have chosen not to comment while others have yet to respond.

Featured Image Credit: GoBear

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Jothi Venkat

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