Consumer discount site Fave is raising a Series C round, with plans to expand its offerings to more Southeast Asian countries, Joel Neoh, the company’s co-founder and CEO, told DealStreetAsia in an interview.
“We are seeing that with larger-scale our profitability is improving,” Neoh said. “The Series C funding that we’re looking at is mostly based on strategic partners that could help us to expand across the region.”
Neoh’s comments confirm a DealStreetAsia article in December, citing two sources close to the deal, that Fave was looking to raise $50 million.
The Singapore-based startup had last raised a $20 million Series B round from Sequoia India, SIG Asia Investment, Venturra Capital and other investors in September 2018. It counts 500 Startups, Axiata Digital Innovation Fund, and Segnel Ventures among its early investors.
Fave currently has operations in Singapore, Malaysia and Indonesia. Neoh said Malaysia is profitable and Singapore is nearing profitability, and the company is eyeing entering Thailand and the Philippines. Fave competes with other rewards and cashback apps such as ShopBack and Rebate Mango in Southeast Asia.
The consumer discount website and app sells discount vouchers across segments ranging from food, beauty, fitness and art classes, much like Groupon. But unlike its antecedent, the Southeast Asian company plans to grow by tapping into repeat business and payments, instead of just one-time bargains.
In 2018, Fave tied up with ride-hailing firm Grab in a deal allowing the discount site’s customers to use GrabPay to spend at restaurants and retailers in Fave’s network. Grab does not have a stake in Fave.
Said Neoh: “[Grab] provides us with the payment infrastructure. So our users use GrabPay inside the Fave app as a source of funds.”
Neoh added that while most of its customer base tends to be in the 25 to 40 years old age range, the company has seen a pick up from younger customers, which he attributed to the use of a mobile wallet.
“The mobile wallets, the e-wallets, are actually targeting the youngest segment because these are the underbanked users. They don’t have a credit card yet,” he said.
A cashier at a soya beverage and dessert shop located in Singapore’s financial district, said that about a third of the outlet’s customers used FavePay, and that most of them were younger people. FavePay users get 3 percent cash back and 10 Grab rewards points. The cashier at a nearby poke outlet, which also has a cashback offer, said about 30 to 40 percent of customers daily are paying via FavePay.
Fave has also made a number of acquisitions to scale its operations, including CutQ, a Singapore-based restaurant table-ordering app, and FoodTime, a food ordering and delivery app from Malaysia.
Fave, formerly Kfit, was founded in 2015 by Neoh, the former CEO of Groupon’s Asia Pacific business.
Fave acquired Groupon’s assets in Singapore and Malaysia in 2016. Groupon withdrew from a number of countries as it faced a backlash from small businesses after the steep discounts from selling vouchers often failed to spur repeat business. The coupon business also had a low barrier to entry for competitors.
Fave sees the payments business and loyalty programmes as an improvement on Groupon’s business model.
“As we introduced mobile payments, we realized that a lot of merchants were not just about acquiring or getting new customers. They want to retain their existing customers. So we built a very simple micro loyalty solution,” Neoh said, referring to the cashback offers.
The startup boasts over 4 million app downloads and claims to have provided cashback rebates worth over $6 million to its Singapore and Malaysia customers in the second quarter of last year.