Woes at once acclaimed startup Honestbee seems to be never ending. On 22nd
of July the company issued a statement that the company was halting its Thai operations on its website. This was followed by more layoffs at its Singapore offices with 38 staff laid off. Then yesterday, the company submitted to the High Court in Singapore to commence a court-supervised restructuring process as it seeks six months of reprieve from creditors that it owes to for just its Singapore operations, which is to the tune of over US$180 million. The exact losses and monies its owes to its overseas operations is still unknown.
Honestbee Launch In Thailand in 2017
Sources close to creditors say that one of the possible reasons for Honestbee decline that started about 2 to 3 years ago could have been due to mismanagement by incapable team heads in all its offices including its overseas operations.
The irony of this statement is that some of these personnel have since moved to other startups in even higher positions and some are even at agencies that deal with promoting startups. This could signal a worrying issue if the statements are true and individuals, companies and venture capitalists should all do due diligence when dealing with entities with such personnel.
Major creditors of honestbee Singapore operations include its convertible noteholders, which include its key backer Formation Group and associates of Mr Brian Koo, who is Formation Group’s founding partner and Honestbee chairman.
In its statement, Honestbee said that the court-supervised restructuring will allow it to focus on re-evaluating the business without interference, streamline operations, increase its efficiencies and bring down the cost structure, and is essential for the firm's long-term stability and success. Honestbee has engaged DHC Capital Pte Ltd as its independent financial adviser.
"As part of the restructuring process, Honestbee will work closely with their advisers, creditors and stakeholders to achieve the best possible outcome for all interested parties," the firm said.
A 2017 regulatory filing also noted that the start-up raised US$50 million via convertible notes issued to a Singapore-registered entity, "a Honestbee", whose largest shareholder is Yesco, a unit of South Korean conglomerate LS Group. The conglomerate is owned by Mr Koo's family. Convertible notes are a form of short-term debt that converts into shares in the issuing company.
The Honestbee saga is something that aspiring startups should use as a case study and learn ,and not emulate the same mistakes inorder to be successful.