How a celebrity CEO's rule of fear helped bring down hot startup Zilingo

[weijian]

Zilingo is in the business of creating a platform to digitally connect sellers in those markets to buyers all over the world. A lot of digital businesses were uplifted by Covid-19 and the stimulus. If all these didn't give Zilingo a lift, then it is probably going to be doomed from the start.

How a celebrity CEO's rule of fear helped bring down hot startup Zilingo

With cash in Zilingo's coffers, she would dive into new initiatives to supercharge growth even if the immediate financial benefits were questionable. In one example, Bose suggested Zilingo subsidise a 2 to 4 per cent discount for transactions, effectively paying merchants to trade with each other. She cheered on the team as gross merchandise value hit US$1 million for the first 2 months, even though Zilingo was getting no fees from the merchants, said a person directly involved.

https://www.businesstimes.com.sg/garage/...up-zilingo

[CY09]

The issue of providing large discounts to transactions exists in Singapore's large 2 unicorn too.

SeaMoney offers 10-12% discounts for purchases to consumers when they are charging merchants 2-4% in fees. Grab too was providing approx 4% to consumers for transactions when merchants were charged 2-4% as well. All these were to boost their TPV figures to show Fintech segment is growing.

At the end of the day, this antic is to attract a higher valuation through revenue growth even if margin is terrible. However, once the gravy train in QT accelerates or closes off the 4 billion QE pumped during COVID, things will be messy. Fortunately, for the loss making companies worldwide, the Fed is probably aware how bad it is for QT to be accelerated and at current projections, these companies have 3 years (end 2025) before they need to think how to turn around their margins.

I expect the continuous inefficient allocation of resources and negative margin on transactions to persist for 3 more years due to the central banks actions. Hence we are still going to see even more Zilingo examples existing maybe until 2026.

[weijian]

Probably more will follow in the next 2 years. Unicorns are after all rare and once the tide goes down, most are found to be just ponies.

Temasek-backed Zilingo poised to go into liquidation: Report

At its height, the firm had raised more than US$300 million from some of the region’s most prominent investors, including Temasek Holdings and Sequoia Capital India, the regional arm of the Silicon Valley firm that backed Apple and Google.

Zilingo once had about 600 employees in eight countries and raised US$226 million in early 2019 in its last fundraising round, which valued the company at about US$1 billion.

https://www.channelnewsasia.com/business...ia-3224201