Luxury bags marketplace Reebonz versus home renovations platform Qanvast – It may be difficult to spot the similarities between the two. But one thing that these two businesses certainly have in common is that they’re founded by the same people.
This may be a little-known fact: Benjamin Han and Daniel Lim, the former co-founders of Reebonz are also co-founders of Qanvast. In fact, the founders have been working on Qanvast for eight years already, and they started the business while they were running Reebonz. They just didn’t toot their own horns about it that much when Reebonz was in the picture.
If you haven’t been in the loop, Reebonz filed for liquidation in September last year and in December, the luxury marketplace’s brand and digital assets were sold to new owners. It is safe to say that we won’t be seeing Benjamin and Daniel back with Reebonz anymore.
The unfortunate news of Reebonz closing down last year had sent a shockwave to readers, suppliers, and customers alike. Why? Because Reebonz was once seen as a Singapore startup success story, a homegrown business that made it big. (You can click here to read more about what happened previously for the details.)
Even though many were shocked, there were observers who noted that the closure was a long time coming for Reebonz, given its weak valuations and cashflow problems.
Despite Reebonz going under, Qanvast seems to be providing a “safety net” for the two former Reebonz founders from hitting rock bottom. To get to the bottom of the situation, we will take a closer look at the business condition of former company Reebonz, on how this may or may not impact Qanvast, and if there are any potential pitfalls consumers should be watchful about.
What happened to Reebonz
Reebonz returns. That’s what some might have thought of after reading the article that Vulcan Post broke last week on Reebonz being bought over by new owners LiveCommerce Entertainment (LCE). LCE is a livestreaming platform and marketplace that aims to connect brands and live streamers.
In a social media post on Reebonz’s Facebook page dated Dec 27th, 2021, LCE said it had acquired all the brand and digital assets of Reebonz and it will operate under new management. LCE added that it’ll manage and operate ReebonzLIVE Facebook and Instagram channels, bringing daily live-selling shows directly from Italy and Europe.
A check on Singapore’s company directory website singapore-corp.com showed that LCE is an active company. The business was shown to be registered on Sept 20th, 2021, which is conveniently 10 days after Reebonz announced that it would undergo liquidation.
This suggests that Reebonz could have been in talks to sell its brand assets to LCE when the business was already planning to file for liquidation.
Providing some context on why the news of Reebonz being liquidated is a big deal, we must understand that Reebonz used to be a Singapore internet business with over S$200 million in valuation. Set up in 2009 by Benjamin Han and brothers Samuel Lim and Daniel Lim, it was once even publicly listed and traded on a United States stock exchange.
After a tumultuous period of low share valuation and liquidity issues, as well as high capital expenditures (including the construction of a S$40 million building), the pandemic was the nail in the coffin for Reebonz when additional problems like stiffer competition from other e-commerce players and weaker consumer spending worsened its bottom line.
In September of 2021, Reebonz appointed a provisional liquidator to wind up the company, stating that it “cannot by reasons of its liabilities continue its business”. A month later, Reebonz said it would be selling its “crown jewel”, its S$40 million eight-story Tampines headquarters as part of its liquidation process. The business was last said to have racked up S$65 million in debt owed to many creditors and suppliers. It also owed Reebonz sellers more than S$30,000.
In the update in October, Reebonz had said that the remaining assets it owned included cash at bank, inventory, and office and warehouse equipment. It then had also owed preferential claims that comprise mainly employee salaries of S$120,000.
What are the Reebonz founders doing now?
A check on LinkedIn indicated Reebonz co-founders Benjamin and Daniel as co-founders of Qanvast. Meanwhile, Reebonz’s third co-founder Samuel Lim is currently running a separate business called Greencore, a blockchain-based new energy ecosystem.
The three co-founders are no longer with Reebonz. Both Benjamin and Daniel have been with Qanvast for eight years and worked on it while managing Reebonz.
Other than the latest news on LCE buying up Reebonz, there are many unknowns on the financial status of Reebonz and whether if it has paid up its creditors. Its S$40 million headquarters were also put on sale about three months ago but there hasn’t been an update on the sale process.
What does Qanvast do?
Qanvast helps match homeowners to interior design (ID) firms. It has hundreds of home professionals on board its platform, like material suppliers, contractors, IDs, and architects. It claims that more than 100,000 homeowners have used its recommendation and matching services.
It has a presence in at least three countries – Singapore, Malaysia, and Hong Kong.
According to Daniel in a 2020 interview with Vulcan Post, the eight-year-old business was created to provide an online platform for new homeowners to browse localised ideas and content while getting connected to trusted interior designers.
The business has since grown to become a notable player in the renovation marketplace arena. In December 2021, Asia’s largest omnichannel home interior and renovation platform Livspace announced a strategic investment in Qanvast. The investment aims to help both companies boost their home interior and design services in the region.
The deal will help Qanvast scale rapidly in Singapore and expand overseas too. Calling it a partnership, Daniel had said that both companies have a common vision to reshape Southeast Asia’s home renovation industry.
How does Qanvast work
Qanvast’s brand values revolve around ‘trust’, ‘inspiration’, and ‘experience’.
Staying ahead of the competition is important for the business, as an online aggregator business concept is seemingly easy to replicate if one has the right connections and tech know-how.
Qanvast is observed to be a front runner in the industry as seen by its social media presence of almost 250,000 followers on Facebook and 150,000 followers on Instagram. Before the pandemic happened, it also launched offline experience centres to expand its reach and attract new customers.
For consumers, the Qanvast platform offers features that make it convenient to find and save their favourite home ideas and enquire about home deals. This platform also suits people who are looking for home design ideas for their future homes.
Users can also collate their ideas on boards for easy sharing and discover home furnishing brands on the platform.
How does Qanvast earn money?
The platform is free for consumers to use.
The business earns money from charging IDs a subscription package fee to advertise their offerings on the platform. This is a concept that is similar to property listing websites where agents pay a fee to list their offerings.
It used to charge IDs up to S$1,500 to be listed on the platform but it has since changed its revenue model.
In the current subscription model, IDs can use the purchased credits on the Qanvast platform to buy leads.
Any risks users need to be aware of: Tying up loose ends with Reebonz
When business owners liquidate their company to start a new one, there are legal restrictions involved, such as using the same name or a similar name.
In addition, all directors who are entering liquidation cannot become a director of a company trading under a similar name and style. That’s likely the reason why the ex Reebonz owners can continue their other non-affiliated businesses holding co-founder positions.
It may be by chance, but it seems as if the ex Reebonz owners have carefully thought about their future plans as early as a few years ago as they did not put all their eggs in one basket by focusing on building only one company. They also avoid facing legal complications while Reebonz liquidates as their other businesses are different and not from the same industries.
When a company nears the final stages of liquidation, all proceeds from the sale of the business’ assets will be distributed to creditors. Directors will not receive any proceeds from the company in their capacity as shareholders, as the company is insolvent.
Also, directors/founders can only be personally liable for company debts if they placed a personal guarantee in order to acquire loan funding. Only then will they be personally liable if the company is unable to pay up the debt. It is not known if Daniel or Benjamin have made personal guarantees for Reebonz.
In the event that personal guarantees were made, then the lenders can potentially claim against a director’s assets and property, depending on the conditions.
Any risks users need to be aware of: The role as a platform aggregator
As a platform, Qanvast has done certain steps to “insure” its customers. Many IDs have not been able to meet homeowners to discuss their renovation plans amid Covid-19 and Qanvast supports IDs with tools to host e-meetings. The platform also offers safeguards for consumers like the Qanvast Trust Programme (QTP).
The QTP provides a S$50,000 guarantee and is applicable to deposits paid for works not delivered due to insolvency. The platform offers other incentives for customers like extended warranty coverage to protect renovation works for up to 12 months and refundable deposits. It also provides deals on home furnishing via preferred lenders.
All customers that connect with an ID through Qanvast will automatically be enrolled into the complimentary QTP, according to information on Qanvast website.
Although the QTP is a buffer against errant IDs, it seems to only protect deposits in the event of an ID firm’s insolvency. The cover may not include late or delayed works or other costs involved when things don’t work out between consumers and their IDs.
The surge in demand for renovations led by a backlog in construction and reno activities may lead to more errant IDs and contractors who may default from their paid tasks. Consumers need to note that Qanvast may be the one who provided the platform to match them to these suppliers, but in the event that things go south, the users will have to be the ones chasing the IDs and contractors for a response.
Any risks users need to be aware of: Property cooling measures impact in 2022
With the latest property cooling measures coming down harder on second and third-time homeowners, it is unavoidable for the property market to ease from 2021-levels.
The latest cooling measures include higher Additional Buyer’s Stamp Duties (ABSD), tighter loan-to-value limits, and lower Total Debt Servicing Ratios (TDSR). Experts say new home sales will be on a “downtrend” for 2022, while property prices are likely to be flat and are expected to increase only one to three per cent for the year.
The bearish sentiment might lead to a slowdown in IDs and contractors subscribing to Qanvast or some not renewing their plans as they tighten their purse strings. That is likely to hurt the bottom line for Qanvast.
Depending on how capital intensive Qanvast is at this stage of its growth – e.g. high cost via office rental, increased staff count – the business may need to shed some spending weight to rebalance its sheets.
It might have to consider cutting back on growth plans and adopt a wait-and-see approach at least for the first quarter of the year to prevent expanding too quickly. It also needs to ensure it has enough cash flow to withstand unexpected pandemic shocks.
Any risks users need to be aware of: Qanvast needs to stay relevant
The business has had the first-mover advantage – many years of product development ahead of its competitors.
But one must note that many new competitors are now emerging and eyeing the same target market too, in view of the burgeoning internet economy. The business needs to continue to innovate and keep users engaged with new features and offerings.
User experience will be key in keeping customers. The experience has to start right from the moment a new potential customer browses the website. Users need to feel that the experience is also hassle-free to want to keep coming back.
Constant tech enhancements such as exploring Web 3.0 to suit the palettes of even younger future homeowners is also what an industry “first-mover” like Qanvast should consider too, while bearing in mind its regulars who are older users.
Although such tech enhancements may add to the bills, they are deemed crucial for business development if it wants to keep the lights on for a long time.
Featured Image Credit: Qanvast, Reebonz