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💥 Bambu shut down after missing profit targets
It couldn’t get to profitability in time...
Admond Lee
May 05, 2024
Read Time: 5 minutes
Hey Founders,
Welcome to The Runway Ventures, a weekly newsletter where I deep dive into startup mistakes and lessons learned to help you become a better founder.
Let’s get to it! 🚀
Today at a Glance:
☠️ 1 Failed Startup → Bambu
⚠️ 2 Mistakes → Underestimated time taken to achieve profitability
🧠 3 Lessons Learned → Know the game you’re playing & play it well
🔗 The Runway Insights → 8 hard-earned lessons from repeat founders
💰 Southeast Asia Funding Radar → Wavemaker leads $4m round of Staple — an AI document processing firm
☠️ 1 Failed Startup: Bambu
🚀 The Rise of Bambu
Bambu, a Singapore-based fintech startup founded in 2016 by Ned Phillips, Luke Janssen and Aki Ranin, was a B2B robo-advisor for financial institutions in the wealth management industry — powered by proprietary algorithms and machine learning tools.
The Problem — Financial institutions in the wealth management industry struggled to help their users save and invest for their future without the right technology.
The Solution — Bambu developed technology for financial institutions in the wealth management industry by helping their users through:
Offering intelligent features for personal financial management, including daily spending and finances.
Providing solutions to enhance personal investment strategies.
Compared to MoneyOwl (B2C robo-advisor), Bambu was clearly in a different race track focusing on serving B2B customers and was poised to disrupt the entire wealth-tech industry.
🏄♂️ Back then, people were very interested in robo-advisory services. Riding on this wave, Bambu raised at least USD 13.4 million from Franklin Templeton Investments, Wavemaker Partners, and Octava.
🌍 With the funding and traction, Bambu continued expanding. In July 2021, Bambu acquired TradeSocio to accelerate its global expansion and strengthen its competitiveness globally.
📉 The Fall of Bambu
While it might seem everything was going well on the surface, this is rarely the case for unprofitable startups, and this is what happened to Bambu.
We couldn’t get to profitability in time.
📌 According to Tech in Asia:
Bambu had been on a path to profitability in 2023.
However, it was struggling financially due to the economic downturn and its burn rate.
⏰ An Ultimatum: Upon the joint decision between Bambu’s management and its investors, Bambu would be shut down if it didn’t reach profitability by the end of 2023.
Unfortunately, Bambu was officially shut down on 31 December 2023 because it couldn’t get to profitability in time.
Due to the macroeconomic landscape and increasing interest rates, it was very hard for Bambu to find more enterprise deals as shared by Phillips.
With that, Phillips currently offers consultation for companies in branding and sales initiatives.
Want to learn more about Bambu’s downfall?
⚠️ 2 Mistakes
Mistake 1: Underestimated time taken to achieve profitability
Phillips shared that Bambu’s profitability hinged on improving its product while generating more scalable and recurring revenue.
Unfortunately, this bet didn’t work out as the time taken to achieve profitability was longer than the timeline given. Besides, enterprise deals typically have longer sales cycles, which could potentially be one of the reasons why it was difficult for Bambu to scout and secure enterprise deals.
Mistake 2: Didn’t get the right team in time
The source close to Bambu said that Bambu wasn’t proficient in operations and technology despite its strength in sales. Although Bambu later got competent executives on board to fill the gaps, it was too late.
🧠 3 Lessons Learned
Lesson 1: Know the game you’re playing & play it well
Always know which game you’re playing.
If you’re bootstrapping → It’s important to be profitable from Day 1 as there’s little to no room for burning your own cash.
If you’re running a VC-backed company → It’s crucial to know (roughly) how much cash you need to have enough time and runway to iterate your product towards product-market fit.
Bambu was backed by top VCs and financial institutions. However, it underestimated the time taken (or runway) to become profitable. On top of that, given the market downturn, it was hard for Bambu to raise another round from existing or new investors, leading to its closure.
🌟 Key Takeaways:
Always plan for the worst-case scenarios and make calculated bets based on the risk-reward ratio.
If the risk of your bet is too high, you’re betting on your company, not the hypothesis you’re trying to validate.
A calculated bet gives you a huge upside with a low downside.
If you’re running (or plan to build one) a VC-backed company, have a clear path to profitability while iterating your product.
In general, there are 2 ways to become profitable:
Increase your revenue — Have scalable and recurring revenue.
Lower your cost — Don’t hire too fast, grow sustainably, optimise your operational costs, and reduce customer acquisition costs.
Lesson 2: Hire the right people
If certain roles are crucial for your company, try to hire the right people as soon as possible. That’s because the opportunity cost of having the wrong people to do the jobs is way too high.
🌟 Key Takeaways:
The hiring cycle is often long and tedious. Even worse, sometimes you might spend 3 months hiring and interviewing, only to realise you’ve hired the wrong person for the job.
Therefore, to increase the chances of hiring the right people as soon as possible (before you even start building a company), you can:
Expand your network by joining startup events or meetups.
Work on small projects with your network to know their capabilities and test the chemistry between one another.
Leverage the strength of weak ties to access talents with minimum effort.
In short, the more people you know (1st-degree connections or mutual connections), you can dramatically increase your luck surface area to hire the right people with less time through warm connections.
Lesson 3: Grew too fast
After five years of building solid foundations, Bambu is now entering a phase of rapid growth.
In July 2021, Bambu acquired TradeSocio to accelerate its global expansion, doubling its employee count to 130. Given the headcount, Bambu’s cost also increased with a high burn rate.
🌟 Key Takeaways:
While having growth is good, growing too fast often backfires your company with high burn.
A company (i.e. Grab) can only keep growing at all costs under the assumption it has sufficient runway to iterate its product and expand its market shares before running out of time and money.
If you think the assumption can hardly be true in the next 3-5 years, it’s almost safe to assume that you have to grow sustainably (slowly but surely) by being profitable.
🔗 The Runway Insights
💰 Southeast Asia Funding Radar
Happynest raises $720k to make it easy for anyone to design and build their dream home (Link)
Jejakin raises $2.7M to accelerate companies' paths to sustainability (Link)
Wavemaker leads $4m round of Staple — an AI document processing firm (Link)
Accacia raises $6.5M to decarbonise the real estate industry (Link)
PathGen raises funding from East Ventures and Royal Group Indonesia, making early disease detection and precision medicine more accessible (Link)
That's all for today
Thanks for reading. I hope you enjoyed today's issue. More than that, I hope it has helped you in some ways and brought you some peace of mind.
You can always write to me by simply replying to this newsletter and we can chat.
See you again next week.
- Admond
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Disclaimer: The Runway Ventures content is for informational purposes only. Unless otherwise stated, any opinions expressed above belong solely to the author.
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