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- ⚡️ Gone in a flash
⚡️ Gone in a flash
How Flash Coffee shut down all 11 outlets in Singapore after raising USD 50 million...
Admond Lee
June 09, 2024
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.
Today’s issue is quite interesting. Yes — it’s how Flash Coffee was gone in a flash in Singapore. Let’s get to it! 🚀
Today at a Glance:
☠️ 1 Failed Startup → Flash Coffee
⚠️ 2 Mistakes → Over-expansion without a solid foundation
🧠 3 Lessons Learned → Take care of your employees
🔗 The Runway Insights → Your startup cheat code is here
💰 Southeast Asia Funding Radar → Nium raises $50m in series E round
☠️ 1 Failed Startup: Flash Coffee
🚀 The Rise of Flash Coffee
Flash Coffee was founded by David Brunier and Sebastian Hannecker in 2019 as a tech-enabled coffee chain that offered high-quality coffee drinks at affordable prices.
 | ⚡️ It operates a grab-and-go concept with a strong focus on online ordering and delivery through its mobile app. |
The Problem — Consumers struggled to find high-quality and affordable coffee.
In particular, consumers paid high prices for coffee from large outlets with extensive seating in expensive neighbourhoods when in reality, most orders were grab-and-go.
The Solution — Flash Coffee provided high-quality coffee at affordable prices by leveraging technology for cost efficiencies.
With the concept of grab-and-go, consumers could simply order a drink using Flash Coffee app and they could collect their drinks at specific outlets.
🌏 At its peak, Flash Coffee operated over 250 stores across 7 countries, including Singapore, Indonesia, Thailand, Hong Kong, and South Korea. The company employed around 1,400 people and saw a significant increase in revenue, with many of its stores achieving profitability.
💰 In May 2023, Flash Coffee raised USD 50 million in a Series B funding round led by White Star Capital, Delivery Hero, and other investors.
The funds were intended to accelerate the company's mission to achieve group-level profitability and expand its footprint across the Asia-Pacific region.
📉 The Fall of Flash Coffee
On the surface, Flash was growing and expanding rapidly with significant traction.
However, on the inside, Flash Coffee was facing significant financial difficulties, leading to the closure of all 11 outlets in Singapore.
📌 Here’s how Flash Coffee was gone in a flash in Singapore:
2019 — Flash Coffee was founded.
🇮🇩 Jan 2020 — Opened its first store in Jakarta, Indonesia.
🇸🇬 Oct 2020 — Expanded to Singapore at opened its first store at Oxley Tower.
🌏 2021 — Raised USD 15 million, opening close to 250 stores and employing 1,400 people across 7 countries.
2022 — Employees were laid off across different markets.
💰 May 2023 — Raised USD 50 million in a Series B funding round.
Oct 2023 — Flash Coffee officially shut down all 11 stores in Singapore and was placed into provisional liquidation due to liabilities.
The official answer was that Flash Coffee wanted to focus on more promising markets to build a profitable and sustainable business.
After probing deeper, Flash Coffee owed over SGD 14.9 million to about 120 creditors, including employees who were not paid up to 2 months’ salaries (more than SGD 300,000 in total).
This explained why many chain baristas went on strike across different outlets in Singapore — which was denied by the company.
❓ Provisional liquidation is initiated when a company cannot pay its debts and seeks to wind up its operations in an orderly manner.
Again, Flash Coffee was one of the casualties of growing at all costs without the foundation of infrastructure, systems, and financial sustainability.
⚡️ Short-term growth ≠ Long-term sustainability
Today, Flash Coffee is still operating in Indonesia and Thailand as the key markets to achieve group-level profitability.
Want to learn more about Flash Coffee’s downfall?
⚠️ 2 Mistakes
Mistake 1:Over-expansion without a solid foundation
Flash Coffee rapidly expanded to 250 stores across 7 countries without establishing a strong operational and financial foundation, resulting in low quality and service consistency.
📉 Besides customer dissatisfaction, Flash Coffee also faced significant financial strain, inadequate support systems, and ultimately had to shut down all the stores in Singapore.
Looking back, it’s crazy to see that despite having raised USD 50 million in May 2023, Flash Coffee still couldn’t sustain its operations in Singapore due to existing liabilities and financial mismanagement.
🧠 Moral of the story
Having more money could bring more harm than good to a company 💸💸
Mistake 2: Poor management of human resources
Flash Coffee’s baristas went “on strike”
🙅🏻♂️ Baristas went on strike in Singapore due to unpaid wages, which the company denied, indicating a lack of transparent and effective human resource management.
Unfortunately, this led to low employee morale, strikes by baristas, and ultimately contributed to the company’s negative public image and operational challenges.
🧠 3 Lessons Learned
Lesson 1: Prioritise financial health & sustainability
While expansion is good, founders should still prioritise financial stability and sustainability without killing the company.
This is especially common for VC-backed startups as investors tend to expect your company to grow and expand quickly to raise the next round. This is where the misalignment comes in:
VCs want your company to have a higher valuation so they can get higher returns from their investments and answer their LPs.
Founders want to build a profitable and sustainable business.
🌟 Key Takeaways:
🏦 Whether you’re running a bootstrapped or VC-backed company, always avoid over-leveraging and ensure you have sufficient cash reserves to manage liabilities and operational costs. Financial discipline is key.
Regularly review with your team and investors to adjust financial strategies to maintain a balance between growth and sustainability.
For example, you can develop a detailed financial plan that includes contingencies and stress tests for different scenarios in different markets.
Lesson 2: Take care of your employees
A company is simply having a team of people to solve problems for customers by delivering products or services.
💟 Without employees, your company wouldn’t exist and grow. So take care of your employees, and they’ll take care of your business.
🌟 Key Takeaways:
🤝🏻 Be transparent with employees on what’s happening in the company and how they could help to tide through challenges together as a team.
It’s okay to say what’s going wrong. It’s not okay to hide something behind and pretend everything is going well.
Ensure timely and fair compensation to maintain employee morale and productivity.
Because at the end of the day, everyone has to put food on the table.
⚡️ Establish clear communication channels and feedback mechanisms for employees.
When your company has more than 50 employees, communication starts breaking down. It’s hard to know what’s happening on the ground as your direct reports are management people.
Therefore, having a system to communicate and listen to feedback from employees helps you know what’s going wrong to improve employees’ welfare.
Lesson 3: Well-funded companies can still die
We often see fundraising news that certain startups have raised XX million dollars and we tend to associate this news with success.
🏃🏻♂️ However, it’s important to remember that running a business is a marathon, not a sprint. At the end of the day, every business is risky. Raising tons of money is a milestone, not a success. And yes, well-funded companies can still die.
🌟 Key Takeaways:
Every dollar you’ve raised from investors is a form of TRUST — use it wisely to support sustainable growth rather than rapid and unchecked expansion.
Focus on achieving profitability and operational efficiency alongside growth to ensure long-term viability.
🔗 The Runway Insights
💰 Southeast Asia Funding Radar
Nium raises $50m in series E round (Link)
Rhea raises $10M for a global reproductive care ecosystem (Link)
Evermos shares plans to go public and IPO in Indonesia or the US (Link)
Botsync, a robotics firm founded by NTU graduates, raises $5.2M to bolster software offering (Link)
Mober raises $6M to grow EV an logistics fleet for the Philippines (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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This is the founders community I wished I had when I first started.
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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