As the fintech startups, blessed by overwhelming investor interest, burgeon into a multibillion dollar emerging market, scaling to sustainable growth is increasingly becoming a hurdle as the industry gets saturated and competition heats up.
The situation means many startups offering common services will have to wield a magic wand to stay afloat, otherwise they’d get drowned in the sea of competition dominated by big fish. This is the story of Fast, a startup that provided online checkout products.
On Tuesday afternoon, the fintech announced that it will shut down, confirming the fears many had expressed for days now about its future. Reports indicated that its 2021 revenue growth was modest, its cash burn high and its fundraising options limited.
Tekedia Mini-MBA edition 14 (June 3 – Sept 2, 2024) begins registrations; get massive discounts with early registration here.
Tekedia AI in Business Masterclass opens registrations here.
Join Tekedia Capital Syndicate and invest in Africa’s finest startups here.
The Information, citing sources, broke the news that the company is winding down. In a statement issued later, Fast confirmed the news saying that in the wake of “making great strides on our mission of making buying and selling frictionless for everyone, we have made the difficult decision to close our doors.”
TechCrunch ran a brief on Fast’s journey to its unfortunately botched great future.
The company, founded by Domm Holland and Allison Barr Allen, went on to describe itself as a “trailblazer,” saying that not all such parties make it to “the mountain top,” claiming that while it failed, the startup managed to “forever” change the world online commerce. How much credit the short-lived company can actually claim for work in the one-click checkout market is far from clear, but at least Fast is going out as it lived: giving itself more props than perhaps its business results warranted.
Fast posted a paltry six-figure revenue total in 2021, despite raising a $102 million Series B led by Stripe. The company’s burn rate was said to be as high as $10 million per month, or a simply massive multiple of its revenue, let alone gross profit.
A company imploding a year after raising nine figures won’t be a common story this year, but startup failures come in degrees; this is a more high-profile crash. Others will be slower-motion and less violent in their halt.
PitchBook data indicates that Fast was last valued at around $580 million, measured on a post-money basis. For the employees holding options that are now worth nothing, the company’s shuttering is a shock. Whether the company’s founders were able to sell some shares in the company’s huge Series B is not clear, but if they did, let’s hope they distribute the cash to their former staff.
The company has raised $124.5 million since its 2019 inception, according to Crunchbase. Besides Stripe, other investors include Index Ventures, Susa Ventures and Global Founders Capital.
As recently as March 28, 2022, Fast was inking deals such as one with The Honest Company to implement one-click checkout for its customers. Earlier this year, NPR reported on how CEO Holland had his share of controversy in Australia prior to starting Fast. Holland’s former startup Tow.com.au, which aimed to be “the Uber of towing,” failed in what at least one person described as a “disaster.” NPR’s article noted that Holland’s previous venture was embroiled “in a multimillion-dollar billing dispute with the Australian state government over towing and impounding fees that led to the startup’s liquidation in 2018.”
Meanwhile, in the wake of Fast’s demise, community resources are already cropping up — including a list of former workers. A quick scan of social media indicates that a number of companies are looking to snap up Fast staff. The talent market for startup workers is still hot, so perhaps the impact on those laid off today will prove short-lived.
Fast’s conclusion comes after some other richly valued startups have begun to pull back. Layoffs are ticking back up more broadly in startup-land, and one very well-known unicorn cut its valuation to better incentivize its workers. Earlier today, TechCrunch reported that Workrise — which was valued at $2.9 billion last year after a $300 million raise —laid off what is believed to be “hundreds” of employees. 2022 is shaping up to look at a lot different from 2021.