Pine Labs said on Tuesday it has acquired Southeast Asian startup Fave in a deal valued at $45 million as the Indian firm looks to strengthen its consumer-focused offerings in the domestic and international markets.
Fave helps an offline merchant connect and retain customers by using gift cards and vouchers. The startup allows merchants to accept digital payments by having a customer scan a QR code. Once the payment is made, the customer automatically receives a cashback / loyalty point through the Fave app that can only be redeemed at that specific business during future transactions.
“Customers love us because they get safe money, cashback and rewards for being on the platform. And merchants love us because they get a lot of new and repeat customers,” explained Joel Neoh, co-founder and chief executive of Fave, which like Pine Labs, is backed by Sequoia Capital India. Five-year-old Fave, which started as a fitness subscription service, raised over $32 million prior to being acquired.
This offering has especially proven useful to merchants in the pandemic as they scramble for ways to drive sales from existing customers, said Amrish Rau, chief executive of Pine Labs, in an interview. “Consumers, too, were looking for ways of cost-savings or ways to optimize their purchases.”
Pine Labs — which offers businesses payments terminals, invoicing tools, and working capital, and acquired a gift cards solution provider Qwikcilver in 2019 — made its first investment in Fave last year.
Amrish Rau, who ran PayU business in India, joined Pine Labs last year. Mastercard and PayPal have backed Pine Labs, which is now valued at $2 billion.
Rau drew comparisons between Fave and Honey, saying the Southeast Asian startup is doing to offline businesses what the PayPal-owned business has achieved in the online world. “For the first time with QR, what I realized was you can do a wonderful job when it comes to loyalty, rewards, and the redemption in the offline world,” said Rau.
Leadership of Fave will continue to work at the startup post the acquisition and Rau said the team is working to bring Fave’s offering to customers in 3,700 Indian cities. (This is one of the rare times when a Southeast Asian startup is launching its offering in India.) Neoh said in the interview that Fave, which will be hiring an additional 100 employees, also plans to launch a buy now and pay later product in the next one to two months.
“India has the digital advantage with young demography, growing aspirational middle class with rising disposable income and increasing digital savviness. We are confident that the APAC e-payments landscape will continue to achieve exponential growth in the coming decade. Together, we will be stronger, faster and better,” said Neoh.
Within the next 30 days, Fave Pay will launch in India with QR code transactions, and then Rau said, the team will work with Pine Labs’ merchants community to deliver rewards, coupons, and redemption programs to Indian consumers.
“After looking at the business for nine-ten months, I thought it was time for us to do something more important and strategic,” said Rau, who added that the acquisition will help Pine Labs make further inroads in the consumer space.
Rau said Pine Labs is exploring more merger and acquisition opportunities and broadly focusing on two themes: Bridging the gap between offline and online payments, and business applications where Pine Labs’ prepaid cards offerings could be leveraged.