🤯 Cake Group: How a 50/50 Cap Table Killed a $1B Singapore Crypto Unicorn

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Today at a Glance:

• ☠️ 1 Failed Startup → Cake Group

• ⚠️ 2 Mistakes → A 50/50 cap table with no tiebreaker

• 🧠 3 Lessons Learned → Build governance for the day you disagree

• 🔗 The Runway Insights → The new under-utilised sales trick you can steal

• 💰 Southeast Asia Funding Radar → Featherless.ai raises $20M (Series A) to expand serverless AI inference platform and build neutral open-source AI infrastructure for developers globally

🍰🍰🍰 Have your Cake and yield it too

• Jan 2019 — 🚪 Julian Hosp stepped down as President of TenX after Visa cut off its card issuer and the ICO model fell apart.

• 7 Jun 2019 — 🎂 Cake Group was officially incorporated in Singapore by Hosp (CEO) and U-Zyn Chua (CTO), with $2.4 million in seed funding from the founders, John Rost, and Howard Fineman.

• May 2020 — ⛓️ The team launched DeFiChain (DFI), a Bitcoin-linked layer-1 blockchain to power transparent on-chain yield generation.

• 2021 — 🔥 Cake rode the crypto bull market — revenue jumped 1,800% YoY to $631 million, with $203 million in operating income and 10x user growth.

• 9 Mar 2022 — Cake launched Cake DeFi Ventures, a $100 million corporate VC arm investing in Web3, gaming, eSports, NFTs, and fintech.

• Apr 2022 — 🚀 Cake signed an LOI for a SPAC merger valuing the company at $1.5 billion and launched its "Borrow" feature on the same trajectory of bull-market expansion.

🥶 Then the music stopped...

• May 2022 — ❄️ Terra/Luna collapsed. Crypto entered winter. Cake walked away from the $1.5 billion SPAC, citing the market crash and unclear regulations.

• Q3 2022 — 📉 Cake posted its first operationally negative quarter since early 2020. Crypto prices were down ~70%, AUM had shrunk, but layoffs hadn't started.

• 15 Feb 2023 — Hosp published the 2022 transparency report titled "One of the Last Ones Standing".

  • 2022 revenue → $266 million (down >50% from 2021).

  • Profit → $23.5 million (down 5x).

• 14 Nov 2023 — ✂️ Hosp announced a 30% workforce reduction — 52 employees laid off, headcount cut from ~177 to 125. CTO Chua publicly opposed the cuts, saying he'd been kept out of the loop and that the layoffs had "no clear intention".

• 1 Dec 2023 — ⚖️ Chua filed a winding-up application in the Singapore High Court — not because Cake was insolvent, but because the shareholder relationship had completely broken down.

🤼 Hosp vs Chua

• Feb 2024 — Both founders made eleventh-hour buyout offers to each other at the same valuation. Both were declined. A previously agreed S$32 million buyout from late 2023 had already collapsed.

• 25 Apr 2024 — 🧑‍⚖️ Singapore High Court dismissed Chua's application. Judicial Commissioner Alex Wong said Cake was "a thriving enterprise of value" and that Chua "had gone too far".

• 27 May 2024 — Chua sold his remaining shares to Hosp at a price he later called "much lower than the original deal."

  • Finally, 6-month legal battle ended.

• 11 Dec 2024 — 🤝 GSTechnologies (LSE: GST) announced a binding agreement to acquire Cake Pte Ltd and Cake DeFi UAB for an undisclosed cash sum. By then, Cake had ~700,000 registered users, but only 50,000 active, holding ~$80 million in assets — down from $1B+ at peak.

• 2 Jan 2025 — 📦 Acquisition completed. Hosp stayed for a 3-month handover, then stepped down to "focus on his family and children".

• 5 Feb 2025 — 🔚 Bake announced it'd shut down all Singapore operations effective 1 May 2025, citing the discontinuation of Cake Pte Ltd's MAS license exemption.

🌮 Key Takeaways:

• Avoid 50-50 equity splits to prevent decision deadlocks.

• Independent directors are cheap insurance against future deadlock — one neutral vote breaks a tie.

• The cheapest moment to install governance is before you ever need it.

🛠️ Operator Playbook:

• ⚖️ Install a deadlock-resolution clause in your shareholder agreement

  • Specify a neutral arbiter (i.e. independent director, mutually agreed mediator) for board-level disputes.

  • Work with a Singapore corporate lawyer (never DIY a deadlock clause).

    • That’s why I always recommend my founder friends to work with Sunil (Senior Partner at Dentons Rodyk). He is very well-known in the startup ecosystem and has helped founders navigate costly founder disputes and is an accredited mediator.

    • If you’re starting a company, having founder disputes, fundraising, or doing M&A — you should talk to him.

• 🤝 Bring in a lead investor or independent director early

  • A small institutional cheque (~10-15%) buys you a board seat that isn't 'you vs your co-founder'.

  • Even one voting director outside the founder block can break a 50/50 stalemate before it reaches the High Court.

🌮 Key Takeaways:

• In yield platforms, never let stakers, reward payments, and platform fees depend on the same correlated token.

• Vertical integration concentrates exposure rather than diversifying it.

• When customer losses and revenue losses share the same trigger, your P&L has no shock absorber.

🛠️ Operator Playbook:

• 🪙 Decouple your platform's economics from any token you issue

  • Take fees in stable assets (USDC, USDT) rather than your house token.

  • Run reward yields through battle-tested external protocols like Aave, Compound, or Lido before building proprietary chains.

  • Maintain a treasury split: at least 60% in BTC/ETH/stables, max 40% in any token tied to your own platform.

• 📊 Build a "correlated risk" stress test into quarterly board reviews

  • Map every revenue line and customer-facing product to its underlying assets.

  • Ask: "If asset X drops 95%, what happens to AUM, fee revenue, and brand trust simultaneously?"

  • Compare with how Coinbase and Kraken structure custody — no proprietary token in the staking flow, and both survived 2022 with users intact.

🌮 Key Takeaways:

• Plan your cost base on trough-cycle revenue, not peak-cycle revenue.

• Late cost cuts compound into bigger cuts that fracture internal alignment.

• The first operational loss is the signal to act. The longer you wait, the deeper the cut.

🛠️ Operator Playbook:

• 📉 Run two financial plans: peak-cycle and trough-cycle

  • Build your operating budget against trough-cycle revenue assumptions

  • Allocate any peak-cycle surplus to the balance sheet (cash, BTC, stables) rather than headcount or office expansion

  • Maintain at least 18 months of runway calculated against trough-cycle revenue

• 🪓 Pre-commit cost actions to operational triggers

  • First operational loss = freeze hiring, freeze new product investment

  • Second consecutive operational loss = layoffs of 10-15% (small enough to preserve team alignment)

  • Coinbase laid off 18% of staff in June 2022 — within weeks of crypto's downturn — and was back to profitability by 2024. Cake waited 14 months and cut 30%.

🔗 The Runway Insights

• The new under-utilised sales trick you can steal (Read)

• How to use Claude for GTM and pricing analysis (Read)

• Growing a fully bootstrapped email marketing platform to $37M ARR (Read)

• I redesigned my landing page so AI agents can read it (Read)

• The wide path: Why most current valuation dynamics are not here to stay (and what will) (Read)

💰 Southeast Asia Funding Radar

• Featherless.ai raises $20M (Series A) to expand serverless AI inference platform and build neutral open-source AI infrastructure for developers globally (More)

• Cata secures $5.3M (Seed) to scale white-label SaaS platform helping F&B and retail brands build owned digital ecosystems and apps (More)

• FORMAS.AI bags $3.98M (Pre-Seed) to build AI-native design workspace for architecture, engineering, and construction industries across global markets (More)

• Cube closes $3.7M (Series A) to scale e-commerce data intelligence platform helping leading brands grow faster online across Southeast Asia (More)