Singapore-based asset management firm R. E. Lee Capital today announced that it will invest in up to 30 early stage startups within the next two years, as part of the firm’s suite of alternative investment products that it is building for its high net-worth individuals (HNWIs) and family offices clients.
Expecting to invest up to US$2 million in each startup, the firm will focus on startups based in Singapore, Hong Kong, and Taiwan. The startups are working in industries that overlap with the clients’ businesses such as real estate, retail, and telecommunications.
Thai conglomerate Benchachinda Holdings is one example of such clients; the company is looking to invest in startups in the energy management, smart lighting, video analytics, and IoT to support its building development businesses.
R. E. Lee Capital is also looking forward to launch three different funds in blockchain, raw materials for electric vehicles, and a machine learning trading algorithm within the next three months.
According to Capgemini’s 2017 Asia-Pacific Wealth Report, Asia has the largest HNWI population and wealth, and is on target to surpass US$40 trillion in wealth by 2025.
In a phone interview with e27, Investment Director Bao Vu explained that there are three factors that have driven the rising trend of HNWIs and family offices investing in tech startups:
1. Generational changes at the top leadership of family offices
2. Disruption of traditional businesses in Asia by tech startups
3. Push towards alternative assets and investment as traditional investment such as stocks continue to experience bull run since the last financial crisis
This happened despite the fact that many startups do not immediately have a clear path to profitability.
“What makes it sort of attractive for these families to invest in startups is beyond financial gain. They are typically strategic investors … These Asian family businesses typically have a very wide client base, and they can introduce these clients to the startups,” he said.
“Even though the startups are not profitable at the moment, for these families … they can bring in sort of a different angle that is not just financial gain,” he added.
The director also added that these family offices and HNWIs tend to be more interested in early stage startups.
“They hope to influence the path of the startups, in terms of their growth … At the late stage, the decision to invest is purely for financial factor,” he said.
“Our clients’ investment philosophy is that they don’t want to be just a financial investor … They are looking for new products that can inject new energy to their businesses,” he closed.
Image Credit: R. E. Lee Capital