Private investment platform aiding investors and diluting banks
New technology disrupting traditional investment banking infrastructure
DISRUPTION is a major theme across almost every industry today as spirited start-ups challenge the established traditional practices. In the banking sector while the retail and wealth management units fight off the pervasive fintech firms, investment banking is also being confronted by new genres.
One such entity Fundnel, a Singapore-based private investment platform with a growing presence across Asia has something in common with tech giant Apple, at least in the environment where the respective firms began their corporate life.
Benjamin Twoon the co-founder and COO of the private investment platform explains how his firm, which now employs over 40 staff in Asia, started in the not so glamourous confines of a room in a garage.
“In the early days we would have investors coming to visit us, they would call from outside and say are you sure this is your office, am I at the wrong place? I'd tell them to come through the car workshop, come up to the second floor," says Twoon.
Now well established in a contemporary fitted shophouse in the heart of Singapore’s central business district, and with satellite offices in Malaysia, Indonesia, Brunei, and India, the firm is well on its way to disrupting the traditional investment banking infrastructure.
Fundnel’s platform is an organic conduit that enables investors access to private market opportunities in unlisted companies, secondary unicorn shares, and professionally managed private equity.
While peer online platforms operate more as a wholesale listing venue, Fundnel presents deals based on financial markers, business fundamentals, and an empathy of local and regional investors’ interests.
These range from SMEs across Asia to some of the world's largest tech companies and investor funds, all without necessarily engaging a bank. And the bank is not required is a concept clients are getting used to and embracing.
The platform boasts an investor network of more than 11,000, the opportunity to invest in high growth companies, and currently serves investors from all over the world. It also holds a capital market services license from Singapore’s financial regulator for dealing in private securities and is also a Recognised Market Operator (ECF) under the Capital Markets Services Act 2007 in Malaysia.
Since inception in 2015, the total value of deals launched on Fundnel's platform has exceeded US$1.8 billion with 36 transactions completed to date.
So what initially drove Twoon and his founding partners, who are both former investment bankers, to create Fundnel?
Among their prime motivations was a desire to address a segment in the market they felt was unserved where even high-quality companies weren't getting access to traditional funding needs. And it was also about harnessing the disruptive potential of technology and data to democratize the mystique of finance.
Circling back to the tech connection, the Fundnel team realized early that by building precise technologies they could operate nimbly saving on costs and time, while helping companies reach their fundraising targets.
In appraising potential deals before transactions get anywhere near the investor platform the proprietary endogenous technologies perform a detailed assessment.
“It is a deep first cut that assesses over 50 parameters to score each company, across five silos — company background, management background, market and industry performance, deal and exit, and financial performance based on that we get a quick sense of whether we should spend more time on evaluating a potential deal,” Twoon says.
“But then we qualify with say qualitative inputs from humans, if by chance there are unique factors that might not have been captured quantitatively,” he adds.
The steady and deepening flow of clients towards the new model means someone is losing the business and that someone appears to be the traditional bank.
While banks may claim for example that margins are too thin, by walking away from those deals that don’t add up, it also pushes clients to the new model. And with many more than satisfied with that service clients are opting not to return to the banking domain.
“Having been in the market for four and a half years people know us now and even larger more established companies are seeing us as a real alternative to the traditional fund-raising sources,” says Twoon.
The COO and his team are not resting on their laurels, earlier this year his firm connected with Phillip Securities and PrimePartners to develop the first member-driven, blockchain‑powered private exchange in Southeast Asia.
Called Hg Exchange the platform will support the issuance and trading of both digital and non-digital capital market products. Hg Exchange has submitted a fintech regulatory sandbox application to the Monetary Authority of Singapore, and expects to launch by the end of 2019.
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17 Oct 2019