Making Private Equity Accessible – Kelvin Lee

As the co-founder and CEO of Fundnel – a private investment platform that offers unlisted securities in growth and pre-IPO stage companies to a investors – Kelvin Lee shares how his start-up intends to make a difference to SMEs in their pursuit for growth and expansion.

Tell me a little bit about yourself.

I am the co-founder and CEO of Fundnel.com, a private investment platform that offers unlisted securities to qualified investors.

Fundnel and its network of investors have invested in 15 companies, c.US$49mm in the past year and is headquartered in Singapore with a growing team of over twenty people spread across regional offices in Indonesia, Malaysia and India.

I was previously in J.P. Morgan covering clients in North and Southeast Asia and has raised over US$20bn+ for clients to date. Prior to J.P. Morgan, I was with Standard Chartered working on leveraged and acquisition finance, balance sheet & capital structure optimization and other alternative structured capital raising solutions such as the securitization of receivables and the provision of sale and leaseback structures.

What is your business venture about?

Fundnel is a private investment platform that offers unlisted securities in growth and pre-IPO stage companies across industries to a network of qualified investors in the region.

What is your mission at the outset?

With an increasing number of companies delaying IPOs on the public market, we’ve been seeing investors display active interest in making private market investments. Fundnel is building an investment platform that will enable these investors to co-invest easily alongside top financial institutions and make private investments simple, accessible and transparent for everyone.

With regards to companies, our focus is beyond the trend of investing in tech startups. We want to be more involved in the business of the everyday SME – to play our part in nation building, and enabling job creation through raising capitals for SMEs. We want to provide SMEs with a platform to raise capital in a more cost and time efficient manner.

How did you get your idea or concept for the business?

SUPPLY-SIDE (Companies)

One of the more memorable IPOs that I did was for a standout Hong Kong-based technology company based out of China that was on the road with us for a NYSE IPO. I was helping out the management team with roadshow rehearsals, and could vividly recall the CEO’s frustrations with the amount of time and money spent with bankers on the process. In a candid moment later in the day whilst I was helping him brush up on his responses to investors and the press, he told me that the way investment banks like ours were going about raising funds for companies was outdated and we would eventually be replaced by technology platforms. If founders could raise growth capital for their companies without spending so much money and time with bankers, they would surely prefer to do so. This statement resonated with me, and I set out to create a quicker, sustainable and more permeable method for companies to raise funds.

Many privately-owned SMEs are no longer seeking an IPO as significant financial resources are required, combined with the inevitable involvement of many external parties. This means that exorbitant amounts of time and money are spent by the end of the whole process. Many everyday companies do not want to commit so much limited resources and choose to stay private instead of listing publicly and dealing with the often fluctuating sentiments of public market investors.

DEMAND-SIDE (Investors)

On the other end of the spectrum, through further research, I also realized that the opaque nature of the private equity industry, means that many working professionals do not have access to the asset class. They end up with more traditional purchases such as cars and homes that they could relate to or would only be able to invest when the company goes public at an IPO with often dismal returns.

The millennial generation is also no longer investing in the public markets, and they do not relate to companies that are currently listed or do not care enough about investing in them. Millennials would prefer to invest in a business that they can see, feel, and experience in their daily lives.

The future efficacy of our financial markets is dependent on the private investing activities of investors

What is unique about your business?

We’re the first FinTech company in Singapore to tackle private investments, and to really push for change in the very traditional and rigid private investment industry. We want to save time, money and effort for companies seeking to raise funds, and we want to provide investors with a modern way of investing in private equity.

We are matching investors who would never otherwise invest in equity, with companies who would never otherwise raise funds from a pool of investors. We facilitated US$49m worth of transactions with a small team of investment professionals, which is unheard of in public IPOs.

We also want to engage everyday companies that we consume daily, and are part of the social fabric, but cannot or do not need to get to a certain level of scale to qualify for a listing. These can be your coffee shops, provision stores, restaurants, cafes, bars or retail outlets.

We’ve taken the first of many steps towards a bolder, quicker and more modern solution that will create a new standard in equity investments.

Who do you sell to and how do you get customers?

We are in Singapore, Malaysia, Indonesia and India, and we target SMEs or companies in the high-growth and pre-IPO stages, when they are usually looking to expand. We do not restrict ourselves to any particular sector, and our deal sizes tend to be in the range of US$3m-20m. We reach out to companies that would never have raised funds with the current investment options available, and we engage investors that would never have invested in current equity investment options.

Why will customers stay or do repeat business with you?

Our platform and programmes cater to the needs of both our investors and lenders that most importantly saves them time and costs. We also utilize a private exchange infrastructure, that has no recurring costs for investors or lenders.

Investors and companies have been happy with their investment and fundraising offers with us so far, and we will continue to serve them, and continuously align our model with their shifting needs.

What have been the biggest obstacles?

One thing has always eluded FinTech in the general public – trust. It’s been an issue that we all grapple with when there were no industry regulations in place and no framework to work with.

In the past year, the government has been quick to respond to the rapidly growing FinTech scene in Singapore. We were awarded the Capital Market License (CMS) from MAS after a thorough vetting process, in which MAS was quick but fair. It has created a legal framework and a flexible sandbox structure for young FinTech companies to build their business model and experiment as needed.

Personally for Fundnel, we’ve also won the best FinTech company award 2016 (Singapore) from the Asset, one of the region’s premiere banking and finance publications. It is a symbol of the hard work the team puts in every day and it gives us a great platform to build even more trust and engagement with current and potential clients.

With the enthusiasm and buzz we’ve seen at the venue, and the government’s continued support, we hope that regional FinTech, and Fundnel, will be boosted to greater heights.

If you had one piece of advice to someone just starting out, what would it be?

The Singapore government has provided a great economic framework with the “Committee on the Future Economy” initiative. It is striving to create an environment for local businesses to succeed and thrive. There is no better time to be a Singapore entrepreneur, the wind is in our sails – so give it your all.

Nothing is certain in life besides death and taxes. With that in mind, job security is a thing of the past so build your dreams, or else someone else will hire you to build theirs.

Do you have any final thoughts?

The world is always shifting, whether it is in politics or business. Agility will be key in navigating a less predictable environment. Fintech will be a large part of Singapore’s ability to react quickly and be successful in an innovative and changing world.

Who is your biggest inspiration or drive to do what you are doing?

Elon Musk is a true dreamer and visionary, and he inspires a whole new generation of entrepreneurs, including many of us at Fundnel. Like him, we believe in being bold, and pushing the boundaries to change and create a new status quo. As a popular saying goes – nothing ventured, nothing gained.

What we are doing every day goes beyond our personal goals and objectives. We are creating jobs, growing companies and helping great ideas to flourish. Leaving a lasting impact on the world around us – that’s what ultimately drives me.

What’s next for you and for Fundnel?

 “By 2020, Fundnel will be the first port of call for private investments in everyday businesses for investors, and especially the upcoming generation.”

To reach our vision, we will be calling on the support of all our partners from government, service professionals and other platforms to help build up the private exchange ecosystem that will serve as a mechanism for liquidity and secondary trading.

We will continue to focus the majority of our time on screening and listing the best possible companies and facilitating both the primary investment and subsequent secondary trades between investors.

Ultimately, we have a vision of an investment ecosystem that sits in Fundnel. It will include an advisory unit that trains and advises SMEs, professionals and investors, and a formalized investment vehicle for our investor network. We will look to build up a private investment exchange, which is a private list of companies to invest in that are an alternative to public exchanges such as the SGX. All of this will be thoroughly vetted and secured in a transparent, holistic investment system that will provide resources to and fulfil the needs of both investors and businesses.

Chia Hock Lai

Chia Hock Lai

Chia Hock Lai is passionate about how technology is disrupting the way financial services are being delivered to consumers and businesses, and in the process making the financial system more efficient and inclusive.

Hock Lai has 18 years of experience in the financial industry, having performed roles in both business and technology. He graduated from the National University of Singapore (Real Estate), Nanyang Technological University (Infocomm Technology) and Nanyang Polytechnic (Fund Management & Administration).

He is also a Fellow of the Singapore University of Social Science, advisor to FinTech Startups and mentor to student FinTech projects.
Chia Hock Lai

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