$1b venture capitalist Hian Goh on how Singapore can grow a firm like Apple

SPEAKER_1 (0:02)

This is a podcast by The Straits Times.

Lynda Hong (0:09)

Hello, I'm Lynda Hong, Assistant Podcast Editor of The Straits Times. In this episode of In Your Opinion, I'm joined by a veteran venture capitalist who manages a portfolio of companies that's worth a billion dollars. He's also the former investment banker, two creative technology founders, Sim Wong Hoo.

Hian Goh, founding partner of Openspace Capital. Welcome to the show, Hian.

Hian Goh (0:29)

Very delighted to be here.

Lynda Hong (0:31)

Okay, Hian, now let's talk about this recent motion in Parliament this August and it's focused on how Singapore can grow its own homegrown Fortune 500 companies from scratch. Now, that begs the question, can we ever nurture a local startup to become as massive as Apple, the US tech giant behind the iPhone, or is our inherent kiazooism keeping us from building a true multi-billion dollar global company? First of all, let's just talk about the private capital ecosystem. Is there anything missing in there to support our local startups?

Hian Goh (1:08)

I mean, it's a good place to start. Is there anything missing? There's always things missing. We always want more. But I would say on balance, if it's the one thing I would say is fundamentally we're there.

We've had a track record in Singapore of putting quite a lot of money to work on the earliest part of the private capital chain, what we call seed, and what we call venture capital. And this started, I think, the best way to think about it is started around 2010, 2011 So we're about 15 years into this journey. And why I point out 2010, 2011, was I think that we really got back to work as a country to innovate and create really interesting companies. If you look at this crop of consumer services that you use, Red Mart, Chope, Love Bonito, and these are all companies I invested in. That's all around 2010 to 2015

So we've been doing this for 15 years and it's been successful. There's been quite a fair amount of private venture capital. I know that because sometimes when I travel around ASEAN, Singapore is seen as the place, oh my goodness, you've got really great capital, the envy of the capital formation. We know that because Openspace Capital, we run a billion under management. So our portfolio companies are bigger, but it's a billion under management that we're responsible for, and we deploy it across the ASEAN region. So most interestingly, in Indonesia, we've done a lot of work there. So Singapore becomes a bit like the capital of the private capital formation in the innovation economy. So yeah, I think a lot of things are doing well. What's missing? Well, there's a lot of things. There aren't always many things in life. But I think the one mission we need to complete is to really invigorate the Singapore Stock Exchange. And I'll stop there, but I think that's the one thing that we can really work on. If you can't graduate from private companies to the public world, then people will stop funding the private capital. That's the thing. You see, when you're investing, so I invest primarily in that one sleeve of private equity called venture capital.

Only two ways of making money. You sell the company or you IPO the company. Now, I would say, on average, and this is an interesting fact. Actually, guess, what percentage of companies actually go public versus what percentage of venture capital companies actually get acquired, globally?

Lynda Hong (3:40)

Globally? I think it might be there are more companies that have gone public than being acquired by private.

Hian Goh (3:46)

What percentage goes public?

Lynda Hong (3:47)

As in the, those startups?

Hian Goh (3:50)

First of all, 50% die, right? 50% die, and then after 50% survive, what percentage actually go public and what percentage?

Lynda Hong (3:57)

I think it's about, the remaining ones, it's like 50%. I think three out of five gets acquired by private companies, and then 20%.

It's about that. It's not a lot going to IPO, yeah.

Hian Goh (4:09)

It's 80-20.

Lynda Hong (4:10)

Because I would assume there are many steps for them, their due diligence, and then you got to pay to stay public. So it might be a bit difficult in that sense.

Hian Goh (4:17)

Well, it's a power law, right? So our business is about really making many, many investments half die by definition. If any venture capitalist tells you that half don't die, you really need to read their books. Or worse yet, they're not doing the right job because you are in the business of innovating. You need to have setbacks. You need to have rights offs. And then of the rest, along the way, people want your companies and then you say, oh, it's a good price, you sell it. But once in a while, you get a company that's really incredible and you hold on for dear life. And those are the companies that go public. So those are the ones that really make a large amount of the return of a venture capital portfolio.