Not too long ago, you wouldn’t be able to get a private equity firm to look your way without a cool million dollars in hand. Now, with as little as US$50,000 (S$68,000), you can invest in exciting new ventures like SpaceX.
The investment landscape is changing and Singapore-based start-up Fundnel is leading the revolution. Launched in 2016 by ex-JP Morgan banker Kelvin Lee and two of his colleagues who were driven by equal parts foresight and naivete, the technology-driven investment platform is exciting in more ways than one.
To begin, it simplifies the investment process to one akin to online shopping: Register for an account through its website (or just sign in with your Linkedin account), indicate how much you are ready to part with, which industries you are interested in, and the platform will churn out a set of relevant deals with information such as company background and market analyses presented in easily digestible summaries. Browse deals, pick the ones that interest you and a Fundnel representative will get in touch to complete the process.
Don’t mistake it for a crowdfunding platform, though, even if it uses that as a channel to raise capital. “With our platform, we can amalgamate smaller tickets – US$50,000 for funds – for deals like Vickers Ventures and Blue Cloud Ventures,” shares Lee, who also acts as the company’s CEO. “We are taking baby steps towards financial inclusion.”
Having observed his businessman father’s struggles with developing the family business, the 34-year-old is particularly motivated to help the little guys in an increasingly competitive market.
“If I had the smarts, I would be a doctor – it is a profession more suited for my character,” admits Lee, who says that he often prioritises the social impact of a transaction over monetary consideration.
“(The way I prioritise things) is a big problem in the finance sector!” he says with a laugh. But Fundnel wouldn’t have been possible, if not for his ability to see past dollars and cents. “We were a bunch of young people who wanted to simplify high finance. Naivete was what got us started.”
In its first year, the MAS-endorsed company completed about 15 deals, canvassing some US$49 million – all through their start-up of three people.
Today, Fundnel is in six countries across the Asia-Pacific, has a network of over 10,000 investors and has completed 32 deals, raising more than US$950 million. Indeed, Fundnel is an exciting proposition not just for investors. Lee illustrates this by comparing Fundnel’s activities to that on Catalist in 2016.
“Catalist supported $77 million through 11 deals during the same period, which required working with 12 banks. The monthly salaries of those people at the banks working all those deals are what the SMEs had to pay. We had just three guys, augmented by technology.”
What this translates to is significantly lowered costs for small companies looking to raise funds. And, while Fundnel takes a 2 per cent cut as fees, Lee reveals that the company is looking to bring that percentage down by revising its cost structure.
For the new capital-raising opportunities Fundnel has brought about, Lee doesn’t see himself as a disruptor though. “All the deals we do are by-products of a bigger infrastructure. What we are doing is to supplement the existing high cost structure to enable everyday businesses around us to raise capital for growth in a time-and cost-efficient manner. Am I really going to be the one spearheading this change? I don’t know.”
“I just hope to show traditional financial institutions that there is a better alternative, and to leave the financial market a better place than before – a more inclusive place, for both investors and businesses alike.”