Raffles Family Office x Antler

Why family offices need to turn their attention to early-stage tech companies?

The current state of the world has forced us to innovate and accelerate a lot of planned digitisation at a rate we never thought was possible. As brick and mortar businesses navigate the digital world and learn to migrate and operate online, investors also need to think innovatively to allocate their money and be part of the digital transformation and creation of companies in the new world, in a safer way for long term gains.

Client and Market Segmentation

Raffles Family Office (RFO) is a multi-family office wealth manager that provides their clients with independent, bespoke and complete family office solutions. Traditionally, their asset allocation for clients has been generally skewed towards the highly liquid secondary markets such as fixed income, equities and funds. With the economic outlook becoming more uncertain and volatile, they are open to the idea of adding on high-quality alternative investments into their portfolios.

Many ill-advised investors who were not properly positioned during the onset of COVID-19 suffered considerable losses, especially if they were undertaking leverage. In light of that, RFO has acknowledged that there is a compelling need to further explore the alternative investments space,” says Kendrick Lee, Managing Partner of Raffles Family Office Singapore.

According to a Cambridge Associates Report, ‘Venture Capital Positively Disrupts Intergenerational Investing’, the three main areas facing wealthy families right now are i) Intergenerational wealth planning, ii) Investing sustainably for future generations and iii) ensuring family unity endures.

Consequently, RFO has always adopted a risk-managed investment approach in the traditional markets with the view of preserving their clients’ wealth. During these trying times, the ability to manage the risks and volatility of their clients’ portfolios is of paramount importance in their larger wealth management strategy.

Enter the VC

While each family situation is unique, RFO advises families and clients with sizable AUM (>15million USD) to diversify at least 5%) of their portfolio towards private investments. Out of that, they suggest families consider allocating a portion of their private investment to high quality, well-backed VCs, depending on the size of assets.

As an early-stage global VC that builds groundbreaking technology companies from scratch, Antler has a unique point of entry. Antler, through its differentiated deal organization strategy is able to work with individuals without a co-founder or team as well as pre-idea level.

We provide them with financial support, coaching, expert advisory and other support from Day 1- from helping them find the ideal co-founder to sharpening their business idea. No other VC does due diligence like this. If you count the number of hours spent with each founder from the time of sourcing to the time of investment, it’s an average of 400+ hours per founder,” says Andrea Hajdu-Howe, Head of Capital at Antler.

From cloud computing and artificial intelligence to SaaS companies that are changing the way companies operate, venture capital investing offers otherwise unreachable access to evolving industries from the ground level at a lower ticket size than investing in larger, formed companies.

Early-stage tech companies have a lower valuation entry point albeit with a higher risk. But if you combine comprehensive due diligence and sufficient diversification, you have a great investment thesis. In addition, though the returns take longer than public and secondary markets, they are largely independent of external factors due to the way in which they can pivot and adapt easily to changes, given how nimble a stage they are at,” added Andrea.

According to RFO, one of the main objectives of their clients is moving from an often-unstructured approach to the management of family wealth, towards a far more structured and planned framework. As a by-product, many families are now beginning to move from a “growth-orientated” model — favoured by the first-generation wealth creators, to a “preservation-orientated” more suited to subsequent generations.

The major risks of participating in such projects are the requirements of expert knowhow, in-depth knowledge of the targeted industries and of course the unsecured nature of these investments. Therefore, there is an immense value add in organizations such as Antler who are leaders in the industry, with access to the brightest minds and best technologies. With their proficiency in leading these projects to success, what better way than to learn from and to tap into their expertise of the VC space,” added Kendrick.

The survival of the most maneuverable

Early-stage tech companies are maneuverable and more adaptable — this trait is becoming increasingly important in a COVID world where it is getting harder to predict how things are going to unfold- things are constantly changing and moving. These companies can change with the times and become more useful and adaptable to the consumers around them.

Start-ups are exposed to wider economic risks and are inherently riskier because of their often untested business models, but they can adapt easily as well and change the business model in quick and real time. It takes an average of seven years to sell a tech company, and most of the return comes from a few hyper-successful outliers. Investors should take a diversified portfolio approach to have the best chance of ensuring they get the best from each group of companies,” added Andrea.

The newly minted wealth amongst increasing sophisticated investors here in Asia has resulted in a surge in demand for such services, with there being a total of more than 1500 family offices set up in the region. However, most of these family offices only offer a limited range of services which may not be able to cater to a client’s holistic needs.

What is particularly attractive are the potential returns, but also its somewhat low correlation with the broad economic landscape as a whole. Many of these early stage Venture Capital (VC) start-ups are typically less affected by market cycles, some even thrive better amongst such conditions. Many of our clients — notably the second, third generation ones have had a keen eye for such investment opportunities. Just as how the first-generation saw entrepreneurship or real estate as a propellant, we see the same budding signs here in VC,” says Kendrick.

This article has been co-written by Raffles Family Office and Antler. Please join us for a panel discussion Webinar to find out more about this topic. Registration is a must and details will be sent once registered.

Appendix:

What is a family office?

A family office is a private and independent wealth management firm set up by ultra-high net worth individuals to oversee the day-to-day administration and 360-management of their family’s assets. Its main goals are to successfully and efficiently — protect, grow and transfer wealth across multiple generations. Having its roots from Europe and the United States (think the Rockefeller and Rothschild families), the family office concept has indeed proven its worth, allowing the legacy and wealth of such families to last centuries. With that being said, the family office landscape has indeed evolved, especially in the last decade.

About Raffles Family Office:

Since its inception as a multifamily office in 2016, Raffles Family Office (RFO) has successfully positioned itself as one of the pioneer leaders in the industry. With a team of more than 50 staff across 4 locations — Hong Kong, Singapore, Taiwan, China, we provide all our clients with an independent, bespoke and complete family office solution. With a wide spectrum of partners across different financial sectors, they are able to provide clients with the best in class products and services. RFO also has its own inhouse investment team made up of seasoned professionals with decades of experience at the very highest level of wealth management.

About Antler:

Founded in Singapore in 2017, Antler (www.antler.co) is a global early-stage VC helping to build the next big wave of tech. With the mission to turn exceptional individuals into great founders, Antler aims to create hundreds of companies globally. They select the world’s most exceptional and determined people, help them find the right co-founder and connect them to a top tier network of advisors and experts worldwide. Antler breaks the barriers to entrepreneurship by providing funding from day one and building strong teams from the ground up while enabling founders to rapidly launch and scale their ideas. Antler has 10 locations globally- Singapore, London, Beijing, Sao Paulo, New York, Amsterdam, Stockholm, Sydney, Nairobi, and Oslo.

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