HK family offices look to early-stage AI, blockchain for long-term upside
Two single family offices in Hong Kong are betting on investments in artificial intelligence, blockchain, and other transformative technologies to capitalise on long-term upside even as they diversify portfolios to manage risk.
To balance their high-risk appetite for early-stage tech investing and participation in future technology reforms, they are utilising real estate investments to provide stable income and preserve capital.
“I’m definitely a long-term believer and have been for a very long time. That's why I'm in certain direct deals for early-stage startups in business-to-business (B2B) software and now AI (artificial intelligence),” said Timothy Tsui, chief investment officer of Arbutus, a Hong Kong-based single family office. Tsui manages the firm for his family’s wealth.
Tsui’s family office invests heavily in tech. It is working on investing in an AI company based in the United Kingdom. He thinks it’s still early days for the mass adoption of AI, but it has become a major focus for the family office, which believes the sector will enjoy continuous growth in the next 10-15 years.
“[AI] is an area we are following very, very closely and we see that the next 20 years are going to be completely changed by AI,” Tsui told a panel discussion at AsianInvestor’s Family Office Briefing Hong Kong last week.
Tsui focuses on AI applications in the e-commerce sector. He believes technology advancement will prevail and ultimately increase productivity for society in the long run, despite people’s fears about it affecting employment and corporate survival.
However, he stressed the importance of portfolio diversification to keep risk at bay. The family office will stick to real estate investment for income generation, while venturing in early-stage tech to grasp the long-term upside it sees.
“When you're doing early-stage investment, not everyone is a winner. That's a given,” he said, noting that investors and family offices must fully embrace the high failure rate by managing the asset allocation properly.
He also adopts a diverse way of tech investing, including direct investment, funds, joint ventures, or partnerships, depending on the project and expertise.
EARLY PLAYER
Similarly, Ong Iu-Jin, co-founder and managing partner of single family office Augventive Limited, is also a risk taker in the tech space. Augventive prefers direct investments.
The family office’s investment is driven by strategies like finding asymmetric risk and return profiles. Its founder is an early investor in crypto.
Despite the market volatility, the family office has started to take some selective small positions, as it believes opportunities will return in 2024.
One of its core investments is a quantum-resistant tier 1 blockchain company, which just went public. The family office has high hopes for it.
“This is an example of investments that we want to make where there is very, very limited downside and all the possible upsides. When you come across these opportunities, you have to allocate something to it,” Ong also told the panel discussion.
For 2024, Ong said they are in the early stage of due diligence on an investment in a cloud computing service provider, which grants data owners a high level of control of their information, including how and where it exists, and how it communicates with others.