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Singapore family office: Emerging managers make the difference in VC investing

Investing in emerging managers offers diversification and opportunities to drive change through seed capital, according to a single-family office.
Singapore family office: Emerging managers make the difference in VC investing

The venture capital market is currently experiencing a downturn, yet there remains a noteworthy presence of emerging fund managers who operate on a smaller scale, according to Click Ventures, a Singapore and Hong Kong-based single-family office, which invests in this space.

Emerging managers are often defined as emerging managers (“emerging GPs) who are raising a first, second, or third institutional fund in the original fund series.

“We specialise in seed-stage venture capital and actively support emerging VC managers who focus on seed investments. Our approach involves strategic investments as a limited partner,” said Carman Chan, Founder and Managing Partner at Click Ventures.

Carman Chan
Click Ventures

As the principal of her family office, Chan is focused on managing and allocating assets, including real estate, to optimise cash flow. For diversification, the family office also invests in public markets and hedge funds.  

“Our investment approach prioritises a diversified portfolio spanning multiple asset classes, and this underscores my interest in emerging managers,” Chan explained.

According to Pitchbook, a private and public market data provider, the average fund size for an emerging manager in 2023 was $41.7 million.

Chan observed that market views towards emerging managers changed significantly during the pandemic.

“The massive digitalisation drive and shift to cloud-based technology led to increased efficiency for these GPs,” she noted.

“The shift was also driven by the realisation among LPs that they cannot always rely on existing GPs and need to discover new GPs to get early and future access opportunities,” Chan added.

Emerging VC managers frequently operate in niche markets or specialise in innovative strategies, offering family offices access to sectors and ideas that are not readily available through traditional investment channels.

“These GPs frequently manage very distinct assets, creating opportunities for arbitrage and generating remarkable returns,” Chan said.

In the current economic scenario, this compares with situations where “LPs face reduced allocations for new ventures, necessitating a strategic approach to asset allocation for future growth,” Chan observed.

DRIVING CHANGE

Selecting the right emerging fund managers is a critical step in these investments. An October 2023 report by alternative investments manager Hamilton Lane highlighted the dispersion of returns for emerging managers was much wider than for their established peers.

In a buyout, for example, the bottom of the top to the top of the bottom was 2,000 basis points or more. Top-quartile emerging managers provided returns often in line with, or better than, their established-manager peers.

 “Emerging managers must be curious and adaptable to navigate the fast-paced technology environment successfully,” Chan said. For her, this includes having a keen interest in new technologies and business models, as well as a quick learning capability.

Chan’s experience as a VC investor have shaped her current interactions with emerging fund managers. Click Ventures was a VC fund before transforming into a family office investing in emerging VC fund managers. The growing complexity of its portfolio was a key factor for the strategic shift, which took place about seven years ago.

Chan underscored the significance of alignment, trust, and mutual support in sustaining high-performance standards.

 “Seed-stage investments are inherently risky, and it can take several years for startups to mature and generate returns. I look for startups that leverage the newest technology to redesign a new tech-enabled business process or the way we live and entertain,” she said. “The potential of these disruptive technology makes seed-stage investing exciting.”

Click Ventures is particularly interested in VCs that look for startups leveraging new AI technology to redesign business processes, Chan elaborated. Diversity and inclusion are also important due diligence considerations for the family office.

“I believe that diversity leads to better decision-making and innovation, and I actively seek out fund managers that invest in startups founded by women and underrepresented minorities.

“Overall, my goal as a family office is to not only generate attractive returns but also to plan for the succession of our family to our next generation as well as to drive positive change in the world through technology and innovation.” she said.

KEY MARKETS

The US and China are the two main locations on Chan’s radar. Chan’s familiarity with these two markets, given her earlier work as an entrepreneur and seed-stage VC in these two countries, also makes them her preferred geographies.

“These markets offer unique opportunities for growth and innovation, especially in the field of Gen AI,” she said, referring to generative artificial intelligence, a technology that enables algorithms to create new content.

She also sees huge potential for emerging fund managers in emerging markets.

“In China during the pandemic, e-commerce flourished in tier 2 and tier 3 cities, showing scalability, and paving the way for social commerce,” she said. “Similarly, other emerging countries offer fertile ground for technology use cases due to the absence of legacy systems, presenting unique opportunities for innovation and growth.

¬ Haymarket Media Limited. All rights reserved.
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