Singapore-based single family office (SFO) Xin Family believes it is still a good time to invest in frontier technologies via private equity, despite the ongoing funding winter and global economic uncertainty.
“Private equity investments are something we continue to look at with a focus on six key sectors. Web3, artificial intelligence (AI), healthcare, IoT, Fintech, and e-commerce and logistics”, said Ken Chew, the deputy CEO of Xin Family, in an exclusive interview with AsianInvestor.
“Our approach is to look out for solutions that are transformative but not resource-intensive, create a significant real value in the world and can be sustained in the longer term. If these investments also create a positive impact on society, then that’s an additional positive,” explained Chew.
The Xin family office was set up around four years ago and has been consistently investing in the technology space using the private equity route.
The family office is set up by a Chinese billionaire who used to be Vice Chairman and CEO of one of China’s prominent private-sector companies with diverse business interests, spanning healthcare, insurance, real estate, and leisure.
He set up this family office in Singapore after leaving his position in the Chinese multinational conglomerate.
Chew admitted that private equity investments in the current macroeconomic backdrop within single-family offices are not very common.
“We know that this is a high-risk, high-return investment but we have a pedigree of investing and so we do these investments ourselves rather than going through funds, like most SFOs. Through our extensive networks, we look for high-quality investee companies in the correct cycles and trends. Amongst them, we look for those whose risk-return valuations are attractive, before making the investments”, Chew said.
It is often said that family offices face challenges in private equity investments due to a lack of investment expertise across different sectors and companies, difficulty in deal sourcing as well as risk monitoring complexities.
But Xin Family Office takes a partnership approach when making these investments, working closely with experts in each of the sectors they focus on.
“We work with recognized experts in each industry who are fully vested in each of their own industries so that we can ensure that the projects we invest in are of high quality. We also have some in-house experts but largely believe in working closely with our partners for deal sourcing, due diligence, and ongoing risk monitoring,” shared Chew.
“It is impossible to do this entire process alone at the SFO level. We need people that are dedicated and we don’t proclaim we know all these sectors”, he added.
Xin Family is stage agnostic in its investments and can go anywhere from Seed to Series D or even pre-IPO projects.
“It is rare to find great projects to invest in. Hence, we prefer not to restrict our flexibility unnecessarily further by saying we only want to invest above a certain multiple of return, or above a certain ticket size or absolute return”, noted Chew.
“We'd rather focus on the correct trends and cycles, and good teams with key competencies in technology and business models," he added.
One such investment by the SFO was Arkreen, a Web3-powered digital infrastructure for global distributed renewable energy resources. One use case of the startup is to use IoT devices to reduce costs and improve data collection for long-tail residential rooftop solar panels.
Xin Family also dabbles in healthcare investments, focusing on medical healthcare and pharmaceutical.
One example of investment in the health space is Leo Cancer Care.
“The company develops a technology-based platform that provides multiple innovative, high quality and cost-effective radiation therapy solutions for cancer patients,” said Chew.
Medical healthcare primarily focuses on the delivery of healthcare services to patients. It involves the diagnosis, treatment, and prevention of diseases and medical conditions. Pharmaceuticals specialise in the research, development, manufacturing, and distribution of drugs and medications.
As for the family office's Web3 investments Chew noted, “nascent industries are riskier and use cases are difficult to predict. So, in Web3, we do technology infrastructure-related investments.”'
“No matter which side the tide turns and which use case becomes successful, investing in the infrastructure of Web3 is a more logical and safer bet for us”, he added.
Infrastructure-related investment in Web3 means developing the fundamental tools, protocols, and platforms needed to enable the functionality of Web3.
This investment is critical to ensure the technology's growth and stability before more specific applications and services can thrive on top of it.