'If you are a start-up that requires funding, you need to be able to talk to investors smartly'
Timothy Tsui will be making his first trip to Dhaka this week to attend the International Women Entrepreneurs’ Summit 2022. He is an investor and entrepreneur, with 20 years of experience working in the finance and asset management industry
Timothy Tsui, currently based in Hong Kong, is the CEO of Loki Group (M&A advisory and consulting firm) and co-founder of GT Hospitality Partners (a specialist hospitality investment firm).
A strong advocate of technology, Tsui also invests in start-ups. He comes from a background in finance and asset management. Once, he managed $13 billion worth of investments in various asset classes such as equities, bonds, hedge funds, real estate, and mutual funds, while working in an insurance company.
Currently, Tsui's businesses are centralised in the hospitality industry in the United States and Europe, with fintech start-up investments mainly in Hong Kong, Singapore and other parts of Asia. Tsui, who visited India two years ago, is interested in South Asia and will be making his first trip to Bangladesh this week, with a Maldives trip scheduled for early December.
Can you tell us about your experience in investing in start-ups? Bangladesh has an emerging start-up market. What would you recommend to aspiring start-up founders?
I like fintech, and I also like B2B solutions. In 2015, I invested personally in a company called FansWifi, which is a social media Wifi login analytics company. We got customers in Hong Kong, some of the big brands like LVMH group, some large telecom companies, MNC clients, etc are our customers now.
I spent two years inside the company on the business side, through which I was able to learn how B2B works, how to work with the tech team, business development, fundraising [and] how to be a CFO at the same time. And with that experience, I am more geared towards B2B solutions.
I like fintech because I come from a banking background, and I have spent time at Goldman and UBS before. I worked in insurance as well. So I understand investment and finance. And I know how some of the systems and processes are old school, and a lot of innovations are required to make things more efficient.
The other day I was talking to a start-up - who was saying that if you want to settle your trade, if you want to buy stock in the US you still have to wait three days to receive your money. In the crypto world, it takes minutes. Why is the difference so large?
We are living in the 21st century. And it is already proven that we can do same-day instant settlements. I think it is because of the entrenched old processes. But these things can be made more efficient. Because tech has proven it can be done.
As for my suggestion to start-up founders, they should think about what the investors are looking for. I know it is important to focus on your product, product innovation, building up a product and finding customers. That's definitely important. But equally important is – if you are a start-up that requires funding, to survive and grow – you need to be able to talk to investors smartly.
I think they have to spend a decent amount of time learning about how to talk to investors, what they are looking for, how to communicate well with investors, and maintain investor relationships after the investment has occurred. They need to make sure of regular communication updates with investors. You can't just take the money and forget about them. That's not responsible.
Your investor can also help you if you have a strong relationship with them. They believed in you and your company already, and they are ready to put money on the line. So, I think they can be a very strong advocate for the company or product. They can also refer you or introduce you to new investors for the next round.
Not every startup will succeed as there is an inherent risk with each startup, but those startups that do succeed can really change the way we work and live for the better.
Identifying and investing in the right startup at the right time is what I specialise in. Not only does it bring substantial financial returns for early investors, but it creates jobs for people around the world, makes our lives more efficient, and brings many intangible benefits to society as a whole.
What is the significance of hosting a high-profile event like the International Women Entrepreneurs' Summit in Bangladesh?
Many advancements – in blockchain technology, smart contracts, Web 3.0-related technologies, robotics, medical technology, advanced computing, artificial intelligence – are going to increase productivity and allow humans to focus more of their time on high-value activities. We should be spending more time doing research, developing key skills, [and] spending time with our loved ones rather than processing repetitive administrative tasks that can be automated or outsourced to a computer program or a robot.
This summit is a big opportunity [for networking and exposure]. When I told my friends that I am going to Bangladesh, some commented why? I say why not. I think this is why hosting events like this is important. People get to know about this emerging country and learn about it.
Although my schedule is jam-packed and I will have only a day to roam and learn about the culture, I am looking forward to this trip. And more trips in the future.
We are seeing mass layoffs in some of the largest tech companies (Meta, Amazon, Twitter, etc) [more than 73,000 workers in the US tech sector lost jobs till mid-November]. Can we draw parallels between these mass lay-offs and the lay-offs in the US during the 2008 financial crisis? Can you share insights into the landscape of venture capital at this time of inflation and economic uncertainties?
We now live in a world that is very dynamic and more volatile than ever before. Global geopolitics is changing very rapidly and people and organisations (large or small) have to adapt quickly to the recent changes.
Like any industry, there are up cycles and down cycles. We may be going through a down cycle in these large tech companies. [However, among the thousands of laid-off employees] I am sure 1% or 2% will consider starting their own tech companies or inventing a new product.
There are engineers, there are business-minded people in those organisations. [And] as long as you are an engineer and have a business mindset, you can invent a new product.
I think the key difference between this time in the tech companies (2022) and the 2008 financial crisis is that the banks [in 2008] were losing money like crazy, they were facing bankruptcy. But that is not the case for tech companies. I don't have the correct numbers at the top of my head for Twitter, but I know for a fact that Amazon and Meta are extremely well-capitalised, cash-rich companies. And so they are just cost-cutting, padding up the bottom line for Wall Street investors. And this is my take on this.
They may have over-expanded and over-extended themselves in the past few years. And now they are just scaling back a bit.
It's like Apple. The company is doing fine. They are debt free. The company is not going away for a very long time and will continue to invest in, and innovate new products. Just like Meta will, like Amazon will. I think there is a key difference.
The FTX incident [On 11 November, key cryptocurrency exchange FTX filed for bankruptcy, wiping billions of dollars of value from FTX, its billionaire founder Sam Bankman-Fried and broader crypto markets. Concerns about improper use of client funds led to a run on FTX deposits, creating an estimated $8 billion liquidity shortfall], it's not good for the industry.
However, from the investor's point of view, suddenly all the valuations of companies in Web 3.0-related technologies [market] are now much cheaper. And so, suddenly everything is much more interesting.
And it's much harder for these companies to raise money. So for the remaining players and some of our competitors, funds are actually going under, as we speak.
Yet I think that's an opportunity for investors like myself and some of my business partners to go out there and take a serious look at these companies. They are no longer asking for sky-high prices now because they can't. And they don't have investors lining up to invest in them. Now it's our turn to be more picky, and not the other way around. So, I think this is a very interesting time and I see this as a tremendous opportunity.
And technology is not going to go away. Things need to be modernised. I hope for Bangladesh, telecom companies are able to increase connectivity and mobile coverage and that smartphone penetration goes up. That is only good for the general population.
We are not going to go backwards, we are only going forward. I also spoke to one of the moderators [at the upcoming International Women Entrepreneurs' Summit (IWES) in Dhaka]. She tells me Bangladesh is adapting and she is working with start-ups that are trying to adapt blockchain technology for record-keeping — which is great!
Young countries like Bangladesh that's growing fast need to embrace technology and make things more efficient.
As a big believer in technology, startups and efficiency, I hope countries, governments, organisations and households around the world can embrace new technologies and work closely with startups to improve our livelihoods and make our processes more efficient.