Expert networks: the matchmakers behind mega-investment deals
Singapore
HOW do institutional investors justify the multimillion price tag on deals they bet on?
Consider Singapore's Sealed Network, an elite matchmaker of sorts between investors and industry informants to help with due diligence. The sales pitch is simple: investors speak to those on the ground to get the whole picture; and insiders in Sealed's network are paid handsomely.
Need to know where a semiconductor company sources its components from? Sealed might find you someone familiar with the country's semiconductor supply chain. Want to find out how much it costs to maintain a bee farm? The firm could link you up with a farmer familiar with it.
Sealed's clients are willing to pay a premium because these nitty gritty details - unavailable in public records or financial statements - could make or break a deal.
"This information could help validate assumptions in an investment thesis, or could serve as a cross check for details the management provided," said Jerry Goh, an investment manager at asset management firm Aberdeen Standard Investments.
The promise of anonymity and speed are also what makes these networks attractive.
A lot of money is at stake, so it is important to make sure the due diligence process is watertight, said Edwina Yeo, the co-founder of knowledge-based social network Supermomos, who has worked with expert networks for about nine years during her time in private equity, management consultancy and venture capital.
Sealed's packages start at US$10,000, which can buy users about 10 hours of experts' time. The company now has over 20,000 corporate profiles in its database that it can match to clients' requirements.
Experts can earn anywhere from a few hundred to thousands of dollars depending on the type and length of engagement. Management consultancies, private equity (PE) firms and asset management firms are particularly heavy users of the platform.
Sealed is not the first to wade into the business of corporate matchmaking. Others include New York-based Gerson Lehrman Group, London's AlphaSights and Hong-Kong based Lynk. But the startup reckons it can carve a niche out of this service in South-east Asia, where global firms have yet to gain much ground.
Success in this space largely boils down to who can get the most relevant industry source for the client. Sealed's co-founder Benjamin Emmanuel Lee said the startup might have an advantage here because of its familiarity and understanding of the regional scene. Other factors include pricing, access to relevant industry content and the ease of connecting with experts.
"One of the differentiating factors between Sealed and others is that we have strong connections to local large enterprises, SME companies and startups," said Mr Lee. "We have access not only to experts from multinational corporations but also large local firms like Cheng Heng Paper, Kian Soon Mechanical and MUI Group Berhad."
Many experts in South-east Asia are either not on English language platforms or have minimal online presence, he said. The firm also leverages on the networks of its founders, investors and advisers to help clients find suitable contacts.
Sealed was founded in 2019 by former Grab and Huobi executive Mr Lee, and Leo Wen Ge, former investment professional at Temasek-backed venture capital firm Wavemaker Partners.
It counts blue-chip investors such as former DBS and Singtel chairman Koh Boon Hwee, Far East Ventures (corporate venture capital arm of Far East Organization) and PropertyGuru co-founder Steve Melhuish as its early backers. Former member of parliament Sin Boon Ann is one of the firm's close advisers.
Sealed's Mr Lee believes that the time is now ripe to build up its presence in the region, especially as the investment ecosystem begins to grow and mature. The firm has raised US$1 million to date.
"We have noticed an increase in demand for experts based in Indonesia and Vietnam. . . Some of the hot industries in Asean where we notice a strong demand for expert engagements include fintech, e-commerce and last-mile logistics," noted Mr Lee.
Tan Choon Hong, managing director of PE firm Northstar Group, agreed that the "demand for expert networks should grow in tandem with rising investment activity in South-east Asia".
But he noted that expert networks are still a "relatively niche due diligence service", and new entrants should consider building deep specialisations in select sectors.
Upselling more in-depth due diligence services and perhaps even partnering with a global expert network could also help smaller firms build a presence, he said.
Sealed plans to raise around US$2-3 million this year, said Mr Lee. The funds will primarily be used to expand the team across South-east Asia, and enhance the features and user interface of its online platform.
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