Investing in private equity is usually seen as reserved only for those with ultra-high net worth (UHNW) or shrewd entrepreneurs who invest in start-ups from an early stage. This is something ADDX is trying to change. Backed by SGX, it describes itself as “rewriting the rules of private market investing”.
As we can imagine, it’s no easy feat to rewrite the rules in such a highly regulated industry, and within the somewhat opaque private equity segment. This was what led Darius Liu to join ADDX as Co-Founder and Chief Operating Officer (COO) in 2019.
While ADDX has origins starting from end-2017, the team was still in its building phase. Around this time, Darius was working in portfolio construction within GIC, and was himself thinking about “what’s next” in his career. Through a mutual friend, he met up with the Co-Founder who had first incorporated ADDX – Danny Toe – to understand the company more. After the meeting, and in Darius’ words, he believed his presence would contribute to “an appreciable increase in the probability of success” of ADDX. So, he did the only logical thing – to join the start-up in his late 30s.
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Opening Up Options In Private Equity Investments
When I chatted to Darius, he mentioned that while ADDX is currently only for accredited investors, there’s no reason why it cannot be extended to retail investors in future.
Many of the private equity products are already available in some form for retail investors. For example, retail investors can already invest in publicly-listed companies, which may be quite similar to investing in private companies. Retail investors can also invest in retail bonds, while there are private bonds. There are also mutual funds, such as those from BlackRock, that retail investors can invest in – that may be investing in private companies.
ADDX is striving towards opening up more investment choices to investors. A quick look on its available products reveals a very broad and diverse investment spectrum. We can invest in property portfolios, bonds, venture capital funds and more. Most recently, ADDX also launched its first crypto product with the listing of a digital asset fund by investment manager Trovio Capital Management (TCM).
ADDX also makes private equity investments more digestible. Typically there has never been much private equity access for investors. Even when such opportunities arise, it will be for very large quantum and will also be very illiquid. On the ADDX platform, the investment size is lower and liquidity is opened up as fractional ownership is enabled.
“I’m a portfolio construction guy, so I feel strongly about these things…and I believe this really opens up the opportunities for people to construct better portfolios”
At the end of the day, Darius still says it is about “giving people the choice”. Not everyone will be able to take the choice when given – maybe due to a lack of knowledge or not having enough investible funds. With his background in portfolio strategy, Darius also says that private equity can play a big role in an individual’s portfolio as part of diversifying is about finding uncorrelated assets.
In this edition of 5 Questions With…, we ask Darius about his experience becoming a co-founder, and some of the challenges he faced and the advice he has for aspiring entrepreneurs.
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Dinesh: As the COO of a start-up that hires close to 100 people, you must lead a really busy life. Can you share what a typical day looks like for you?
Darius: A typical day is a whole bunch of meetings from nine to about 6 or 7. As a COO, a lot of the decisions are made at my level on an operating basis. I have to attend all manner of meetings – legal, risk compliance, marketing, product, engineering meetings. Whatever requires a decision to sort to get the whole enterprise going.
I try to wake up early in the morning, but I don’t “cheong” into the office. I sit somewhere for breakfast to calm my mind down for maybe about like 30 to 45 minutes. This would be near the office because I have three boys at home. I like sipping coffee and just reading through the daily news, browse LinkedIn. This helps generate more ideas for me.
When I come back, I put the kids to sleep. I also do enjoy a little dose of classical music at home. I’m a classical musician, and I used to be a violinist in the Singapore youth orchestra. Depending on my mood, this could also be Gregorian chants or whale songs underwater.
Dinesh: We always hear about success stories in entrepreneurship. I think more people should know about the failures as well. Can you share a story of how you faced failure at ADDX – and, of course, how you overcame it?
Darius: So a funny story. FinTech is quite a big topic these days. And there are many competitions everywhere. In the early days of our journey, we entered into a competition. And we think we have an idea that is the greatest thing since sliced bread, we’re going to like nail it, and everybody’s going to love us.
What happened was that we weren’t even selected past the first round. In the end, a chat bot won. To us, it was like, oh my gosh, we lost to some chat bot. What’s going on? Upon reflection and, with hindsight of where we are today, I think when something is on a different order of magnitude in terms of scale and impact, it takes a while for people to understand it.
I don’t want to see that competition as a failure, but as a realisation that there could be instances whereby we are actually too early. When we knock on doors, people may not (understand). We may have needed a bit more traction – mainstream adoption and institutional endorsement before people start taking us seriously.
We have since reached that stage. But in the early days, I was unpleasantly surprised at the lack of interest (in what we were doing).
Dinesh: What are three things you try to make time for each week regardless of how busy you are?
Darius: At work, I try to make time for like one-on-one meetings with my key team members. That’s something I feel it’s very important. It’s not for the purpose of breathing down their necks, but it’s really about, mentorship and enough oversight of what the issues on the ground are so that I can clear roadblocks before they become major issues.
I’m a bit of a weekend warrior when it comes to physical fitness. Every Saturday morning I take the kids to East Coast Park to the cycle. That’s a routine that was built up. I also go to the gym on weekends.
On weekends, one thing that I will always do is church because I have a leadership position. Other than the usual Sunday mornings, there is a whole lot of “running the enterprise” kind of work that happens in the background. It’s really almost like a half-time job.
Dinesh: As a leader of a fast-growing firm in an ever-evolving fintech scene, how do you keep up with everything that’s happening?
Darius: I really do this by talking to people. People now also starting to reach out to me and I rarely ever say no to anyone. I believe I get something out of every interaction that I have even if it doesn’t really evolve into anything business related. There are always some ideas or a new node in the network that I’m constantly building. This has become my main source of market intelligence.
I really like meet people in person because there are so many sort of non-verbal cues that get lost when we’re talking (over video). I lose maybe 60% of the non-verbal cues. And, and it’s, it’s just different.
Catching up with old friends in the space is another one, because after about 15-plus years in the workforce, people have gone to various places and some of them have become senior decision-makers in various places. Just maintaining these friendships have also become another source of business development.
Actually, a couple of issuers have come on to our platform through personal networks. After catching up with past colleagues and contacts who have gone on to various funds and telling them about what I do and then say, “hey there could be an opportunity here”.
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Dinesh: One advice for corporate employees who want to venture into entrepreneurship for the first time?
Ask yourself the question “if that something becomes wildly successful, what changes?”
Darius Liu – Co-Founder of ADDX
Will you be truly fulfilled and happy? And if that says yes, then, I would say, go ahead, because that’s that vision and meaning that will keep you going when everything seems to be going wrong in the enterprise.
If the answer to what changes is that your personal wealth grows by a lot then maybe, there are other easier ways to grow your wealth. If it’s just money is the main driver, then maybe you should think twice about it.
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