GIC’s strategy in tech space: 'Offence, defence and excellence'
GIC's high profile investments all about building strong relationships from very early stages
Stakes in consumer lending firm Affirm in the US and food delivery business DoorDash are some of the more high-profile tech investments that sovereign wealth fund GIC has made in recent years.
In a crowded consumer lending scene, Affirm's popularity with young people was a signal to the head of GIC's technology investment group, Mr Jeremy Kranz, that this was a company worth following up on.
The tech investment group was formed over a year ago. While GIC has invested in technology for more 30 years, it wanted to deploy capital better, increase its business development efforts and highlight tech disruption risks for the benefit of its overall portfolio.
The group has teams based in Silicon Valley, China and India. It has investments in over 50 companies in eight countries, with cheque sizes anywhere between the "single digit millions to single digit billions", said Mr Kranz, who is based in Silicon Valley.
Given GIC's long-term view, the group has a broad mandate, ranging from startups all the way to big listed companies.
How do investments get identified? Mr Kranz said it comes down to building strong relationships with technology firms and investing in those with good business models at the very right moment.
Internally, GIC's strategy in the tech space can be viewed in the framework of "offence, defence and excellence," said GIC chief executive Lim Chow Kiat. This includes hunting for good companies, protecting its portfolio from disruptive threats and learning from the industry.
The group seeks entrepreneurs who can execute a vision well, not just investments based on broad themes or a strict formula.
"The greater weight is on finding the founders who discover something novel that people want to buy, as opposed to imagining a category and then finding someone in that category," Mr Kranz said.
Relationship building from the very early stages is key, said Mr Kranz, who has been with GIC since 2004. For example, GIC led a US$200 million (S$270 million) funding round for US consumer lending company Affirm in 2017, but GIC has known founder Max Levchin since Affirm's early days as a startup.
Mr Kranz's group also has its ear on the ground, with members working as grocery delivery drivers and rideshare drivers to better understand the business.
It helps as well that GIC has had a long-standing relationship with venture capital firms dating back to the opening of its San Francisco office in 1987.
"That gives us the knowledge and networks to figure out which are the startups that are going to a growth phase and reach an inflection point," Mr Kranz said. "We invest directly at that moment."
GIC's global nature allows it to also draw connections between different regions, learning key signs that a business is taking off in one country and then applying those insights in another.