YONG HUI YOW: How did you come to start CoAssets?

GETTY GOH: Prior to CoAssets, I started Ascendant Assets, a real estate research and investment consultancy. We made investments in properties and small-scale development projects in the region. I thought to myself: why can’t I do this online where the reach is greater? Speaking with developers I met, I realised there was a funding gap in the market for projects between one and five million. It’s a sweet spot which is too large for retail investors to pool, yet too small for big banks and other financial institutions to be interested in.

YONG HUI: What is the process like for an interested investor to fund a project on CoAssets?

GETTY: You just sign up, and browse the available deals. When you visit a project’s page, you can also view available documentation for the project. If you are interested, just enter your email and the amount you’d like to invest. After this, you are given a five-day cooling-off period. Then, you may transfer the funds to us, and we will hold on to it until the developer signs all the relevant documents for the project, including pledging collateral. There are no high-pressure tactics. If you have second thoughts, it is okay. The project has to raise the full amount they set out to raise in order for them to get the funds.

YONG HUI: What’s the maximum a developer can raise on CoAssets?

GETTY: We set the maximum amount at S$3 million. This is because we are here to serve the funding gap, and give developers an alternative. We had a boutique developer from Sydney who needed to cover a shortfall of AUD$1.5 million. He’d already secured a loan facility in Australia at 25 per cent per annum in interest when I suggested he come onto our platform. He offered a 15 per cent return, and got the funds he needed. There was another case where a company wanted to raise S$50 million to S$100 million. We found that highly suspicious because many banks would be more than willing to loan that kind of money. So for now, the cap helps us stay committed to serving this funding gap.

The only way to eliminate all risks is not do the deal – basically, not do anything at all.

YONG HUI: What's the minimum amount to invest in a project?

GETTY: A thousand dollars. But I’ll give you some statistics. On Kickstarter and Indiegogo, out of every hundred visitors, about two will back a deal eventually. Our conversion rate is on par with them, but the key difference is this: on Kickstarter, the average ticket size is about US$100; for us, it's S$30,000. So even though people can invest a lot less, they have enough confidence in our projects to invest more.

YONG HUI: Are the banks missing out on these smaller funding opportunities?

GETTY: I’m definitely not in a position to say what the banks ought to do. We don’t see ourselves replacing the bank’s role because they will always be there to do the big deals. We are a technology player serving a market need which isn’t well-served today. We operate a platform, and the stakeholders decide whether to invest or not. Banks are custodians of their depositors’ money, so it is understandable they don’t make certain deals. For us, once they pass our internal due diligence process, the potential investor is the one who makes the call. We have seen cases where new developers start off using our platform, and later on moved on to bigger deals where they partner with bigger stakeholders.

YONG HUI: So new developers can use CoAssets as a starting point?

GETTY: Yes, we see ourselves as an incubator of sorts.

Revenue has always been our focus, not because we are money-minded, but to us, it is a score. It's a test of whether someone is prepared to pay you for your services.

YONG HUI: What has been the average return on the deals you have done?

GETTY: It varies, and depends on the project. On average, it's five to fifteen per cent. We empower our developers to decide what kinds of returns they want to give their investors.

YONG HUI: Will you raise the amount you allow developers to raise?

GETTY: Not at the moment. For bigger projects, to be fair, you have private equity funds. We are a platform which allows developers to list their deals, and we perform the role of an administrator. We don’t give recommendations or advice.

YONG HUI: You call yourself a leads generation platform.

GETTY: Yes. We are not reinventing the wheel. Even though we are not regulated by MAS [Monetary Authority of Singapore], we are in strict compliance with all applicable laws. Our legal advisers have also consulted with MAS.

In listing the company, we wanted to demonstrate our commitment to our employees and the community that we want to do this right.

YONG HUI: Do you see any regulatory challenges in the future?

GETTY: Laws change all the time. Sometimes it's for you; sometimes it isn’t. This is partly why we listed the company at such an early stage. In listing the company, we wanted to demonstrate our commitment to our employees and the community that we want to do this right. This gives a lot of comfort to our funders and developers that we are open and aboveboard. Our accounts are audited twice – in Singapore and overseas. Our listing was a compliance listing. We did not raise funds when we went public because we didn’t need funds at that juncture. We wanted to leave it to when we move on to the mainboard. 

YONG HUI: Why didn’t you list on Catalist?

GETTY: There are a couple of reasons. We have identified Australia as a market we want to enter. The listing is a foot-in to understand the market. The market is bigger there, and has more liquidity. Also, we are following in the footsteps of companies like iProperty, which has done very well there. Would iProperty have done as well on Catalist? It's hard to say. But this shows us that fund managers in Australia probably understand technology businesses better.

YONG HUI: What is your due diligence process like?

GETTY: Statistically, out of every four proposals, two don’t pass our internal due diligence process. Out of the two, one will get funded. Aspects we look at are the developer’s paid-up capital, and you need to be either a licensed developer or realtor. If you are neither, you need to produce a title deed so we can do our checks in the local jurisdictions. Naturally, you cannot be on the MAS watch list or a bankrupt. As a safety measure, depending on the country, we also require collateral. In Singapore, we require that you be personally liable, which means the directors have to sign a personal guarantee. As a result of our strict processes - knock on wood - we have zero defaults.

YONG HUI: What if a default does happen?

GETTY: All investments come with risks, and we are not naive. Even with all our internal controls, mishaps can happen. There is no way to entirely eliminate risks. The only way to eliminate all risks is not do the deal – basically, not do anything at all.

YONG HUI: What's the goal of your Joint Venture with Fujian Yaosheng Zichan [Yaosheng] in China?

GETTY: To make money [laughs]. China is an exciting place, and the reason we are going regional is because we recognise crowdfunding's potential to be magnified across borders. We were fortunate to be one of the recipients of IDA’s iJams programme; our roots will always be in Singapore, but from the get-go, we’ve always had an outward-looking approach. Singapore's market is only so big. When people say China is slowing down, remember that it’s on the back of very, very vibrant years. Those with money can still invest, and being the second-largest economy in the world, there's a lot of wealth being generated. We just received a strategic investment of S$1 million from a group of investors. In China, if they see an idea they like, they will go for it. Right now, our focus is growing in these five markets. We want to be a pan-Asian platform.

YONG HUI: You were not the first crowdfunding platform in Singapore. What did you do right?

GETTY: The typical mindset behind start-ups is you raise funds, then you burn it to capture market share. As a result, a lot of start-ups provide services for free, with the hope of gaining market share – even at the expense of revenue or profit. For us, we took a different approach. Revenue has always been our focus, not because we are money-minded, but to us, it is a score. It's a test of whether someone is prepared to pay you for your services. If you offer a free service, of course everyone will use you. The litmus test comes when you ask them to pay. It’s a marker of value, and the best market validation. This is the distinguishing factor between our mindset and our competitors’. In our first year, we clocked S$600,000. Last year, we clocked S$1.1 million. This year, we hope to grow by high double-digits a high double-digit percentage. We are a start-up in a way, but we are also very business-centric. We believe in adding value, and in making money every step of the way.

Had we relied on fundraising to sustain our operations, I think we would have closed down by now.

YONG HUI: Why didn’t you go down the venture capital route?

GETTY: We did try to raise venture capital. In fact, we spoke to many VCs in Singapore and the region. But because of the novelty of crowdfunding several years back in this region, many were hesitant to make an investment which commensurate with our value. Venture Capitalists are themselves fund managers, which means they are accountable to their limited partners. Naturally, they tend to err on the side of caution. Had we relied on fundraising to sustain our operations, I think we would have closed down by now. Instead, we focused on growing organically, and bringing in revenue first. Only then could we have the flexibility of paying our bills from our business activities. This allowed us time to attract the right kinds of investors, and at the right terms. When we got our first tranche of investment from a group of investors, we had a valuation of about S$30 million.

YONG HUI: How’s the property market doing in Singapore?

GETTY: Crappy. Please don't quote me on that. If you are, then it can be better. The days when people could flip properties and make obscene amounts of returns are gone, at least for now. People have to realise we are living in a very different world now as compared to three to five years ago. Back then, there were extremely low interest rates. Three years on, quantitative easing has stopped, and there are talks of rising rates. The forces which caused asset prices to increase are no longer there. Unless there’s another catalyst which triggers governments to start printing money again, I don’t foresee much action. 

YONG HUI: But it’s now after the General Elections. 😉

GETTY: My personal, humble opinion is that the government feels we are in a sweet spot right now. The market isn’t crashing, but neither is it going up. It's coming down at a steady rate. Of course, being in real estate, all of us want it to go up. But this is a measured approach which suits the government's agenda. It is about people’s expectations as well. The lack of activity now is in stark comparison to those good years, and the reason people feel the pain now is because we've probably played a bit too much. That said, the majority of homeowners are probably not affected because they bought their properties before the hype, and are still in a profitable position.

I'm a quintessential Singaporean – I'm kiasu, kiasi, and kia jenghu.

YONG HUI: Why did you start off with crowdfunding real estate?

GETTY: We recognised real estate wasn’t the only area we could have provided our services in, but we chose it for strategic reasons. Four out of five new businesses don’t survive the first one or two years. In comparison, the default rate on home mortgages is less than 1 per cent. As a crowdfunding platform, we needed a business model which ensures the success of our participants. Real estate projects, because they are backed by real assets was the most logical place to start with. When developers become personally liable, it shows a high degree of commitment and vested interest. Other businesses are much greyer. I'm a quintessential Singaporean – I'm kiasu, kiasi, and kia jenghu. But now that we have a good sense of our capabilities and limitations, in due course, we will venture into business crowdfunding.

YONG HUI: Did you always know you wanted to be in real estate?

GETTY: No. I just knew I wanted to be in an industry where the resource is limited and scarce. I wrote about this in my book, Crowdfunding Wisdom. If the barriers of entry are low in an industry, profitability is also low. For example, let's say I start a blog shop, how much can I make? My margin may be as low as three or five dollars. How many shirts must I sell to breakeven? How many can I constantly sell? One of my first enterprises was when I was in university. It was during the Valentine’s Day period. My ex-girlfriend told me she didn’t want to spend money, so said: okay lor, let's make money. We bought flowers from a wholesaler and took orders from people. We cut, wrapped and mailed the bouquets out ourselves. We made about S$500; half in profit. But it was so much work! It struck me that there must be a better way to make money.  I'm not commenting because I haven’t done it, but because I have done it before. It wasn’t worth the effort. In the end, she broke up with me!

YONG HUI: What's the future of crowdfunding?

GETTY: It's evolving, so whatever I say is a shot in the dark. I'm just suggesting my version of the future, not forecasting it. I see crowdfunding as a platform where anyone in the Asia-Pacific region will be able to put out a good idea or project and get funds for it. One of the projects which did not make it onto our platform which I often cite was a solar farm project. He was an entrepreneur from the UK who wanted to build a solar farm in India. In some villages that are far away from the power grid, when the children study, they have to use kerosene lamps. These are not good for their development, so he wanted to do something which makes a difference. It's a shame he did not come on board, and got other investors instead. It's my hope that we can have such social projects too, as long as they’re backed by assets. They can even be to fund intellectual property or research and development.

YONG HUI: Does your family deal in real estate?

GETTY: No. I’m from an average family so this is the Singapore dream. It's about working hard, finding your way in life, and following opportunities. My parents were executives, so they were not particularly poor, nor were they wealthy.

YONG HUI: What makes one successful?

GETTY: In every industry, take for example property agents. On one hand, there are top property agents, on another, you have agents who are not prepared to commit, and put in the effort necessary. Others simply don’t have the aptitude for it. The market is agnostic, and in general, does not favour one over another. The top Char Kway Teow stall owner can drive a BMW. It's whether you are in the right place at the right time, how innovative are you, do you think differently, move fast, and work harder? What's your edge?

YONG HUI: Are you successful?

GETTY: I don’t think I'm successful. We are not quite there yet. I'm just very fortunate and privileged not because of the financial aspects, but because not everyone has the opportunity to do something they really believe in, and can reasonably see it having a decent chance of making a big difference in how we do things today. The support and response have been very encouraging. That's what motivates us.

YONG HUI: What is success to you?

GETTY: To me, the epitome of success is... okay I shall not say it, or I will sound very shallow. You can check our financials: I draw S$7,500 from the company, but my holdings are worth more than S$12 million and growing. I'm not working for the salary; I'm working for the belief that whatever we are doing is going to change how people can make money for their retirement. 

YONG HUI: What was the shallow thing you wanted to say?

GETTY: I wanted to say that success is if I can jet-set around the world, and not worry about anything, but on second thoughts, you don’t need a lot of money to jet-set, and whether you worry or not is up to you.