Singapore’s sovereign wealth fund said it still sees more growth in the financial technology sector, even after a downturn that’s sent startup valuations plummeting as investors turn away from riskier bets.
Chris Emanuel, head of GIC Pte’s technology investment group, said the fund is excited about innovation in financial product distribution that brings opportunities to scale across the world. It also sees opportunities in enterprise software as digital transformation efforts “increase across sectors in both momentum and urgency,” he said.
“Tech companies are continuing to change the way businesses operate,” Emanuel said in an interview before GIC’s Bridge Forum in San Francisco. “There will be further innovations, such as with cloud migration, which we are still in the early days of, especially internationally.”
The global technology industry has seen a rout that’s prompted layoffs in the tens of thousands, depressed fundraising activity and shaved billions off the valuations of once high-flying startups. Even GIC and its sister firm Temasek Holdings Pte weren’t spared despite their long-term investment approach. GIC is an investor in Digital Currency Group, the parent of troubled cryptocurrency broker Genesis. Temasek wrote down $275 million in November following the collapse of crypto exchange FTX and Singapore’s Deputy Prime Minister Lawrence Wong said the FTX loss was disappointing for the country.
GIC participated in Stripe Inc.’s $6.5 billion series I round in March that valued the fintech firm at about $50 billion, which is a far cry from the $95 billion valuation it received in 2021. The Singaporean investor led a $60 million funding round for startup Parafin in August.
GIC, which doesn’t publish its assets under management, is estimated to manage about $690 billion as of April 2023, according to a report from consulting and research company Global SWF. The firm’s technology investment group sits within the market group’s private equity asset class, which made up 17% of the GIC’s portfolio as of March 31, 2022.
The fund started investing in technology since it was founded in 1981 and set up an office in San Francisco five years later. The technology investment group has 20 members, of whom 13 are in Silicon Valley, according to Emanuel. GIC is hosting the Bridge Forum in San Francisco this week where its partners and tech firms across Asia, the Americas and Europe will participate.
GIC invests in all stages of financing tech firms from startups to listed companies, Emanuel said. The firm is “closely following the development of emerging technologies like AI” and working with entrepreneurs tackling big problems with technology, he added.
“Our team’s approach is to understand the fundamentals, rather than placing bets on the next big thing,” he said. “Even with the secular trend of technological disruption, we believe there are cycles and to us, it is most important to stay disciplined and be selective.”
--With assistance from Ben Scent.