Hedge fund manager Steven Cohen is bringing his passion for tech startups to Asia, along with his checkbook.
Point72 Ventures, which invests mostly the billionaire’s money in early-stage companies, is starting to evaluate prospects on the continent after putting millions of dollars into startups in the Americas and Europe.
Asia presents a chance to “swing big” because it’s unburdened by technological infrastructure, particularly in financial services, said Matthew Granade, who oversees investments at the venture-capital arm of Cohen’s Point72 Asset Management. Many parts of the developed world, such as the U.S., spent decades to build such infrastructure, making it harder for them to adapt, he said.
“Here, when suddenly you have a huge population moving into the middle class that was never served before and no technologies that were available to support them, you could just build from scratch and leapfrog,” Pete Casella, who leads the venture capital firm’s investments in financial services technologies, said during an interview he gave together with Granade last month in Singapore.
The value of private-equity transactions in Asia reached the highest in at least six years in 2017, EY said in its Private Equity Capital Briefing in February. In Southeast Asia alone, this year “is already off to a phenomenal start,” the consulting firm said in a separate report. Deals worth more than $17 billion were completed in January in the region, about triple the $5.9 billion value reached in all of 2017.
Granade manages a 10-person team in the U.S., where Point72 Ventures has done most of its deals so far, along with a few in Europe and Latin America. Asia is the next frontier, he said.
In its latest investment, the venture unit is backing a dark pool called Imperative Execution Inc., which aims to give big investors a sanctuary from high-speed traders.
Acorns Grow Inc., which offers an investing and savings app for people with limited disposable income, is one of the more than two dozen investments that Point72 Ventures has made over the past two years. Others include HANetf, a London-based firm that helps launch exchange-traded funds, and Extend Enterprises Inc., a New York startup that allows business cardholders to securely share their credit cards with employees and freelancers.
While Granade said deal sizes range from $250,000 to $10 million, it’s not just about the money for Cohen, who’s worth $12.1 billion according to the Bloomberg Billionaires Index, a ranking of the world’s 500 richest people. Cohen has a “soft spot” for those entrepreneurs with a passion to excel and shares almost a kinship with them, Granade said.
“These are not huge checks we are writing,” Granade said. “But Steve is involved in everyone of them. He meets with almost every company we invest in. He enjoys spending time with them. And in every deal he hears the pitch.”
Investing in private markets is also crucial for Point72, which primarily operates in the public markets, according to Casella. Most of the innovation is currently happening in the private sector, he said, and learning about those developments also helps the asset manager’s investments in public markets.
Cohen started his hedge fund SAC Capital Advisors in 1992 and returned an average 30 percent before becoming embroiled in an insider-trading scandal in 2013. SAC pleaded guilty to securities fraud and agreed to pay a record $1.8 billion fine. While Cohen wasn’t charged, he agreed to return client capital, changed SAC’s name to Point72 Asset Management a year later and became a family office. A two-year ban from managing money for other people was lifted on Jan. 1, and Cohen told employees in March the firm raised $3 billion for a long-short equity fund.
Point72 Ventures is not open to investors apart from Cohen and some eligible employees. While it is a wholly separate entity from Point72 Asset Management, the bigger investment firm can come in at a later stage of a portfolio company’s life cycle and inject larger sums of money if needed, Casella said.
“Most early-stage venture funds are going to be constrained in some way in how much money they can put in a startup,” he said. “As a company scales and grows over time, we have the ability to support that company from idea through public market.”