Silicon Valley remains ground zero for the venture capital industry, but Melissa Guzy thinks there’s a big advantage to being based in Singapore instead.
Living in Asia and traveling extensively in the region has given Guzy, a cofounder and managing partner at Arbor Ventures, a different perspective than she’d have if she were based in Silicon Valley, she told Business Insider in a recent interview. It’s given her an up-close perspective on what’s going on in Asia and the challenges faced by companies operating there.
“If we were sitting in California, we’re just another firm,” Guzy said. “When you live globally and you see how different markets are evolving or you see different challenges,” she continued, “it really does impact our investment strategy quite a bit.”
Guzy’s knows from experience. She was a managing director for a Silicon Valley venture firm — VantagePoint Capital — for nearly 12 years before starting Arbor in 2012.
In Silicon Valley “you have less awareness of what the global challenges are”
Last month, Arbor led a $15 million Series A funding round in InCountry, a startup that helps companies store date in the countries in which they operate. A growing number of countries have put in place laws that require data about their residents to be stored within their physical borders or put restrictions on how such information can be used. Companies of all sizes — from giants like Visa or Lufthansa to small startups — are starting to having to contend with such regulations, she said.
Thanks to its position in Asia, Arbor saw this trend emerging and developed an investment thesis around it about a year ago, Guzy said. Because of that, investing in InCountry was “an easy decision for us,” she said.
“You don’t have to explain to us the problem,” Guzy said. “So it’s just a question of how good is the solution, because we see the problem. Our companies [that Arbor has invested in] experience the problem.”
Another example of how Arbor’s location has influenced particular investments is Forter, a startup that provides online fraud protection services. Credit card companies usually protect brick-and-mortar retailers when people use stolen cards to make purchases or other types of card fraud. But they don’t generally offer the same protections to online retailers; instead, online stores generally have to eat such costs.
That’s made many apprehensive about approving transactions that look unusual or sketchy for any reason. Forter and other companies like it, including Signifyd, review and approve transactions on behalf of online retailers and assume the liability for any card fraud.
That investment was informed by Guzy’s own experiences living Asia. She’d attempt to purchase an item from a US-based online merchant, but would be denied, not because she couldn’t pay or her credit card company rejected the charge, but because the online merchant thought it was too risky, because the order was coming from overseas.
When you’re based in the US, as opposed to elsewhere, “you have less awareness of what the global challenges are,” she said.
Why Hong Kong is fading, and Singapore is rising
Arbor, which has offices in Singapore, Tel Aviv, and Tokyo, focuses on financial technology companies, defined very broadly. It invests about 80% of its funds in early-stage companies — those raising seed and A rounds — and the other 20% in more mature companies raising later rounds of funding. It splits its events roughly evenly among companies based in the United States, those based in eastern Asia, and those based in Israel or the greater Middle East.
Until November, Guzy and Arbor’s main office were based in Hong Kong. Over the last 10 years, Hong Kong has become less of an international business hub and more of just a special region of China that’s focused on serving the needs of its parent country, she said. Singapore, by contrast, has started to become the kind of regional center — particularly for technology and venture capital — that Hong Kong once was, she said, noting that the city-state has convinced Google, Facebook, and Palantir to set up offices there in recent years.
“They’ve done a really, really good job of growing the community, and so we thought it was a necessity for us to be there,” she said.
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