SINGAPORE: Getty Goh is all about reinventing himself. The CEO of Southeast Asia’s first listed crowdfunding platform, CoAssets, has reinvented himself several times, from being a regular in the SAF, to investing in and consulting on real estate, to now running a real estate and SME-focused crowdfunding platform.
Goh bought his first property at the age of 24. He had to crowdfund the traditional way, asking relatives and friend for loans in order to finance it. He then started Ascendant Assets, a real estate research and investment consultancy. While investing in property and small-scale development projects in the region, he realised there was a funding gap for projects of between S$ 1 and S$ 5 million – too large for retail investors to pool for, yet too small for big banks and other financial institutions to be interested in.
He now hopes to fill that gap with his crowdfunding platform CoAssets, which was recently listed on the Australian Stock Exchange – the first crowdfunding company to go public in Australia.
He went “On the Record” with Bharati Jagdish about his entrepreneurial journey, what it will take for crowdfunding to become a norm in Asia, why he thinks certain property cooling measures should be lifted and his fascination with real estate.
Getty Goh: I’m a typical Singaporean. If you ask any Singaporean what is the largest asset they own, they would probably say it is their property. So I think as someone who started out very early in life, I felt that it is something that I had to do. It made a lot of sense. I bought my first property at the age of 24. It was a private property. It wasn’t a typical HDB flat that you go to your girlfriend and say: “Should we get an HDB together?”
I think back then, it was really meant as an investment decision and looking back, I am glad that I actually did it, because that really kick-started the whole journey which led me to where I am today. I flipped a few times and I went into some small-scale developments. It was then that I realized that a lot of boutique developers face some difficulty in raising funds between $ 1 and $ 5 million. That was really something that triggered me. It made me realise that if you can service this group of people, connect them with like-minded investors online, get the investors on and invest in them, you can make quite a decent living out of it.
Bharati: Where did you get the money to make your first investment?
Goh: I had a scholarship from the army so that gave me a financial head start in my life. So I asked myself what I can do with that financial head start, with that asset. In fact, in my last year of university, I actually went around looking at show flats and putting it in the right perspective. I don’t think that someone at 22, 23 would want to do that, but for me it made a lot of sense. From that perspective, the interest in business, the interest in investing, was something that started really, really early for me.
I was a regular in the SAF, so I had an 80% bank loan. The other 20%, you borrow and beg from friends and relatives. I’m from an average middle-class family. My parents worked as executives. We were not poor. We were not rich either. It was about working hard and making it. My parents chipped in a bit of course. If you think about it that was one of the earliest forms of crowdfunding I did for myself. All of the money for the downpayment came from within my social circle – some friends, some relatives. That really gave me the first exposure of what it takes to raise funds or talk to people and getting people interested in deals and ideas.
And of course, having a stable career with the SAF gave me a lot of time to reflect. I asked myself what I wanted to do, and at the age of 30, 6 years after my bond had ended, I decided to take a step out. At that point the choices were whether I should work for an MNC or do something on my own. I decided to give it a try. So that happened in 2008 and since then, I’ve never looked back.
Bharati: Where did the entrepreneurial instinct come from?
Goh: It’s hard to say when it started. But I like telling this story about what happened in university.
One Valentine’s Day, my then-girlfriend told me that she didn’t want to spend any money because back then we were college students, and a meal out, a good night out would cost $ 100 or $ 200. It was a lot to a student. So I said, “fine, if you don’t want to spend money, let’s use Valentine’s Day to make money instead.”
And I think that is something she regretted because the 1 to 2 weeks prior to Valentine’s Day, we went out, decided on the price, and gave fliers to people at MRT stations to offer flower delivery services. Back then, we sold a stalk for $ 5 which included delivery which was a great deal. The weekend before Valentine’s Day, we actually went to a wholesale florist. We packed everything ourselves and on the actual day for between 8-10 hours, we drove from place-to-place around Singapore to deliver flowers. And at the end of the day, we made about $ 400 to $ 500. It was not much but it was something very fun and meaningful. I can’t really say the same for my girlfriend, and naturally she broke up with me shortly after that. So from then, I learnt that when a lady says “no”, you should dig a bit deeper and try to suss out what she really means.
YOU CAN’T EVER GET COMFORTABLE
Bharati: How would you describe your business philosophy?
Goh: I’m very aware of the fact that the market is very dynamic. One trap that I realise some businesses fall into is the notion that their companies will never go out of business. But that’s not true because if you think about it, we don’t really ponder too much about it, but if you think hard, there are many great companies that have failed. There are also many great companies that are here today. But will they last indefinitely? It’s hard to say but the odds aren’t really in these companies’ favour.
Just to name a few, one of them was Kodak and there was Nokia. These were big brands many years ago but today, where are they? I think it’s a realisation that as a company, we need to keep reinventing ourselves. We need to keep improving. Just like with my own entrepreneurial journey. I started by writing books because back then, there weren’t many resources on property investing. That was back in 2008. Other people started following suit, so the question I asked myself is: What can I do next?
I went around doing some talks, consultancy and started up a consultancy firm for retail investors and slowly moved to development. Finally I ended up with crowdfunding today. So it is about reinventing. Even today, I am very certain that given 5 or 10 years, CoAssets won’t be in its current form. I’m certain that by then, crowdfunding will no longer be a buzzword. It could die a natural death or it could become a staple of how people do business. It is about how to keep inventing. Think about what the next trend is. That is something that I am very mindful of to keep us, our company on our toes.
Getty Goh is the Chief Executive Officer and Co-Founder of CoAssets, and is responsible for the business direction and operations of the company. (Photo: CoAssets)
Bharati: In other words, you never ever get comfortable.
Goh: You can’t ever get comfortable. We have to keep reinventing ourselves even if it means cannibalising our own business because if we don’t do it, there’s nothing stopping your competitors from doing it. For example, this whole crowdfunding thing started 2 to 3 years ago and we’re very fortunate that within 3 years, we got ourselves listed on the Australian main board. But prior to that, I was very focused on real estate consultancy as well as real estate development. It was a deliberate decision to put that side of the business on hold to really look into the crowdfunding thing because had I stayed on in the real estate business, would it have done as well as the crowdfunding part? I think the answer is no.
I also think it’s very important to surround yourself with good people and when these good people join the company, it really frees me up and gives me a lot of bandwidth to come up with strategies and to think: what next?
Bharati: Being able to identify what’s next is so important yet probably the hardest thing to do. How do you do it?
Goh: To be absolutely candid, to get it right, there’s no magic formula and it just boils down to one thing: you just have to try. Did I realise that property was the thing to do? The answer is no, I didn’t. I would be lying if I told you I had everything figured out. But what I did know is that I had to try. I had to find out for myself.
Similarly, for crowdfunding, we just had to try because you never know until you try. Of course, down the horizon there are a lot of trends that are developing with the social and geopolitical situation, with the political situation and the financial situation in the current form, the question you have to ask yourself logically is: what next? What do you do? Bounce this idea among your team, talk to experts, and then ask yourself what the best course of action is and then take action and try.
If you think back, crowdfunding is nothing unusual. Even property investing is something a lot of people have thought about doing. The only difference between them and someone who made money from the market is that the person who made money from the market is someone who actually tried at the right time. There is a saying that to be on stage for 10 minutes, you probably have to spend 10 years off-stage preparing. What people usually see is success cases. What they don’t see are nights when business-owners lie down in their beds but can’t fall asleep, wondering what’s going to happen next, wondering how they’re going to make the next payroll, wondering how they will fulfill obligations. And I think this is an issue that is not unique to just me or a handful of business-owners. It is something that everyone faces.
ENTERING UNCHARTED WATERS
Bharati: Which of your challenges or failures over the years stand out for you?
Goh: There were a lot of near misses. What comes to mind is working with the right partners. We have an excellent team now, but it also took me time to get there. What is important is to realise that, and be bold enough to make a call, a hard decision and to recognize when things are not working out. We had near misses when I was doing development work. Even for crowdfunding itself, there were many instances where we were so close to giving up. I think it is just about digging it in, having the grit and determination to pull things through. It is easy to just give up and walk away. But most of the time, the market will reward someone who keeps at it and I think history is littered with such people.
Bharati: All this also requires taking risks and staying the course. A lot of entrepreneurs I’ve spoken to have said there is a lack of this spirit here. Some of them think there are good reasons for this. For instance, the cost of living here is so high that it’s only natural that if people had to choose between a stable job or taking a risk in business, they would rather just choose a stable job. Why take on a risky endeavour? Do you believe the way our society is configured and socialised is an obstacle?
Goh: I wholly agree. I think at the very fundamental level, the cost of living here is high, so imagine if you venture into business and you fail. You still have your bills to pay. I think that is what puts a lot of people off. But that said, I think you must be driven by the ability, the drive or the desire to chart new territories. I think if you take it as a whole, it is a very daunting challenge. But if you break it down into bite-sized pieces, it is actually not insurmountable. Why am I doing this? Why is the team doing this? It’s because we are driven by the knowledge that we are charting new territory.
And sometimes it is easy to take the easy way out, take the path of least resistance, do something that people have done before. But only the brave win. Are you prepared to chart a new territory and pave a path for others to follow? That is something that really gets me excited. It is not about the dollars and cents, because I think we know that if we do it correctly, the dollars and cents will follow. But nothing can replace the satisfaction of knowing that you started something and you really have a positive impact on society and the people around you.
Bharati: You said earlier that crowdfunding could become the norm in business. So do you think it could make banks obsolete one day?
Goh: Well, let’s put it this way. When eBay came out, they said it was going to revolutionize how auctions are being done. But guess what? Sotheby’s is still around. So what I’m trying to say is this: we, if anything, have opened an avenue for people and businesses that banks think are not worth their while. If I’m a bank, I have all the regulations to bear in mind, the fiduciary duty of a bank is very different from that of a crowdfunding platform. As a bank, they are holding deposited money and they have a national duty to ease monetary flow and to stimulate the economy via their business of lending. For us, right now in our current form, we are opening a front to a business that the banks are currently not paying a lot of attention to. That will likely change some point down the road.
Bharati: So do you think the banks might in fact see the value of what you do?
Goh: Well, as a bank, what will they prefer? They have a lot of finances. Will they rather start from scratch? Or would they rather invest in a company like CoAssets which at that point in time will have licences, will have systems in place, and an investor base. So I think if the banks are interested, who is to stop them from coming in to acquire a large part of our shares. As of now, we already have an anchor investor from China who sees the potential of regional cross-border funding of projects. In the last 12 months as a company, we have raised for CoAssets itself about $ 12 million. We believe that at some point down the road if we get our formula right, if we get our business right, if we get our member acquisition right, we will make a very compelling proposition to regional investors. So by then, maybe a bank will find us ready for investments and I think that is the discussion we might have 3-5 years down the road.
THE NEXT BIG THING
Bharati: You say you always have an eye on what the next big thing might be. What do you think is next?
Goh: There is definitely a lot of new technology. I think if you take a lead from some of the trends in the US, drone technology, nanotechnology, space travel, I think these are the things that are going to be big themes. If we extrapolate, crowdfunding in Asia only started because of things like the JOBS (Jumpstart our Business Startups) Act, because of platforms like Kickstarter and Indiegogo, in the US. It is only when the US starts embracing these kinds of things that we see what is happening in this part of the world.
I am not about to say we should all go into nanotechnology, clean energy, or space travel. But I think if we were to think along those lines, we can figure out how Asia, how Singapore can position ourselves to take advantage of these impending trends. It is really about thinking hard. I’m not about to suggest bringing the ideas here and copying them lock, stock and barrel. Do it more intelligently. What are the lateral services we can provide here based on the strength and the strategic advantage we have.
Bharati: So give me an example of something that you can think of right off the bat. Considering the major trends that you’ve mentioned what are some of the lateral services people in this part of the world can provide?
Goh: One trend that we are really very focused on right now is China’s One Belt, One Road initiative. This is in part why we started our Chinese operations about a year ago. Because we recognized that the days of China looking inwards are over. What is particularly interesting is that China is no longer just a country that the developed world outsources their manufacturing activities to. In fact, in November, we are actually working with the local governments to co-organize the EPIC China event, with a view to attracting businesses that provide products that are made outside China and to supply it to the local Chinese.
The standard of living there has improved considerably. The way they do business, their online financial technology is amazing.
Things in Singapore aren’t going to change in the near-term. The business climate is going to stay the same. To me, the choice is really simple. Either they stay, and they see lacklustre growth and at some point, in the mid to long-term, shut their operations or they venture overseas. Yes, they may fail, but if they stay in Singapore, what is the likelihood of success? What sort of breakthrough are they talking about? Unless they are just looking to get by. For companies which are looking for growth, I think Albert Einstein said it best, “insanity is doing the same thing over and over again and hoping for a different result.” So I think any business-owners that are really hungry would want to look overseas and ask themselves this question. We have been overseas, and I realise the Singapore brand does carry weight. So how do we use that to our advantage? How do we go to these countries, provide consultancy work? How do we go to other countries to work with local partners?
CEO and co-founder of CoAssets Getty Goh delivers at an investors’ event. (Photo: CoAssets)
IS CROWDFUNDING SAFE?
Bharati: When it comes to crowdfunding, the Monetary Authority of Singapore (MAS) introduced some regulations recently. These act as safeguards for investors too, because there are always risks of scams, etc. But some have said they worry that regulation could stifle the sector. What do you think?
Goh: I think that if you look at it from the right perspective, the reason that they closed the loopholes is not because they are anti-innovation, but I think they also have a duty to ensure that the man-in-the-street doesn’t get burnt. And they need to balance that with the need to promote innovation and technology. I think that they have been very open in coming up with schemes to allow crowdfunding platforms to flourish as the regulation increases the amount of trust among investors.
In Singapore’s case, we are in the process of applying for our license. In Australia, we have secured some licensing. In Malaysia, we are in the process of getting a P-to-P licence.
To get ourselves listed on the ASX, we have been audited several times. Because of these things, investors as well as the members of our site have greater confidence because they know that the company won’t disappear overnight.
In the last 12 months we have raised $ 12 million and we have between $ 6-$ 7 million on our books to help the company survive the downturn.
Bharati: What recourse do investors who fund a project on your platform have if something goes wrong with the project?
Goh: Different platforms have different models. For us, our model is simply if anything happens, we as a platform will represent our investors to take all those businesses to task. It can come in the form of either personal guarantee or it can come in the form of assets which we will hold on behalf of the investors and those assets are something that we can then liquidate in the unlikely event that this business does not do well.
Bharati: You vet the people on the platform too.
Goh: Yes. To give you some statistics, only 1 out of 4 who come on the site gets funded successfully and we actually turn a lot of deals away. To help us do that, we have actually developed a risk assessment model with one of the top 4 auditing firms and I think it has helped us to considerably systematise what we are trying to do and identify what the good deals are and which deals we shouldn’t put on the site.
Bharati: Of course investors who come on board need to do their own due diligence as well.
Goh: Precisely. Also, they have to remember that we are not a bank. Some of the deals may return between 5 and 15% and I think investors must be aware of the fact that high returns more often than not translates to high risks. So if they see the returns are exceedingly high, at the back of their minds, they need to be mindful that the risk is high as well. And what we advocate is for investors to invest only a part of what they have. Don’t put your whole nest egg in. That is really a recipe for disaster. It is our hope that crowdfunding, or the notion of investing in a crowdfunding project will be one day as common as investing in unit trusts and shares. Hence, coming under a MAS regulatory framework makes a lot of sense to us.
PROPERTY COOLING MEASURES: LIFT ABSD FOR FOREIGNERS
Bharati: You deal with property on a larger geographical scale, but let’s talk about the property market in Singapore. It isn’t what it used to be, but even when it was speculative and people were making money out of it, it made for a really unhealthy environment. Today, things are very different. Property cooling measures have kicked in. What is your stance on the cooling measures?
Goh: I think it made a lot of sense to put in cooling measures to prevent retail folks from taking excessive debt because back then, you could buy multiple properties and in certain instances, with little cash upfront.
What made you rich was your ability to sell them which I think some people were able to. For most of them, right now, they are holding on to a liability especially in an environment where they cannot get rentals.
Bharati: I’m sure you weren’t happy that cooling measures were introduced considering your investments.
Goh: Well as early as 2 to 3 years ago, I already foresaw this happening and that’s why I made a conscious decision to say: let’s branch into something fairly different from real estate into real estate and SME crowdfunding.
Naturally the local developers are unhappy because I think they bought land at a considerably high price. But then the issue is if you lift the cooling measures, you will just shift the responsibility, the debt from the developers onto the consumers. If a market correction happens, the retail consumers wouldn’t be happy. What happens next? It will become a social problem. Of course, there is no silver bullet.
The Ministry of National Development’s job is to ensure continuous development of the sector. They price it in an open tender. The developers could have jolly well priced it toward the higher end of the spectrum and I think ultimately, the market will have to find its own dynamics. So cooling measures are really a way to protect the end consumer. Yes, the developers have to suffer, but I think developers are also in it to make a profit and I think they would have to find a sweet spot for themselves.
I think the message that the government is trying to send to these developers is you have to find some way to sort yourself out because don’t forget, these developers did make some very, very healthy margins before.
It’s right for the government to arrest the problem of rising prices and people taking on too much debt.
But in light of the current economic climate and the lacklustre growth, say in the next 6 months, 1 year, 2 years, what will happen to these guys who took on too much debt? I think the government has a more important issue to resolve.
I think what has made it a bit more difficult is that in the past, you could sell to foreigners. Now they need to pay Additional Buyer’s Stamp Duty (ABSD), so they are staying away.
I think there is really no harm in removing just the ABSD especially for foreigners because it will meet the various competing demands. Firstly, the Total Debt Servicing Ratio (TDSR) will already ensure that Singaporeans don’t overstretch themselves. So that shouldn’t be a worry. And the reintroduction of foreign buyers is not going to change things too much in the near term.
Bharati: Why do you advocate this?
Goh: If foreigners can start coming back it would benefit Singaporeans who are holding on to multiple properties and are desperate to let go. You can sell to these guys who are currently keeping away. Would that not help you?
Bharati: But will this also drive up prices and again lead to a situation where property is out of reach for Singaporeans?
Goh: We have seen that the government has the ability and will to move very fast by introducing new policies and removing policies. All I am trying to say is this: yes, I recognise that if we were to remove ABSD, in the mid to long-term all the issues that you just articulated will come back. But I think the question is this: do we recognize that removing ABSD is a short-term solution? Are we looking for a short-term solution to tide us over these 1-2 years of lacklustre global economic conditions? If the answer is “yes”, then I would say removing ABSD would be a quick fix. Are we prepared to let the man-in-the-street feel the burden of holding 2-3 properties and have the mental burden, in the event of them losing their jobs, of being saddled with debt?
I recognize that the market is not going to go anywhere in the next 1-2 years. I don’t see it as a way of speculating or stimulating the real estate market as the other measures will still be in place. I see removing this one measure temporarily as a way of allowing people who have already invested, an exit strategy.
In the course of my work, I see a lot of bankers, people in shipping, oil and gas losing their jobs and these guys may not be multiple property owners, but they can’t afford to hang on to their homes anymore. These guys are someone who probably stretched themselves a bit, own a condo, but who can they sell to right now? If there is an additional avenue for them to sell to foreigners, to cash out, giving them the ability to downgrade, who are we to say “no”?
Bharati: But what if this drives up prices again?
Goh: I would say that this is a short-term fix. Let it go for the next 1 to 2 years and see what happens. If you can’t get a loan because of TDSR, you can’t get a loan. You can’t drive prices up. Who will be coming to buy? Foreigners.
Bharati: And they’ll drive prices up and make it even harder for you to buy the property of your dreams.
Goh: The Seller’s Stamp Duty still needs to kick in. So as a foreigner, I can buy, but I can’t flip. And I need to hold it for 4 years before I can sell. So in the larger scheme of things, there are already some well-thought-through policies to augment and to support the removal of ABSD. It is not a perfect solution, and once again putting things in the right perspective, I would say governments do change policies every now and then. I think the question we need to ask ourselves is in today’s economic climate, do we want to give this a try?
HDB FLATS FOR FUTURE GENERATIONS
Bharati: Let’s talk about HDB specifically. You’ve said before that HDB flats should not be a tool for people to get rich.
Goh: I think people benefited from that. I think it made a lot of sense then. But that said, as with all policies, and with all things in life, there is a limit as to how far you can push it. My key concern is that right now, we have million-dollar HDB units in Bishan. Several decades ago, Bishan was a cemetery. No one was there, and who bought properties in Bishan? Essentially, it was newly-wed couples who couldn’t afford flats in mature towns like Ang Mo Kio and Toa Payoh. As a result, they got pushed out to places like Bishan. Today, you have newly-weds who cannot afford a million-dollar resale flat in Bishan. Where do they go? They go to Punggol and Sengkang. Once those prices in Punggol and Sengkang catch up, where will newly-weds, fresh grads buy? As the prices start going up everywhere, where will HDB build? Where else can we go?
My concern doesn’t stem from the fact that people are making money. My concern stems from the fact that as prices normalize upwards, are we taking away our later generations’ ability to buy a home of theirs?
Bharati: Do you think it was a mistake to open up the HDB market?
Goh: Honestly, no. The ministers and the civil service made a deliberate decision. It was not on a whim. They have deliberate facts and figures to back themselves up. I would like to think that when the decision was made several years ago, it was suitable in that context. Today, the market sentiments, market conditions are very, very different. So we should do something different.
Bharati: So what do you suggest be done?
Goh: I think some of these HDB owners are not going to be too happy with where this conversation is going but I think profits from the sale of HDB flats should be taxed. The tax in turn can be used to supplement the subsidies that new home buyers would require. Nobody likes to be taxed, but I’m looking at it from a sustainable standpoint. If you tax profits and these profits are in turn put in a pool which is used to subsidise first-time home buyers even more, it would help.
The money from the land sales probably goes to the reserves and in turn, it goes to the development of Singapore as a whole. An HDB capital gains tax, in addition to government subsidies, could be used to help Singaporean home-owners.
What I’m saying is based on what I understand of the market currently. Who’s to say that 3 to 5 years down the road, things won’t change. I feel that HDB owners have the right to make money off their property, but collectively as Singaporeans, are we making it harder for the younger generations to buy property? Yes, the government can still come up with new towns, but beyond that, what happens? Beyond the 10-20 years plan what happens? Beyond the 50-year master plan, what happens?
Look at Hong Kong. There are already instances where because prices are not really controlled in an appropriate manner, they have newly-weds buying very small places or not being able to afford anything at all. Who is to say we won’t go down that track. I think it is something to which we don’t have to find a solution now but it is probably something that we want to think about because we owe it to the next generation and the generation after that. There needs to be a sustainable framework and it is a discussion that we should keep open.
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