Born into a hawker family and raised up in wet market, Keith Tan empathises deeply with the hardships of entrepreneurs and SMEs, and loves to engage with businessmen, all of which paves the way for his successful investment career in future. After working for more than 10 years in banking, he partnered with his old schoolmate, re-ignited the passion for entrepreneurship and co-founded Dymon Asia Capital, which in only 10 years, develops into an investment firm that manages more than S$6 billion assets. Notwithstanding the tremendous success, his passion remains, and while managing the private equity arm in the firm, Keith enjoys staying close to the ground, listening to the stories of entrepreneurs and helping SMEs to craft their roadmap to success.
From being a bank employee to founding your own investment firm, how have you grown?
As an employee, the bank is always there to bear the losses whenever things go wrong. Whereas when you are running your own business, you are trained to make critical decisions, which affect the livelihood of many people. Secondly, founding Dymon Asia allows me to have the chance to craft the culture of the firm. One of our culture statements is to “win right”. As Danny and I were both sportsmen in our younger days, we always wanted to win as we are highly competitive individuals, yet we constantly remind ourselves that we must win right, and this includes playing within the rule, not venturing into the grey areas, not compromising on our value systems and respecting our competitors and partners
What is the biggest strength that you see in yourself as an investor?
I believe my biggest edge is that I am also an entrepreneur myself. It was very difficult, from being a salaried worker to founding Dymon Asia. We started just before the start of the Lehman Financial Crisis in 2008, operated from a small shophouse in Mohamed Sultan Road, where the rental was only $1,300 per month and bought used furniture. Therefore, I can empathise the hardship and challenges entrepreneurs go through. We speak the same language. Secondly, I came from a very humble background, my parents were vegetable hawkers in a wet market in Geylang Serai, and they brought me to the market since I was three. Starting from the bottom, again, allows me to understand all the difficulties a lot of entrepreneurs faced. This experience has come in handy as it allows me to connect with them better. I have often joked that my humble background, ironically, puts me in an advantage position now.
As a manager of private equity arm and being specialised in investing Asian SMEs, what qualities in SMEs and their leaderships do you value most?
SCCCI President Roland Ng always speaks about integrity. To me, this is a very important characteristic of many Asian traditional entrepreneurs. Once they promised something, they will attempt to deliver, even those things are not documented in black-and-white. The integrity, credibility and trustworthiness of the Asian entrepreneurs make my job a lot more enjoyable. The other is the passion, perseverance and determination – you really need to understand the hardship involved in starting up a new business. Most of these businesses start from zero, don’t have much support from the banks initially, need to compete with the MNCs and GLCs, and those in our neighbouring countries even have to go through many political challenges and hurdles. I always have a huge respect for entrepreneurs because it takes a lot of passion, determination and self-belief in order to succeed.
As the economy transform, many traditional businesses face pressure to transform. How can private equity play a role in this process so that traditional businesses may get an uplift and a new life?
Broadly, there are two aspects which we typically contribute. One is the operational improvement, and the other is strategic improvement. Operational improvement is about enhancing what you do in the dayin-day-out basis. Because of limited resources, most SMEs naturally allocate their resources to generating sales because this is the lifeline of businesses. However, other operational functions like human resource, finance, R&D, brand development and technology are equally important. For instance, many SMEs may not have timely and regular financial reports. This is important, especially in a volatile business environment where we are in now, as you could be making profits in a month, but suffering losses in the next. Thus, having up-to-date financial reports allow you to make timely and critical business decisions. Entrepreneurs are actually aware such operational functions are important. However, due to cost concerns, they may not be in a position to invest in these functions. Thus, very often, we will lend our internal resources in Dymon to the companies, so that we can help them to improve but yet they need not necessarily have to incur too much of additional costs. For example, we have recently hired a digital marketing person from IBM, where he helped SMEs to understand how to navigate better in the new social media world such as Youtube, Facebook, Instagram, etc. Not only it is difficult to hire such a person now, it may be too expensive for a SME to individually enlist the services of such a resource. However, when we hire at Dymon level and we share this resource among all our portfolio companies, then it makes more economical sense. Also, technological advancement and changes are probably one of the things which worry a lot of companies. However, they may not have the financial ability or the knowledge to invest in the various technology capabilities. Within Dymon, we have invested in AI, quant, cybersecurity and also has an in-house Venture Capital Fund which invests in numerous new technology companies. Similarly, these are resources we can share with our investee companies. Then we move on to strategic initiatives, which are more medium to long term, rather than day-to-day issues. These include succession, regional expansion, talent development, employees’ stock options and incentives, mergers & acquisitions (M&A), etc. Take for example, M&A. Many SMEs understand the benefits and want to grow through M&A but they don’t know how to. Some say they do not know how to identify M&A targets, some are too shy to negotiate terms with their peers, not sure what to include in the term sheet, how to do the due diligence, what legal clauses should be included, etc. This is our rice bowl and thus, we can help them. Another area we have helped is on business succession. About 50% of businesses may have younger generation to take over, while the other 50% may not be as fortunate and have to look for professional managers or plan what to do with their businesses. We will work with them to identify and screen for suitable professional managers or even buyers for their businesses when they decide to exit. The other aspect that we often render our help is in regional expansion. Singapore government has rightfully been encouraging our SMEs to venture out, but this involves a lot of capital, time and effort… We try to reduce the time and risk for the businesses by lending our regional and global network, resources and knowhow and leveraging on our offices in UK, Japan, Hong Kong, Thailand and Malaysia.
What makes you and Danny Yong successful partner in founding Dymon? What is Dymon’s philosophy in building a strong team since the beginning?
I have known Danny for 25 years now, since we were students in Nanyang Business School. We both came from humble families and in our second year in university, we have a pact that one day if he were to start a business, he must invite me; and similarly, if I were to start a business, I must invite him. Upon graduation, the option to start a business was not there as we needed to find a job so that we can start contributing to the household income. It was only about 15 years later, in 2008 when we felt it was the right time to start. Prior to starting the business, we spent about 6 months discussing the right business culture and model we wanted to build. We wanted to ensure we have the same thinking as we did not want this business venture to affect our friendship. We agreed we wanted a culture of “Winning right”, which is something I elaborated in the beginning of this interview. Secondly, we wanted Dymon to be a platform whereby the best talents can excel and build successful careers. It is not meant to be a business between Danny and myself, but instead, it is a platform where the best talents can fully exploit and realize their potential and over time, can even become owners of the business. Over the years, we have given shares to several key managers and we intend to continue doing this as we feel this is the best way to attract, motivate and retain the best talents. I believe one of the key reasons why Danny and myself can be such strong partners is because of our common value systems. This has formed a very strong foundation for our partnership. In addition, knowing each other since young and having similar family backgrounds help, also, having a genuine conversation on what kind of business we wanted to build, as I mentioned above, helped a lot too. Ironically, starting during the worst time – about 2 months before the Lehman crisis in 2008, actually put our partnership to a real test and as a result, have made the partnership stronger.
Having achieved successful entrepreneurship, what do you look forward to progress, be it in career or in life?
Having dealt with a lot of businesses, I hope that I can share my experience by coaching and mentoring new businesses and young entrepreneurs. Whenever there is an entrepreneur who wants to have a coffee with me, I will try my best to allocate my time to meet him or her. Second is giving back. Coming from humble families, Danny and myself are very grateful for the opportunities given to us in our lives so far. About 6 years ago, Dymon recruited a full-time person to focus fully on our CSR initiatives so that we can adopt a more targeted and consistent approach. I am currently also the Vice Chairman of the Yellow Ribbon Fund.
We are an award winning South East Asia Focused private equity firm, investing in lower mid-market space. Owned and managed by Southeast Asian professionals with multi-year track record of successful investments. We are the private equity arm of Dymon Asia Capital