Going against the grain
Sharon Sim, co-founder of Purpose Venture Capital, takes on an investment approach that involves bucking trends and strategically taking risks – a formula that has proven to be effective.
In the first quarter of 2024, venture capitalist Sharon Sim will be releasing her first book, titled Why Women Don’t Talk Money. Co-authored with her secondary school friend Serena Wong, the book features interviews and essays with Singapore’s most influential women from the finance, sports and arts industries about their relationship with money.
“The book is more on the psychology of money, and how we deal with it. A lot of women don’t do enough investing, or don’t talk enough about what they want to do with their finances. I believe it’s something quite psychological, and it goes back to our childhood, as well as our relationships with our mums, dads, our husbands. All these relationships colour our feelings about money.
“And these could be some of the reasons holding us back from taking charge of our own finances.”
Having worked in the finance industry with the likes of Citibank, J.P. Morgan and Goldman Sachs, 47-year-old Sharon is now the CEO of Ormand Group, a family office that handles business interests across Singapore and Indonesia, as well as the co-founder and general partner of Purpose Venture Capital.
Here, the mother of two teenagers tells us about her biggest risks, investing in start-ups and the best advice she’s received.
How did your early years shape your view of money and investing?
It revolves around conversations with my mum, who was a stockbroker in the 1980s in Singapore. Those were exciting times for the stock market and Asia’s growth. I remember that our discussions centred on market dynamics and the stress she experienced due to market volatility. My mum shared insights into the stock market’s highs, such as exciting stocks and IPOs, and lows, like the market collapse in the late 1980s. She would talk about how these downturns impacted her clients and her own business.
I also remember when I was five or six years old, I would help her with the manual counting of stock certificates. This was when we didn’t have digital records, and we used physical certificates to count our shares.
Do you remember your first investment?
I began investing when I started my first job at Goldman Sachs in 1999. That was just before the dot-com bubble burst, so those were very, very good years with the US stock market. I got carried away with the euphoria, and put a significant chunk of my money with Pets.com (ed’s note: the now-defunct e-commerce pets site IPO’ed in 2000, despite concerns that there were issues with its business model). It went bust six months after I invested.
It really taught me that I had to do my own research. At that point, valuations for tech companies were out of whack, and a lot of people were following each other [blindly].
Despite the fact that you grew up learning to be cautious with your money, your first investment turned out to be a bust. What lessons did you learn from that experience?
You have to understand what you’re investing in. That was one of my mistakes, not really understanding [the market]. But when you start investing, it becomes more relevant than just reading a book. You start looking at investing from a different perspective.
The more risk you take, the higher the return, but also, I think the higher you pay for your peace of mind.
It’s ok to make small mistakes along the way. It helps you understand who you are as an investor. For example, if you see stocks dropping 10 per cent, you may panic and sell. So you may realise that this is something that’s inherent in you, and you feel insecure when things don’t go the way you think they should. If you see that as a pattern, you can realise it and see how you can mitigate [that pattern], because the right call could be to just keep holding.
What has been your approach to investing since?
I think we all evolve in the way we invest, and the way we manage our portfolios. My first investment in equities didn’t go well, but I didn’t let that lesson stop me from investing.
How much knowledge of the market do you need if you’re going for a high-risk portfolio?
For women not directly involved in finance, a practical investment approach could be to focus on ETFs [exchange-traded fund, which essentially is a basket of equities from the market] that are fairly liquid. You can start with smaller amounts.
By investing in ETFs, you gain broad market exposure while avoiding the intricacies of individual stock or company risks, which demand significant time and effort for research.
For instance, if you’re interested in tech giants like Apple or Nvidia, but lack the time for in-depth analysis, choosing an ETF that mirrors big-cap tech names simplifies tracking. With equities, especially with increased market volatility and a shift to higher interest rates, macro-level considerations become crucial, making stock picking more challenging.
What’s the biggest risk you’ve taken?
I can point to a few in my life, but I guess the biggest risk was when I was in my early to mid 20s, and I had just started to invest in real estate. This was around 2005: I had just moved to Hong Kong from Singapore, and real estate markets were picking up in both countries.
I took on two mortgages at the same time: one in Singapore, and one in Hong Kong. Because I wanted to leverage as much as I could, and interest rates at that time were still fairly high, it was a pretty high risk move. I managed to sell the Singapore condo within two years. There were no cooling measures at that time, and it was when the government was doing more to stimulate property investment. I waited for it to be built, and sold it after I got my keys for at least 30 per cent more.
I doubled my Hong Kong investment, because I managed to sell it during the peak of the market.
You took these risks in your 20s, when you were more gung-ho. If someone were to take two mortgages now, what advice would you give them?
I would say you really need to research the interest rate cycle and read the macroeconomic factors.
You also have to ensure that you’re working within what you can afford. I did stretch [the two mortgages] quite far, meaning that I pushed the LTV (loan to value ratio) to the max, and it gave me very little room if the interest rate were to go up further, or if I lost my job.
It’s also important to manage your own expectations, and be confident with your decisions. The fact is that you do make the most money when you’re doing things that nobody else is doing. This ties back to my point about jumping into the equity market and buying into the dot-com bubble. Everyone was chasing tech investments, and that’s when I lost the most money.
her world
“It’s important to save, but a lot of times for busy women, we just leave it in a bank account. This is something that’s been ingrained in me: When you’re not thinking about your money, how are you going to earn from it?”
Do you have any regrets?
I have lost money in investments, but I don’t regret it. I have also done a fair amount of investments in private companies and start-ups, and some didn’t make it. That was a learning curve.
The failure rates [when investing in start-ups] are higher, but the upside is that you can make a lot more. Because you take a journey with the start-up founders, if the exit (ie IPO) does come, it tends to be a lot higher than what you would normally get in a public market.
Can anyone become a VC investor?
Most VC funds are under a fund structure, and they need to look for accredited investors. In Singapore, you can qualify as a retail investor depending on your net worth. I think the minimum investment is $250,000.
If you’re interested in investing in companies, you can look at angel networks, or angel investing communities. There are quite a few in Singapore, and they always do webinars, seminars that you can learn from, and where they showcase start-up founders.
You have to do your research, because investing in early-stage start-ups comes with a lot of risk. Early-stage companies may not have revenues. [Their business] might be a concept to begin with, so they may not have commercialised it. You’d be making judgements based on the management team or founders. It depends on whether the founding team has the gumption to carry it through, and secondly, the market fit. Is their product really what the market needs?
What’s the best investment advice you’ve received?
My mum would tell me: Always make your money work for you. A lot of times we tend not to think too much about it. We receive our pay cheque, pay our bills, and then what do you do with the money you save? It’s important to save, but a lot of times for busy women, we just leave it in a bank account. This is something that’s been ingrained in me: When you’re not thinking about your money, how are you going to earn from it?
There’s the magical formula to compounding, even though it starts off with a bit of savings. So make sure you know what you’re doing with your money. For example, put your money in a fixed deposit, then once you grow it a little more, you can deploy it into an ETF or a fund. Otherwise, you’ll never be able to get out of the cycle of investing and saving.