We caught up with Michael Tse, a former Managing Director and Head of Central Asia Product Marketing for Citigroup Alternative Investments who is now an active angel investor and start-up mentor and a member of the 1Crowd investor community, to seek his thoughts on angel investing and start-ups in India.
Michael Tse was the Managing Director and Head of Central Asia Product Marketing for Citigroup Alternative Investments. He started his career at Citibank in 1981, where he was Director of Loan Syndication and Asset Sales for Hong Kong and China, moving on to Merrill Lynch in the same capacity. Michael then moved to Bankers Trust as its Head of Loan Syndication for Asia. He later became Managing Director and Head of Asian Debt Sourcing and Trading at Amroc Investment Asia Limited. Michael is currently active with his own private equity investments in diverse sectors including beauty and wellness, consumer financing, healthcare and stem cells technology development.
Q. Tell us something about yourself and what interested you to begin investing in start-ups? What were your motivations behind angel investing?
My first visit to India was in 1989 during my time at Citibank. I was travelling on the Palace on Wheels to Rajasthan, when the thought first occurred to start a business or invest in businesses in India. Decades later, I connected again with Anup Kuruvilla, co-founder of 1Crowd, with whom I spoke about investing in start-ups in India. Anup told me about his vision when starting 1Crowd, about the way he envisioned this space. I really liked Anup’s passion. The fact that 1Crowd’s team was so well-rounded and the processes were well defined, in terms of curating start-ups and inviting investors, prompted me to join the platform.
Everyone comes with the same intent when investing in a certain asset class; to diversify your portfolio and make better returns. I was driven to invest in this asset class with the same intent. However, when I made my first few investments in start-ups, I realized that there is a bigger purpose for which I was investing in start-ups. I believe that start-ups are not just in the business to make money, though it may be one of their primary motivations. However, start-ups primarily venture out to bring good for humanity and society. A number of start-ups I have been exposed to and have invested in are trying to solve real-world problems and help people in making their lives better. The social aspect of start-ups’ work is what interested me in this space.
Q. How long you have been active in this space? How many start-ups you have invested in? How did you get started?
I started my professional career working at Citibank and a few Hedge Funds where I was constantly exposed to the financial side of start-ups. It was in 2008 when I started investing in start-ups that were in the consumer sector. One of the start-ups that I first invested in was a consumer financing start-up in Shanghai in China.
I have been fairly active in this space for the past 10 years. So far in my start-up investing journey, not counting my investments in India, I have invested in over15start-ups in China. Including my Indian investments via 1Crowd, that number would be over 25. My first such investment was in a clinic in Hong Kong. Since then, I have made investments in various health-tech sectors, including the biomedical space. One of my recent investments is a legal start-up, around 2 years ago, in Honolulu, Hawaii that provides patients with a natural and time tested remedy for pain and illness.
Q. What do you typically look for while selecting your investments? Is it the team, idea, scale, market, IP, business model or something else?
My personal opinion for choosing to invest in particular start-up depends on these three criteria: Idea, scalability and the people behind it. These three elements of a start-up are what I would put my money on. In my opinion, business plans can change over time, but it is critical for start-ups to be solving a real problem with an innovative solution that can be scaled, and be driven by a team of highly skilled and motivated entrepreneurs.
Q. What are the sectors you are bullish about in the Indian start-up landscape (if any)? Why do you think these make for a compelling proposition going forward?
I really follow the education/edu-tech and the health-tech start-up landscape in India. I believe medical and biomedical start-ups are the way to go for the Indian start-up ecosystem for two reasons; people are in constant need for health solutions that would make their life better and because the need is so large, there is a huge market for such solutions that enable these start-ups to scale easily.
In a similar vein, I believe start-ups in the education space are very important as well. A country like India is constantly innovating and for this innovation to continue, I believe start-ups which are working towards bringing holistic solutions and skills for the Indian youth will help develop this constant string of innovation going forward.
Q. What are your views on Indian start-ups and how in your opinion has the landscape changed in the last couple of years?
I have been a keen observer of the Asian and Indian start-up ecosystems; I believe things have changed a lot, more for the better. My observations have led me to believe that there has been an increase in the standard of innovation that Indian start-ups are coming up with. Initially, Indian entrepreneurs were focusing on the tried and tested innovations in the west and aping them to build products for India. However, with the level of exposure Indian entrepreneurs have received in the recent past, many of them are now focusing on solving the needs of the people in their country rather than just following the herd. This change is quite evident in the education and healthcare sectors where Indian entrepreneurs are finding the most success. There are multitudes of start-ups emerging in this space, which have been raising funds every 6-12 months or thereabouts coupled with satisfactory business growth.
Q. Where do you think our start-up ecosystem is doing well and where in your opinion it is lagging?
I believe the Indian start-up ecosystem stakeholders are playing a very important and critical role in the growth of Indian start-ups. This can be seen by how 1Crowd works with start-ups and investors to make it a fruitful interaction between the two. There seems to be a shift from Indian start-ups being ‘me-too’ companies to actually innovating for issues they observe in their home country. From an investor point of view, we are being helped by organizations like 1Crowd that do great due diligence of these start-ups and present it well for investors like me to evaluate and invest in high quality start-ups.
If there’s one thing that can be changed in India, it is the bureaucracy related issues that investors and start-ups have to go through. My own personal experience when I started investing in India was hampered when I had to go through various entities to get all formalities and paperwork in place. I have also witnessed some good start-ups struggling to get through bureaucratic challenges when on-boarding clients and I do wish the climate in this context continues to improve over time.