Could Lattice80 startups fit into Marvelstone’s digital ambitions?
Marvelstone’s Joe Seunghyun Cho and his partners intend to use a retail asset-management license to begin building a pan-Asia digital bank.
Joe Seunghyun Cho is known in Singapore’s fintech industry for founding Lattice80, a non-profit startup hub located bang in the heart of the central business district. Cho’s for-profit fund vehicle, Marvelstone, wholly owns Lattice80, but has otherwise maintained a hands-off approach, by not taking equity stakes in any startups that rent a desk at Lattice80.
But, Cho told DigFin, he is open to whether any members of the expanding flock might fit in with his ambitions for Marvelstone.
Marvelstone is applying for a retail asset-management license from the Monetary Authority of Singapore. Once it has this, it can look to acquire other licenses throughout Asia, and build a new, digital financial conglomerate based around both technology and its intimate familiarity with many of the region’s startups.
Cho has been involved in hedge funds, venture capital and private equity for the past decade, in Hong Kong and his native Korea. The original Marvelstone was based in Hong Kong; the firm had cobbled together relationships in seven markets in an attempt to create a regional presence like a larger financial institution, but found managing these disparate entities and relationships a challenge.
In the meantime Cho, who studied computer science at Handong Global University, grew interested in fintech, thinking it could enable his strategy more efficiently. He was also impressed by how the Monetary Authority of Singapore was trying to facilitate the development of financial innovation, he says.
In 2016 he closed the Hong Kong business and set up in Singapore, with just two partners, CEO Gina Heng (a Singaporean, who is also Cho’s wife) and managing partner Joel Ko Hyun Sik, who is also a founding partner of Lattice80. Cho serves as chairman.
Cho’s plan for Marvelstone now is to acquire other types of financial licenses, such as brokerage, financial advisory and banking. Cho says markets such as Korea offer bargains from distressed sellers in these fields. “We don’t pay book value,” he said.
Marvelstone will use technology including robo-advisory, artificial intelligence, digital payments, crowdfunding, and blockchain to create a pan-Asian, full-service financial institution, but with almost every function outsourced.
“We can build a blockchain without more fund managers or employees,” Cho said. “We believe in technology and platform innovation, especially in emerging markets without traditional infrastructure.”
This could be where Lattice80 becomes more than just a community service, as Cho characterizes it. Although the fintech hub is being subsidized by Marvelstone, it is also home to many companies, roughly half homegrown, among which some might fit into Marvelstone’s ambitions to create a digital bank.
So might startups who pitch up at other branches of Lattice80 that Cho and his partners are looking to open. The first extension was announced for India earlier this year (located in Vizag, Andhra Pradesh, an hour’s flight from Hyderabad). Cho hopes to open at least two more centers this year across Asia, which includes Israel and Russia.
Cho says Lattice80 was not created in order to funnel fintech companies his way, telling DigFin “I have a network without Lattice80.” He says the hub is his contribution to the community, and a connector between the Singaporean government and startups. He also helps advise some of the companies located there on matters such as navigating the licensing process. He says the MAS appreciates this support, particularly as – unlike many startup companies – he hasn’t come to them cap in hand; Singapore deputy prime minister and MAS chairman Tharman Shanmugaratnam had presided over the hub’s opening in November.