K2 Global has been investing in startups since 2015, but the venture capital fund its founder, Ozi Amanat, are seldom in the news.
Singapore-based Amanat has been in the game for a decade or so. During that time, he’s been able to get into the cap tables of some of the most prominent tech companies in the world, ranging from Uber, Airbnb, Spotify, and Palantir to Alibaba and Paytm. He’s gathered support from high-profile limited partners, family offices, and investors. And he’s done it largely as a “one-man band,” as he puts it.
I meet him in the Atlas Bar, a cafe slash restaurant slash bar that’s distinguished by its opulent, 1930s New York art deco style. He’s just closed a deal with an investor who agreed to put US$5 million into the fund.
Amanat speaks softly but passionately, every question prompting a torrent of thoughts out of him. He tells me that he tries to hold as many meetings as he can in this place, hoping that more investors and entrepreneurs will start meeting there. “I’ve already run into five or six different people today,” he says.
He stops to greet two more people who pass by our table during our conversation. “It’s a nice environment – you still have your privacy but also your collaborative moments when you can bump into somebody. I think that’s important,” he adds.
In fact, it’s serendipitous encounters like these that have played a big part in his journey as an investor – but more on that later.
The importance of being earnest
K2 raised US$183 million for its first fund in 2016 and announced a new US$200 million fund early last year. The firm keeps things lean – Amanat travels a lot out of Singapore, while co-founder Minal Hasan manages the firm’s operations in San Francisco.
The latest fund is in the process of closing. Amanat expects Spotify’s recently announced direct listing at a valuation of up to US$25 billion to provide a strong exit for the first fund, which will help fuel its successor. Both personally and through K2, he says he owns “tens of millions” of stock in the music streaming company and expects returns at 200 to 300 percent.
Amanat felt that Spotify was going to be big, even though his investors were unsure. “Even today one of my investors called and said, ‘Thanks for making me a profit in Spotify but what is it?’” he jokes. But Amanat believed in the company’s potential to be a content powerhouse, especially in Asia, where he thinks competitor Apple Music will have difficulty scaling in as a more expensive product.
In addition, K2 – in partnership with incubator Trendlines Medical Singapore – was recently selected by government venture arm Spring Seeds Capital (SSC) to be part of a US$76 million investment allocation under the Startup Equity SG scheme for early-stage deep tech startups.
K2 itself has gone into deals in various stages, domains, and countries. Amanat expects that to continue with more investments in Singapore, India, Indonesia, and so on.
Investments in Asia include Alibaba, Paytm, and Singaporean dating app-turned-social entertainment startup Paktor. The Alibaba deal was a case of serendipity over coffee, where one of Amanat’s investors asked him to buy stock in the then-upcoming ecommerce powerhouse, shortly before its US$25 billion IPO.
K2 Global’s investment in Paktor was another fortuitous coffee meeting that highlights what Amanat looks for in the founders he backs. The first meeting he had that day was with an aspiring founder. The son of a rich family, the founder arrived in an expensive car and explained that he didn’t really need money from Amanat for his business, but thought it would look good to have him and his investors as backers. Amanat passed on the investment.
Spotify’s direct listing at a valuation of up to US$25 billion should provide a strong exit for the first fund.
Then, Paktor founder Joseph Phua walked in, stepping out of a modest car that had four other people in it. “What about them?” Amanat asked him. Phua said he didn’t know them, it was an UberPool ride. As Phua explained his vision for Paktor, Amanat was impressed by the founder’s passion and “authenticity” – a word that he repeats several times while we chat.
After talking with a couple of his investors, Amanat arranged to meet Phua again and offered to buy out his company for US$10 million. Phua refused and asked Amanat to just believe in his vision. “He was authentic, never offended, never dismissive,” Amanat says. “In a certain way, he had me at hello.” K2 eventually co-led a US$32.5 million round into Paktor.
“I do look at lifestyle, how much people live below their means,” he says. “So much of this comes down to knowing how to value things. Are you gonna know what it’s like to sleep under a desk, are you gonna know how to cut costs, to do what it takes?”
These are values that matter to Amanat, even though not all of his portfolio founders share them. “Every once in a while, of course, there are people who are just brash and they punch all the boxes and create a huge company like Uber. But I think the sustainable thing would be more people like Warren Buffet, Bill Gates – personalities that are much more and yet present themselves as much less,” he contends.
Coffee meetings figure prominently in Amanat’s life – it’s how he got started down the investing path. After graduating from Harvard business school, he had to support himself and pay off his loans. “I networked and networked over coffee – the cheapest way to network, as I could not afford a proper meal at the time,” he reminisces.
After several meetings, he came across a billionaire who decided to back his first investment. “I think I came in at a moment in his life where he searched for meaning and purpose and perhaps something in my life – be it my hunger or my hustle – reminded him of how he started from nothing. Or it was just dumb luck!”
Armed with this investor’s promise, Amanat met someone who knew Twitter co-founder Evan Williams and, with the billionaire’s support, he bought US$25 million worth of Twitter stock. When Twitter went public, those shares were worth more than US$100 million.
That was when Amanat decided he would make something of himself by investing in startups. This led to investments in Uber, Spotify, Palantir, SoundCloud, Magic Leap, Oculus (“We got a bunch of Facebook stock from that exit,” he says), Airbnb, Twilio, and more.
It wasn’t easy to convince investors to get on board with him, especially since he was mostly running things by himself. “I think nine out of 10 people [I approached] said no at first,” he recalls. “Everyone was like, ‘Who the hell are you?’ It would take three or four levels of communication and verification to even get through that door.”
Amanat values face-to-face interaction and that means he’s had to miss out on deals in the past.
But by showing he was earnest and enthusiastic about his plans (“authentic,” he says once more), he managed to get a number of individual investors, venture capital firms, family offices, and angels to support him. “I’m Joseph [Phua] in this version – I’m sitting there asking them to believe in me,” he says.
Amanat declines to name his backers, giving only a hint about who some of them are – a Japanese family office, a Hong Kong-based billionaire, an Australian magnate, an Indonesian scion, and so forth. He thinks it’s better to keep it that way to avoid being placed in specific boxes.
It’s the lean startup mindset that pushes Amanat to keep his own operation small and look for founders who do so as well. But it’s also meant that sometimes things have to be sacrificed or don’t go as planned. Amanat values face-to-face interaction and, because of that, he’s had to miss out on deals in the past.
He recalls trying to invest in US coffee roaster and retailer Blue Bottle Coffee but being unable to make the meeting because he had to be in Hong Kong for another deal. He never ended up investing, and Blue Bottle was acquired by Nestlé last September. He’s still unhappy about not being able to get that one, but it’s the cost of doing things the way he does.
Betting on founders
Amanat is excited about Singapore’s startup ecosystem, with more growth-stage investments and mature companies. He also sees increased opportunities for collaboration with venture capital firms like NSI and B Capital, that go into series B rounds and beyond.
“This is Act 1 [for the local ecosystem],” he says. It’s why he wants to be part of this environment and help build a venue of collaboration, whether it’s at Atlas or elsewhere.
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