Matthew Salloway on Venture Capital, Tech Startups, and Investments in North America, Middle East and Japan
Big venture capitalist Matthew Salloway is looking for innovative tech startups on behalf of his family office and fund and says the 5G economy is a $ 15 trillion economic opportunity.
Salloway is the CEO of GSI Ventures, one of the world’s top 50 Family Offices, with a focus on venture capital and portfolio market expansion in the Middle East and North Africa region. He is also a co-founder and managing partner of SIP Global Partners, an international performance venture capital fund investing in global technology companies.
The University of Pennsylvania Law School graduate was the Founder and Managing Partner of Salloway Law Group PC, a Manhattan-based law firm, representing members of family offices, private equity firms, royals, professional athletes, investors, celebrities, media companies and other high net worth individuals. He is also a film producer and has directed films with Robert De Niro, George Clooney, Ryan Gosling and Oprah Winfrey.
Salloway will be one of the distinguished speakers during the virtual Campden Wealth Family Alternative Investment Forum, May 18-20. Before his speech he spoke with CampdenFB on his family office strategy, the start-up opportunities he does not want to “MISS” and the new fund he is investing with prolific partners in North America, the Middle East and Japan.
What are the key messages you want families to take away from your address during Campden Wealth? Family Alternative Investment Forum?
I would like families to benefit from the knowledge and experience I have gained from leading a large global family office. While every family office has unique challenges, I believe there are certain lessons that are relevant across the spectrum of the family office.
How did you get started in the family office space?
I started my career as a lawyer and personal advisor, working with royal families and high net worth individuals. These clients needed someone they could trust who could advise and protect them, structure and diligently oversee their investments, help with tax and corporate structuring, negotiate legal agreements, hire staff and to manage personal affairs.
One of the people I have been assisting for over 10 years asked me to launch her global family office – GSI Ventures. âGSIâ stands for growth, sustainability and integrity – the fundamental pillars of the family office we have created together. We wanted to make sure the values ââreflected our core principles and our operating philosophy.
What criteria do you take into account when investing in startups on behalf of your family office?
I found an acronym – MISS – that sums up my due diligence process. I’m looking for a start-up that I don’t want to MISS.
“M” stands for management. We want to work with an experienced team who can execute the vision. A lot of people have great ideas, but that doesn’t mean they’re going to be successful startups. We are looking for teams who have experience in creating and exiting successful start-ups.
“I” stands for integrity. We want to work with people we trust, who share our same ethical principles and values.
S ‘represents the size. We are looking for companies that address very important markets for the product or technology. If the market is not large enough, the business may not be commercially viable.
The last “S” is sales and it is essential that the team have the right strategy and the right sales and marketing process. You can have a great idea, but you can’t be successful if you can’t get this strategy and product to market.
What has been the impact of the Covid-19 pandemic on your investment strategy?
What we have tried to do is to be opportunistic in our investment strategy. There are some critical themes that have come to the fore. As an example, we took a close look at the technologies that represent the future of work – the pandemic has certainly changed the way we traditionally thought of it. We also want to be careful, as themes that arise during a pandemic may not last forever, so we want to make sure we think long term.
Tell us about GSI Ventures’ goals as a family office.
In general, we hope to be one of the best performing family offices in the world in terms of the ability to research and diligently invest in investments and in terms of portfolio construction and management. We want to create the right long-term balance between preserving capital and growing the portfolio.
But a unique aspect is that we are not only an investor, but also a strategic partner. We are often looking to find investments where we can be a strategic bridge between this company and the Middle East.
In this sense, we hope to bring the best technology and first-rate partnerships to the region, which can help promote jobs, people’s quality of life and the economy.
Overall, we hope to continue to develop our reputation as an intelligent, trustworthy and valuable partner.
How does GSI Ventures go about bringing new technology from the United States to KSA?
At the start, we have to find the right technological product and the team. Then we do a significant amount of due diligence and market research on the local economy and how this technology fits into the regional ecosystem. Finally, we must determine the appropriate structure for international expansion and find the best local partners, if necessary. We are trying to be helpful in navigating the market, because the Kingdom of Saudi Arabia is different from many countries in terms of trade. There are a lot of nuances that you need to be aware of so we are trying to help the company deal with this and help them find the best way to find the right and the best partner in the area.
Tell us about an investment you are particularly focused on right now.
There is an investment which is particularly interesting and convincing and which corresponds perfectly to our thesis.
We are investors and co-founders of a fund called SIP Global Partners. The fund was born out of our thesis of investing in best-in-class technologies and being a bridge between North America and the Middle East. We partnered with two people who were working towards the same concept; however, in their case, they focused on building a bridge between North America and Japan. If we could combine North America, Japan (ASEAN), and the Middle East, it could be quite unique and powerful. This is how we founded SIP Global Partners. The fund is anchored in one of the world’s largest global technology companies and focuses on the 5G economy, which we believe is a once-in-a-generation opportunity.
The 5G economy is an economic opportunity worth more than $ 15 trillion. It includes areas such as telecommunications infrastructure as well as the technological layers above the infrastructure such as artificial intelligence, augmented reality, virtual reality, smart cities, gaming, machine learning. , robotics, health and digital media and cybersecurity.
This fund was launched about 15 months ago and we have had huge success and access to the best deals, mainly in North America. People want us to be on their capping table because they want to be able to develop their technologies in markets where we have connectivity and infrastructure.
For example, Japan is the third largest economy in the world and often a stepping stone to the rest of Asia. In addition, Saudi Arabia is the largest economy in the Gulf. If you manage to locate your businesses in these regions, it can have a huge impact on your own growth.
Our fund was able to obtain one of the few licenses from the Saudi Ministry of Investment, which supports us in the growth of our portfolio companies in Arabia. In Japan, one of our partners was the former president of the Japan Venture Capital Association for over 10 years and has helped companies like Amazon and Netscape grow in Japan. The fund has a formidable team of advisors and investors, including a professor at Harvard Business School, the former CEO of GE Asia, the former CIO of Lockheed Martin, a judge of the Supreme Court of Japan and the former co-director of BlackRock Alternatives.
What was your approach to impact investing?
We are a big supporter of impact investing. In fact, we were one of the first families to participate in a Harvard University Kennedy School of Government program that brought together the world’s leading impact-oriented families.
We were so inspired by the program that we started our own workshop in Saudi Arabia about two years ago. It was truly the first of its kind in the region and it brought together some of the best next generation families and community thought leaders to learn more about impact investing and how they can get involved. .
Overall, we seek to be a catalyst for this philosophy in the region.
I have learned many lessons, some of which apply to other areas of investing as well as to life in general. For example, VC requires patience. Many of these investments are long term, and there are many challenges businesses face along the way. Having the patience to stick with a business and support its growth and trajectory is an important part of the process.
Another lesson is to understand that business is a very risky asset class and that in general the losers far outweigh the winners. I believe one statistic I read was that out of five million investments something like three becomes unicorns so the odds are stacked against you, but winners can also compensate losers because you can have really big yields.
Diversification is also an important lesson. It is essential to make sure you diversify yourself, both in terms of industry and geography.
Finally, your reputation is everything. Always be courteous and build a good reputation for being a good, respectful investor.