On Nov.21st, We had a fascinating one-hour-long conversation with Mr.Marco Stagliano,the Managing Partner for Fih Capital and Head of Operation for AngelVest,talking about his experience in cross-border M&A and deep insights on the investment in emerging technologies.
Innoverview: How would you describe yourself in three words? What’s your motto?
Creative, Persistent, Resilient. My motto is “if you want quality, you need to pay for it, what you get for free will cost you double in the end”.
Innoverview: Can you please share more about your educational and professional background? And we’d love to hear what brought you to Investment and Blockchain.
I graduated from Bocconi university, a leading business school in Milan, Italy, in Audit and Corporate Finance. After a short experience in the real estate industry as investment analyst in a listed company, I joined a Private Equity fund as Asset Manager and the Fund Manager. In 2012 I founded a financial boutique in Milan, Heta Finance, operating in Financial Advisory and M&A. We have worked on many project both in capital markets (IPO and Bond Issuance) and private transactions and in 2015 I joined the network Kreston as head of M&A. In 2016 I moved to Shanghai to set-up a Chinese branch of Kreston GV Italy and now I’m operating as Managing Director of FIH CAPITAL Ltd, a company operating under the Kreston network, specialized in corporate finance and cross-border M&A. In 2016 I started a cooperation with a network of Angel Investors named AngelVest, focusing on investment in early stage Hi-Tech start-ups. In AngelVest we explored the blockchain ecosystem and we’ve accomplished few investment in blockchain based company. After studying the different opportunities offered by the blockchain technology, working together with the founding members, we decided to launch an AngelVest tokenized fund through the issuance of an STO (security token offering).
Innoverview: As a mechanism for fostering growth and increasing shareholder value, M&A is an important tool in a company’s armoury. Cross-border M&A in particular can be a useful springboard for those eyeing expansion and future prosperity. With the experience in KRESTON GV Italy, what’s your opinion upon the risks and rewards of engaging in ventures against making greenfield investments will companies need to weigh as cross-border deal activity continues?
Coming from a European investment culture, where funds available are scarce, the willingness of start-ups and mature companies to look after a cross-border transaction is always high. The main problem for new project to have access to cross-border investors is that their business model is not validated and the access to new market without a business validation is hard. An investment in a start-up that has not entered even the local market will be very risky. For more mature company is easier having access to cross-border transaction, but this apply only where the company has potentials to enter different markets. The ecosystem of SMEs (small medium enterprises) in Europe is made by companies that have low attitude in internationalization and this create often an obstacles in pursuing a cross-border transaction.
Innoverview: PE in Asia has been shifting from the traditional firm to single or multi family offices who do a variety of activities from investing across largely different cheque sizes (from angel to in-house hedge funds), to tax optimization. What is the future of private equity from your perspective?
In the recent years we have witnessed a slowdown in PE investments in Asia, mainly due to increasing of asset values that impact on numbers of transaction and the restrictions in foreign investments applied by the Chinese government.
What is happening, especially in China, is a dichotomy between the large funds (as KKR for example) that are resizing the average ticket size from USD 100 Mln to USD 500 Mln, creating a gap for the medium size investments in the range of USD 50Mln and USD 250 Mln.
The proliferation of family offices, small and medium, is taking part of the space left by the big PE firms but the approach at investment and strategies are less sophisticated and industrialized.
The evolution of the private equity will depend strictly on the new forms of investment been available in the market. I believe that the GP/LP model together with the 2/20 remuneration model of the traditional fund will be sooner or later disrupted by the new investment framework as Security Token Offering that consent a frictionless trading and bring more liquidity in the market, this will lead to have Private Equity firms that will be more and more institutional and will focus only on large ticket investment and in industry with high entry barriers like infrastructures, Real Estate Healthcare, Pharma etc.
Innoverview: China throws its weight behind A.I. and Blockchain as it aims to be the world’s tech leader, is China’s new fascination with Blockchain really good for bitcoin especially in the bear market?
The push of Chinese government on AI and Blockchain is not positively related to the bitcoin as the Chinese government has always supported the technology itself but never the declination of the blockchain technology in its speculative aspects as the cryptocurrency trading. I guess that overall the adoption of the technology and the (possible) development of an internal crypto currency in China will be beneficial to all crypto ecosystem but on the long term could lead on a cannibalization of the global value of the crypto assets, as at the end the expression of the real value has always to be based on demand and offer, and once the demand switch on a new class of asset, the previous asset loose value.
Innoverview: From your perspective, what’s unique and game-changing about Blockchain technology? Could share 1/2 projects that you have invested or involved in?
I believe that the blockchain technology has for the first time in the modern economy enlightened the concept of decentralization, the possibility to have a set of rules that are applied in the interaction of different counterparts within an ecosystem without passing from a centralized entity that approves or verifies every single process. This concept allows to obtain efficiency in many sectors, as financial industry and logistic, but also make possible the creation of new business models that benefit from interaction of different stakeholders within an ecosystem.
I’ve recently been involved in a project for the creation of a platform for secondary trading of fashion product, with focus on sneakers.
The contributes that the blockchain technology bring to this project is the possibility to originate trades of physical goods, or portion of it, without involving the logistic issues. The user of the platform can buy certificates that represent a portion or the whole pair of sneakers and decide to trade the certificates, and this process doesn’t imply the physical possession of the goods, or simply buy the sneakers.
Another examples is the AngelVest security token funds, a closed end fund that allow the investors to liquidate their position through the sale of their security token.
In the traditional funds the investors don’t have possibility to liquidate their position before the expiration of the fund (usually 8 years), but with the security token, and the presence of security token exchange, investors will have a market place where they can divest their security token, creating a new source of liquidity.
Innoverview: Why average investors earn below average market returns especially in Blockchain domain these two years? What’s your benchmark to select the promising projects?
The problem with returns in crypto investment is that most of the asset are subject to speculation and “pump and dump” strategy, as the market in not regulated. This leads to high returns in the short period but without a clear investment strategy and an adequate asset diversification, a low return if not even loss. The loss are amplified in case of leverage as the nominal value of the debt is always in fiat equivalent and with a crypto asset used as collateral that goes down in value, the impact of the loss are multiplied.
In AngelVest we always focus on sustainable growth in the selection of projects, we are never impressed by high performance in the short period as we have a long term investment perspective, if the project can demonstrate capabilities of obtaining a return over 25% p.a. in my opinion is a good investment.
Innoverview: Whereas Blockchain is a platform for performing a transparent and hassle-free transaction, quantum computing is the next generation computing machines which will make every work easy and fast. From the investor’s prospective, do you think quantum computing is an existential threat to Blockchain technology?
As a novice of quantum computing, that I’ve recently started to approach, I believe that will contribute to further evolve the Blockchain technology as we know it now. The superior capability of processing data will influence the efficiency and the speed of the technology, the only threat will be to those companies that will not adapt their infrastructures to new technologies. I truly believe that what we are witnessing at the moment is only a minimum percentage of what blockchain technology could bring in our life.