Kazakhstani Innovators Pave the Way for a Revolutionary WealthTech Platform in Asia
Redefining Private Banking: The Rise of the Affordable Singapore Investment Bank
After 25 years in the industry, I came to the realization that my wealth of experience surpassed the confines of the conservative financial ecosystem. My desire was to join a team that would provide me with the opportunity to delve into new investment processes and cutting-edge tools, explained Soon Tong Wong as he formulated his requirements for a new job. In 2019, following this revelation, Soon Tong bid farewell to his position at the Singapore branch of Nippon Life Global Investors, one of the largest Japanese companies.
In 2022, fate intervened and brought Soon Tong together with Olzhas Zhiyenkul the Founder of what was then known as Paladigm Capital (now renamed into Investbanq), and co-owner Talgat Kantayev. Hailing from Kazakhstan, this dynamic duo had already established a successful investment business in Singapore, impressing Wong with their visionary approach to the financial industry, their strategic development plan, and boundless energy. Despite being a high-profile expert with the potential to secure a position at the most prestigious financial institutions worldwide, Wong chose to become a senior investment manager (and subsequently the Head of Investments) in what they proudly referred to as a startup.
Wong's decision was underpinned by Paladigm's ambitious vision for the future: to become a digital private bank capable of revolutionizing the entire industry. This compelling prospect enticed him to embrace this fresh opportunity and become an integral part of Paladigm's journey.
While Paladigm's history and accumulated expertise span back to 2017, making it «chronologically» and experientially beyond the realm of a typical startup, Wong found himself joining the company during a transformative phase. Paladigm was undergoing tectonic changes, altering its strategy and setting its sights on becoming a digital private banking platform. In a pivotal moment, the former sole shareholder, Damir Karassayev, sold 100% of the company's shares to the aforementioned dynamic young team, driven by their vision and the desire to raise the management company to new heights through innovative digital solutions. This strategic shift demanded capital infusion to realize their ambitious goals.
Initial Capital: A Story of Vision and Ambition
Most of the history of Paladigm Capital revolves around Olzhas Zhiyenkul, an accomplished individual recognized in the prestigious Forbes «30 under 30» rating. Olzhas pursued his education at Bayes Business School, Faculty of Management, where he laid the groundwork for his future achievements.
For his graduate work, Olzhas embarked on a project for the Singapore-Hong Kong hedge fund, Sumo Asset Management Limited. The project's deliverables resonated well with customers, leading to a subsequent invitation for him to work in Singapore.
Within the realms of Sumo Asset Management Limited, Olzhas took charge of managing the book for CIS and European countries. Over time, his expertise and dedication propelled him to the position of Chief Investment Officer (CIO).
Olzhas' exceptional contributions did not go unnoticed, as Joanna Lin, Director of Sumo Asset Management Limited, fondly recalls: «Olzhas was a key member of the company. He has provided expertise for establishing a framework of prudent and effective controls which enables risks to be assessed and managed, developed asset management business and identified investment opportunity, and provided asset management service to clients. Olzhas showed himself at all times to be competent and able to successfully handle different tasks. He had very high work ethics».
Having secured stock options in Sumo Asset Management Limited, Zhiyenkul cashed them in when the company was sold. This strategic move bolstered his financial resources, providing him with the capital he needed to venture into his own management company, Paladigm Capital, in 2017. Additionally, the financial foundation of Paladigm was further supported by investments in startups Olzhas had been making since 2015.
Taming the Unicorn
Olzhas Zhiyenkul had a long-standing aspiration to support startups, but he knew that venture investment could be a risky endeavor and finding funding for projects was no easy task. Undeterred, Olzhas decided to take a leap of faith and risk his own finances to gain firsthand experience in the world of venture investments, writing his own history in the process.
In his journey, Olzhas found inspiration in the tech entrepreneurs who were creating transformative technologies, especially those from regions with limited access to venture capital. For him, these entrepreneurs were the heroes of his story, and the most obvious region to explore was Central Asia.
«Here, most of the resources are in the hands of the older generation. But they know only one way to invest – 50/50. How can I explain to them that I value my startup at a million dollars?», - novice tech entrepreneurs used to complain.
As early as 2015, even with limited knowledge in the field, Olzhas represented a different breed of venture investors. He began to venture into promising Kazakhstani projects like Clockster, CTOgram, Relog, Smart Satu, UvU.
In 2017 Olzhas expanded his early stage impact-driven mandate beyond Kazakhstan to include Emerging Asia (comprising of developing countries of Southeast and Central Asia) and beyond. For example, one of his seed stage investments was Tigerhall – a ground-breaking edtech platform, which was transforming education by leveraging on the social element of learning and providing expert content on a broad variety of subjects ranging from leadership and entrepreneurship to workplace politics and life skills. Subsequently, the globally recognized venture capital Sequoia also invested in the platform.
Remarkably, Olzhas' personal portfolio consists of 13 active projects, with only one project not progressing. This impressive survival rate defies the typical early-stage project mortality rate of 90%. Proudly, Olzhas can claim ownership of a unicorn—a leading digital asset custodian and prime-broker Copper. Valued at over $1 billion, it's a rare achievement in Kazakhstan, making Olzhas a trailblazing business angel who has seen this project through from its initial round to unicorn status.
Navigating Singapore's Rigorous Financial Landscape
There are legends about the ease of starting a business in Singapore, with some claiming it can be done in as little as 40 minutes. However, this streamlined process applies only to unregulated businesses. For companies requiring licenses, such as Paladigm, which needed one to manage client money, a thorough check is necessary. These checks aim to prevent fraudsters from taking advantage of Singapore's reputation as a global financial center. Over the years, Singapore has built an impeccable image, and as a result, the authorities meticulously scrutinize newcomers.
«I went through several stages of checks, including a live interview. They asked me about my background and the origin of my capital», recalls Olzhas, who eventually obtained the necessary license.
However, Olzhas acknowledges that running a financial institution in Singapore with his relatively modest resources can be challenging. That's why he decided to seek a partner and offered a friend, Damir Karassayev, a highly respected fellow Kazakhstani, the opportunity to buy 50% of Paladigm from him.
In April 2017, Karassayev, the former CEO of the Kazakhstan stock exchange (KASE) and ex-owner of Advanced Bank of Asia in Cambodia, purchased half of Paladigm. Later, as the need for more capital arose, he acquired the entire business.
Karassayev explained his decision, saying, «Despite Olzhas being just over twenty in 2017, he had already lived in Singapore for several years, established ties with major financial institutions, and built valuable business contacts. Coupled with his high professionalism and a strong desire to foster a new project, Olzhas easily convinced me that it was the right time to start».
Clear Flagships: Revolutionizing Investment in Emerging Asia
In 2017, the visionary founders of Paladigm Capital identified a gap in the investment landscape of Emerging Asia. They observed that the markets were primarily driven by traditional brokers, following a «come, buy an investment, pay a commission» approach. Recognizing the need for innovative solutions, Paladigm set out to disrupt the market and empower investors with a new generation of investment products.
Armed with that vision, Paladigm packaged two pioneering strategies into accessible products. The first flagship product, Paladigm Atlas Fund, presented an income instrument with a globally diversified portfolio, attracting relatively conservative investors. Notably, the Atlas portfolio included a significant share of Asian assets, showcasing Paladigm's global expertise, including the dynamic Asian markets. The fund featured a transparent commission and an efficient tax structures.
A distinguishing feature of Atlas was its partnership with investment advisor Schroders, a leading global investor with over USD 600 billion under management. This strategic alliance with Schroders offered Paladigm clients access to top-tier capital management typically available only to larger investors.
The second flagship product, Paladigm Ventures, was a late-stage fund focused on American technology companies with a capitalization exceeding USD 1 billion (unicorns), poised for potential IPOs. Paladigm Ventures enabled investors to capitalize on the growth potential of these companies before they went public, with the aim of significantly increasing their value upon listing.
Navigating the challenging niche of secondary market entry before IPOs required expertise and valuable business contacts. Paladigm proved to be a brilliant expert in this arena, as evidenced by the impressive annual profitability of 25.5% since the fund's inception.
The success of these flagship products and other innovative offerings enabled Paladigm Capital to attract substantial investments, totaling over USD 100 million from HNWI and family offices in Emerging Asia. The minimum check size of USD 100 thousand ensured accessibility for a broader range of investors, empowering them to participate in the region's dynamic investment landscape.
Paradigm Shift: Embracing the Future as Investbanq
«We rapidly evolved from a capital management company to a quasi-investment bank. Despite operating in Singapore's developed financial market, we encountered constant imperfections in the financial infrastructure, repeatedly having to bridge gaps in services provided by our counter-partners. We grew weary of this and knew it was time to elevate our game», shared Olzhas.
The inspiration for Investbanq came from gaining a deep understanding around the issues with the traditional model of investment banking, which had become largely inaccessible or inefficient and expensive for many individual investors and family offices. Often, a minimum of over USD 30 million is required to access the platforms of classic investment banks, leaving many excluded from the platforms of established investment houses or having to accept high costs or poor service.
Moreover, the investment banking industry seemed stuck in the past century struggling to upgrade their decades old core systems. Investors frequently found themselves managing multiple accounts across multiple platforms in order to satisfy their investment needs, yearning for things like automated investment capabilities and a unified statement for all their assets.
Hence, the team's innovative vision took shape: to create a digital private bank capable of rivaling UBS, Goldman Sachs and others, while democratizing investment access for clients typically overlooked by traditional investment houses. This bold strategy required Investbanq to adopt a startup mindset and secure funding for the next stage of development.
Olzhas Zhiyenkul proposed to Damir Karasayev to buy a controlling stake from him, becoming co-owner once more, and raise investments through venture funds. Karasayev supported the team's vision and in April 2022, sold 100% of the shares to the top managers. With this, in April 2022 Investbanq was born.
Investbanq's focus is now set on the development of a comprehensive digital platform, a one-stop-shop for all investment needs. The platform will offer various options, including investing with the aid of an AI-adviser, minimizing human intervention until required. Alternatively, clients can opt for full discretionary asset management services.
The integrated platform will feature assets listed on world exchanges, along with products and solutions from global investment leaders. Existing products developed by the company (Paladigm Atlas, Paladigm Ventures, Advisory, and Discretionary Mandates) will be available, alongside new innovations.
One such innovation is Crisis Alpha, a form of «volatility insurance» designed to complement any stock portfolio. Crisis Alpha thrives during market downturns, providing an added layer of protection. The product has already been launched on the Stuttgart Stock Exchange, Germany's second-largest stock exchange. «We are fully prepared to share our expertise», Talgat says, «and, as a result, we try to collaborate on the creation of all our products. This is how we achieve world-class quality».
«We profit when our clients profit. That's why we deeply understand each client's situation, search for tailor-made solutions, and achieve the best results. Everything is currently done manually. That's why we, along with the development team, are building the Investbanq platform. No one in the wealthtech industry has such an integrated platform yet», assures Talgat Kantayev.
The target segment for Investbanq remains Emerging Asia. The company will continue to be based in Singapore, as it is the most strategic location to target Emerging Asia. Additionally, the team believes that Singapore is the future of investment banking.
«Wealthtech revolution will impact the entire industry, and we want to be at the forefront of those who benefit from this», the team says.
Several notable investors have agreed to support the idea. In June 2022, Investbanq secured its seed funding which was shared by three investors. One of the investors was Aigazy Kussainov - a serial entrepreneur who leads one of the most successful ed-tech brands in Kazakhstan. Another investor, David Halpert - is a well-known South-East Asia based American venture investor, who is the founder and principal of the Penataran Group, and the founder and principal investor in Battery Road Digital Holdings (BRDH). Between Penataran and BRDH, Mr. Halpert has been an early investor in several high profile unicorns in the developing world. Germany based financial organization Quantumrock which focuses on artificial intelligence in the field of asset management has also acquired shares in Investbanq.
In June 2023, the team conducted a successful public demo of its platform at the CEVF (Central Eurasian Venture Forum) 2023. Following the forum, Dr. Jonathan Chang, the CEO of Fintopia Indonesia and a renowned fintech expert, political consultant, and writer, along with Nellie Wartoft, CEO and Founder of Tigerhall, joined Investbanq's board of advisers, which at that stage already included unicorn founder Dmitry Tokarev and an experienced Swiss investment banking professional Alisher Tashpulatov. Additionally, the company announced plans to develop IQ (Investbanq) chat, a comprehensive chat based financial AI-advisory tool.
Investbanq is planning to launch the first version of its platform in Q4 2023 and aims to create an ecosystem where investors can satisfy all of their investment needs – from the formation of a unique investment portfolio to tax advice and relocation services. The team calls it the «Amazon of finance».