The rare tech startup which listed early and became profitable

Photo credit: Getty Goh

There’s a divide among entrepreneurs. One side believes in doing things the old-fashioned way: chasing profitability from day one. The other side is all about raising venture capital and gaining market share first – income will come later.

And then there’s Getty Goh, an ex-military man who took the least traveled path. He listed his crowdinvesting company CoAssets on the Australian Securities Exchange (ASX) just over three years after starting it, raising US$8.61 million.

The move is paying off. The startup grew its revenue eightfold to US$4.27 million and made a profit of US$1.32 million in the financial year 2017. It’s the first year CoAssets is in the black. The company is not completely out of the woods though. US$1.80 million of the revenue was attributed to unrealized investment gains from selling shares in another company. Its share price is still down from the peak.

Tech in Asia interviewed Goh to find out more about his company’s journey.

You’ve had some difficulties raising money from VCs for CoAssets between 2013 and 2014. Was that a factor in deciding to list on the ASX?

Our decision to list was primarily due to our desire to be transparent with our users and investors. Remember that we got listed in September 2016. Back then, many regions did not have a clear regulatory framework on such online funding activities. So the fact that we were listed gave our users additional confidence in our platform.

If you look around, besides one or two crowdfunding companies, the rest were unable to attract much VC interest. Hence, it suggests that this was a space that VCs were interested in, yet unwilling to invest in due to the lending risks involved.

I believe that it was a right decision to get listed as it instilled operational discipline. Rather than adopting the “burn and grow market share” approach, we ensured that our business model was able to support our continued growth.

Why did some VCs advise against your listing?

Having gone down the path of listing, I now completely understand where those VCs were coming from. If CoAssets had been a regular ecommerce site or a digital marketing platform, I would have thought twice – or maybe even four to five times. This is because listing is typically the exit that VC funds look at. So listing prematurely would mean taking money off the table before the company’s value is fully actualized.

Apart from valuation, management also has to contend with compliance cost and obligations. As a listed company, my accounts get audited twice a year! And I need to split my time between business development and dealing with investor relations. From that perspective, I totally agree with the VCs.

Investor protection is always a good thing.

Having said that, as a CEO, I have to grow the company based on whatever opportunities that are available. Fintech is a business that deals with trust, and the more a company does to increase the trust factor, the easier it is for the company to grow. While those compliance obligations may seem like a liability, it demonstrates CoAssets’ commitment to go the extra mile for transparency.