The Underserved VC Secondaries Niche, Explained | Alpha Uncovered x Chris Shen, Revere

0:05 terms of we've known each other for a long time. >> Yeah. Well, maybe let's just stop there and we'll let's step back a bit. First of all, welcome. Welcome back to Hong Kong. >> Thank you. >> Maybe for those of us who are meeting you for the first time, maybe just introduce a little bit about what you do. I knew you very well as an investor, family office, you're a platform builder, but maybe, you know, we can hear from from your own voice.

0:28 >> No, thank you, Alvin. and uh great to be back in Hong Kong. I lived here for about 11 years, Asia for 13. My name is Chris Shen. I've done many things in my nonlinear career. Started my career uh in corporate finance, M&A law uh with Baker McKenzie. I spent half of my career doing that all through Asia, Beijing, Hong Kong, every small city in China down up to Korea down to Asia in the Southeast Asia. Uh in 2015, I co-founded a family office uh called West 22nd Capital. We're a very close friend of mine. I was a member of a retail real estate family in China and we proceeded to invest uh across sort of different asset classes ranging from equities fixed income in our public book all the way to private alternatives etc.

1:08 During that time I oversaw I guess the external fund managers program. I looked at everything from seed to buyout, hedge funds to credit. And it was that time that I met Alvin uh through the hedge fund world where he taught me quite a bit about sort of how that sort of industry worked and sort of how to allocate to different liquid strategies. That was in Hong Kong. Um I left Hong Kong in 2019 right before COVID, moved back to the United States and then co-founded a a fintech platform called Revier, which was recently acquired by another company. But essentially that platform focused on emerging manager venture capital data. So think like a morning star for venture capital uh where we worked with global emerging managers 600 plus around the world and the LPs that were interested in them and derive data insights and investment opportunities through that. Stepping down for after the acquisition, I co-founded a fund called Newco Academy, which essentially in a nutshell buys out LPs, smaller LPs in VC funds, right? So, we transfer in as an LP, we negotiate with the LP, get the GP approval, and we're in some really interesting look through names like Anthropic, Open AI, SpaceX, Bite Dance, uh Khi, etc. through these these transfers. Uh so, yeah, I'm back in town and uh you know, had to make a pit stop and see Alvin. Well, it's a it's always a real pleasure to have you in town and to, you know, exchange notes because it seems like every time we sit down, >> something new is happening.

2:33 >> Yeah. Something new is happening. The world has changed. Everything from the political landscape, geopolitics, and what's hot this year is exactly the topic we've been that you started on many years ago, which is AI and VC investing. >> Yeah, that's right. I I think every time I come back to age about once a quarter and Alvin is, you know, sort of gracious and hospitable enough to let us use his space and we'll be doing something in October with him. Stay tuned.

2:57 >> Uh for Milin F1 coming through the region, but every time we sit down it was last time we spoke it was like liberation day, right? Like the craziness around that like you Americans uh like not in the government. Um and then we've come back during kind of obviously what's going on in the Middle East. we've seen sort of, you know, Trump one and Trump 2 kind of all these different things that go on and it never sort of, I guess, ceases to amaze me or surprise me that we still have a lot of things interesting to talk about, but the core themes are kind of the same around innovation and kind of development of technology.

3:30 >> So, so let's let's start with the macro view, 20,000 foot view. Um, I from this I want to hit the elephant in the room right off the bat. Okay, recent news. Number one, markets at all-time high. It's it's we've been saying it's been frothy for the last two years, but it just keeps going up. The trickle down effect or perhaps one of the big drivers is the private markets, which everyone is still staring at with with an obsession, both fear and envy about how how large the the private market space has been. It's now close to 22 trillion, I think, >> as of the time of recording. The space that >> Yes. Now the news over the last couple of weeks is anthropic halting or stopping or barring secondaries in the private space and that forced a major draw down in the valuation. So why don't you walk me through what this means to to you how you view it and and for the investors who who are who are in the secondary space.

4:26 >> Yeah, absolutely. Great question. So we'll break this down piece by piece. I think everyone here kind of knows what Anthropic is. you know, Claude and sort of the inroads and sort of the staggering kind of changes that app and sort of the entire platform is causing sort of in work, right? Like in terms of financial services, asset management, research, etc. So, we won't dig into that. I think what's interesting is that about 6 to 8 months ago, if I recall correctly, there were a lot of anthropic secondaries floating around, but nobody was buying, right? I think they were priced at anywhere from four 400 to 500 billion valuation. Again, don't quote me on this. go look it up. But the the the takeaway was that no one was really looking to buy it, right? you know the channels and everything like that which was interesting right I would say fast forward today sort of the fever pitch and the you know it's not hype in the negative sense but the fever pitch demand for anthropic I think most people who have done secondaries on the either sort of direct investing primary or secondaries has never seen that kind of pentup demand maybe in instances for SpaceX and for bite dance but those kind of eb and flow right >> the sustained demand for anthropic in the last I would say three months in anticipation of their primary offering that I was was leaked I would say a couple of weeks couple of days ago at 900 billion putting aside that valuation it's it's it's incredible like it's everyone their mother their grandma their asset management firms are looking for that right what we've seen sort of anecdotally and through different channels is that obviously a lot of the brokers a lot of the GPS the funds that have invested anthropic and they're waiting for their pro ro allocation and others that are trying to get in new at the sort of primary round were building their books very early but all knew that they were going to get cut back, right?

6:06 Really? Okay. >> Yes. It's this is nothing new, >> right? >> I think you see it in a Hong Kong IPO with cornerstone investing and sort of, you know, capital market. >> Far too overs subscribed. >> Far too overs subscribed and essentially no one kind of knew the these things were happening even before again this is all sort of you know sort of hearsay that the board had approved what they were going to do right in an IPO you know that everything is sort of done by the book. you book build and sort of all that they're desk you know big franchises banks working those things all under sort of regulatory scrutiny that you know non-deal versus deal road shows etc but none of that stuff that apparatus or that infrastructure exists in private markets you just kind of go and do your thing right so that resulted I think in the last I would say 72 hours I landed in Hong Kong last night but when I landed it was all these messages around like what happened to people's allocations etc right big firms you know again you can if to know sort of who these people are. Big firms were getting cut back and they were being very selective around two larger firms. You know, they're big institutional names that everyone knows that were had their sort of allocations sort of solidified, right? So, we'll leave it at that and you can kind of check your channels.

7:17 >> So, maybe there's pause right there. So, who does this affect? because you have investors who have purchased shares from preIPO investors and then you have those who are purchasing shares from those who are are vehicles that are still invested in >> yeah that's a good distinction that that you're right to flag I would say when you talk about the 900 billion valuation primary offering there are a lot of people there trying to angle into the firms that have commitment to that right so you're paying top of the market in addition to fees and your valuations usually come out one trillion, right?

7:51 >> So, this would be either like a KKR or like a >> Yeah. Any position >> any or I would say any of the firms that have been blessed to invest in the primary and those names will come out. So, you can look them up on press in addition to sort of other investors that are already on the cap table that have Pratta allocation or sort of subscription rights to a new offering round. Right? So, we'll put them here as a sort of direct primary investors, right? There's a lot of people that are doing the secondary. So they're existing investors on the cap table that are looking to sort of now they have a valuation mark it stepped up from like say 300 to 900 they've made some money they want to sell right and then they will negotiate private transactions they will typically lurk toward the board or the CFO to run so not run a foul of right of first refusal roer rights and that's another sort of pocket of people right what we do obviously is a little different in that there are a lot of other fund managers that are in on the cap table of anthropic or any any big company, right? You think about SpaceX, think about OpenAI, etc. There are hundreds if not thousands of individual line items on their cap table, predominantly sort of early stage investment funds, late stage investment funds, pensions, endowments, what have you, right? A lot of these early stage funds have LPs, limited partner investors who have been in that fund for a very long time and they may be looking to rebalance and exit those positions in that GP. Right? So that's another way of accessing I would say these bigger names in terms of these three different ways, right? As I illustrate the spectrum, you can kind of tell where you're going to pay top dollar and where you can find a discount, right? Because the more opaque the fragmented the market in theory, the better discount pricing you're going to get as a buyer simply because there's no other sort of game in town. When you think about that spectrum on the primary, plenty of people, plenty of people, big fish looking in a big pond.

9:45 And you know again at the end of the day if you look at sort of the big institutional firms you know they have connectivity and sort of networks that I certainly don't have right you drop into the middle and you think about again the different sort of funds you know they're they're pretty well connected for that individual name but they may not have coverage to other names right other sort of you know silos other verticals etc.

10:05 And when you think about the LPS in these funds, they have absolutely zero buyers, right? If you think about that market where I think many of you may not even know that market even existed in venture capital, I certainly didn't a couple years ago. But if you think about secondary offerings in private equity, if you think about real real real assets real estate, there are plenty of larger really great firms like Lexington, RDN, um you know, I would say Hamilton Lane, Blackstone, Goldman that do these dedicated secondary strategies, but buying out LPs of those asset classes very much less so venture capital.

10:40 >> And these LPS, I would imagine there's also somewhat discount to an extent because you have for one, multiple layers of fees. Number two, these are smaller positions. And thirdly, they they have no voting rights. They themselves are not on the cap table. It's the vehicle that they subscribe to that's on the cap table. >> Correct. And that's an important distinction that we talked about because everyone saw the news around anthropic and sort of other latestage startups, latest stage preo companies I should say, cancelling or not honoring sort of these individual dealbydeal SPVS which again in the past most companies tolerated because they were forms of liquidity and sort of getting the name out forms of capital etc. But the best companies simply don't want to deal with that. And there are a lot of other very bad actors, charlatans, you know, outright fraudsters that run these kind of deals, but that actually don't have allocation to the shares, right? They're just kind of book building and then when companies go public, a lot of these SPVS are sort of when the tide washes out kind of see who's swimming without pants on, right? So what the distinction there is that on the primary and sort of on the on the direct and secondary on the primaries there are a lot of those things that anthropic was looking to cancel and sort of get rid of these bad actors right but your comment on sort of those GPS that are already on the cap table they may invest in this company it precedes seed series A sometimes these GPS sit on the board of those companies and they almost are always audited in terms of the fund and they have sometimes they have information rights from the company we think that is a the best way to invest in these companies.

12:12 If you are not a Thrive or a Goldman or a Tamasc going in the primary where you have enough weight to say, I need 1, two, three, four, five, you'll need to grant those for me to write that $1 billion check. >> The vast majority of people kind of sit in this middle abyss where there's just no information rights roofers kind of here and there. You're not getting the attention of the company. You know, sort of the vehicles that you may invest in may may or may not be audited. It's kind of like all over the place. It's like a gaslight version of rights in a way.

12:40 >> It is very correct, >> right? Because you you you think that yes, you might be on the cap table, but you really don't have information rights for one, and you don't sit on the board, but but you're also restricted. >> Correct. >> Whereas the LP of the GP or the LP of the investment firm that does have board rights and has aggregated those rights has more moving power in in the organization. >> Correct. I I would say that >> you still have exposure.

13:06 >> Absolutely. I I think that's a great point because when you think about kind of private companies obviously operate at different reporting if any standards than public companies right 10K 10Q sort of different things in Hong Kong different markets you have reasonably good information and I would say with the advent of AI which we can talk about later you can find information from different sources get to your fingertips pretty quickly and then add to that right even in public markets it's still really hard to find them right like you know you have info rights those board insider presentations. They're good. You know, they're pretty good information.

13:39 But again, there's no substitute for being sitting at that board or virtually on Zoom and sort of going through those deliberations and that just doesn't exist for 99% of the investors out there. You just don't have that access. >> Well, that well that's good news for our investors, that's for sure. Um, so this is really primarily affecting those in the mid-range who are trying to find liquidity. That's not going to happen. But it could also be an opportunity. Uh, >> oh, absolutely. I I think you know when we talk about the things that I work on >> valuations are coming down quite quite dramatically. I I would say valuations for certain companies earlier stage I think the discipline around you know a cap safe note right a simple agreement of future equity we talked about this look it up if you guys don't know what that is there was a period of discipline I would say from like post FTX first republic and sort of the implosion all the way up to maybe the mid 2024ish maybe late 2024 but then I think with AI and kind of you know the oneperson you know unicorn that those coming out those rules have been again thrown thrown out the window, right?

14:39 >> Why why is that? >> I when we talk to the early stage, so we're in touch with a lot of emerging managers early stage, you know, first check writers, specialists in certain sectors like hardware, logistics, um you know, built worlds, sort of foundational AI, etc., etc. They are talking to that next wave of founders who again have all these tools at their disposal and can build companies like this, right? >> Wow. The crazy thing I always tell people is that, you know, you always get the kind of, oh my gosh, it's the 20-year-old Stanford Bay Area kid dropout wearing a hoodie, you know, eating at his desk and whatever, building these companies, right?

15:15 >> But now that's a reality. >> It's a reality. But I would argue that I meet more people who are in their 50s, people that worked at Boeing, Microsoft, etc. that hold patents and they're able to kind of build companies in a way where they don't have to offshore or sort of work with product teams and take forever. They can ship stuff in a week. Now, it's not commercially readable, you know, commercially usable andor sort of I would say, you know, Microsoft buying it, but it's enough for people to get a prototype out there, a beta, and then off you go, right? So, that for me is fascinating. It's something when I come to Hong Kong, when I go to New York, London, that people just, you know, unless you're in it, you don't see it.

15:50 You kind of, you know, if you're doing real estate in Hong Kong or if you're, you know, you know, running a hotel in London or whatever, you're not thinking about these things unless it's touching you dayto-day, right? like affecting your operations dayto day. And I know, you know, come on, I'm wearing a suit today with a pocket square, right? I'm not your typical kind of AI guy like, oh my gosh, it's coming. This is awesome. Whatever.

16:11 >> Crypto bro. >> Yeah, I'm not a crypto definitely not a crypto bro. We can talk about that later. But if you think about when you sit in the Bay Area and you drive through like Market Street in San Francisco, you go down to Palo Alto, this is all that people kind of talk about. It's kind of like, wow, this stuff is, you know, we're we're seeing it real time. And you get kind of used to it when you're from there, but when you leave or you take a step back, you're like, "Holy smokes, no one's really thinking about this in, you know, in central and Hong Kong." Yeah. So, I find that that's where I try to, you know, when we take do these road shows, just bring interesting people to come talk about it with very I mean, again, these people are very smart. They've done well. They just, it's like trying to get someone to understand Hong Kong local real estate market if they sit in like Menllo Park, right? They don't care.

16:53 >> Obviously, tremendous amount of excitement in the market. SpaceX just announced as well. The valuations are insane. I don't want to talk about the valuations because that point is belabored on YouTube already. Y >> but I do want to talk about the other side of the coin about what keeps us what should be keeping you awake at night right now. >> Okay. >> Because there's a couple of buckets. One is the private space. It's unregulated but it is improving in almost self-regulatory manner.

17:22 >> And how much juice is there left for for retail by that point? And then the third bucket is now with more retail participation in the private space, what's really left for capital markets. So there's a lot of your and some of it is maybe a red herring, but give me your thoughts. >> Yeah. So if you go on LinkedIn, you'll see a lot of the graphics where once a company goes public, people will roughly estimate what, you know, a founders fund, what a, you know, an early stage whatever fund that bought in or backed that company, what they'll make, right?

17:54 M >> and you can look it up but Founders Fund these early sort of really good you know these are really good fund managers right like Founders Fund is still one of the top five global VC funds in the world if if not the best what they're looking to make and these graphics obviously need to be taken with a grain of salt it's in the billions right like in terms of they they were either series A earlier their friends and family they've built positions over time and that money will you know hopefully when this gets distributed to their LPs and sort of all their participants be recycled back into early stage and other parts you know the market right venture capital market >> so I would say that it's a multi-prong question but >> those folks have done well right that SpaceX is just going to continue that story of like you got them going early you have to have access but if you have the holding power for what paycheck's been around for 18 years or so that's an 18-year hold period what else would you invest in but again like if it's this versus this then obviously >> yeah for when every SpaceX position I've taken 18 years ago I also have nine otherpetss.com >> 100%. Right. And like that is sort of again where you know it's human nature to see that and be like okay not because I'm smart enough but you know I've got to I've got to put my bets on the table for that right for the future companies.

19:08 So it it has a good effect in that you know capital's finally recycled people will come back in they'll back earlier stage managers and companies and sort of the cycle will hopefully begin new. Right. think about the downside is that to your point it's like oh my gosh I'm going to start spraying and praying at early stage because whatever happens happens right >> but I think that's also I would say in rough roughly like how venture capital kind of works yeah >> like power law we all talk about it look it up power law does its thing to portfolios and just like oh my gosh I need to be right like two times out of 100 whereas you know we joke around the public markets managers are like dude I'm I'm marked to market every day right if I if I'm right two out of 100 times I'm out of a job Right. So, it's just the name of the game, right? I I would say that, you know, retail investors buying in.

19:55 There's no shortage of like quasi ETFs, you know, the Arc Invest, Liberty Street Ventures, all these different groups buy these kinds of names. Yeah. And you can buy like hybrid portfolios, you know, public, private, yada yada yada. Go read the terms, okay guys? The fees on those are sometimes pretty incredulous. You know, those tools that Alvin mentioned are kind of there for you. you kind of need to know where to look, right? I would also argue, and I would sort of say this even though I'm in this industry, that venture capital is not for everybody. Like, if you're a retiree and you just need to ek out some income, right? You should not be investing in a 15-year fund that, you know, if you're 75, right? Like the numbers are not great for for on both sides, right? It is what it is. I would say that if you are if you're really good at investing in something, you see like Hong Kong real estate, if you're good, you know, at manufacturing, doing this, keep doing what you're doing, right? I think there's a question in there about if you're working with family offices and high net worths and sort of what you want to do next. It's your money, right?

20:51 If you want more money and do your thing, just stick to what you do. If you diversify, diversify wisely, right? Like that's that's kind of where a lot of people get themselves into trouble. I always joke that, you know, there's that saying, it's tribute to Mark Twain, it's not what you know that gets you in trouble, it's what you don't know that you think you know that actually does, right? And we see that all the time with investing in particular tech and venture capital investing.

21:17 >> So, so when you when you look at I mean when you look at GPS right now and you have a pretty good bird's eye view more importantly not who's good but who's evolving through this space. >> Good question. Um okay so if you break down venture capital in general you have the earliest check writers angel friends and family preede managers that essentially look are betting on teams right literally there's an idea it's scribble down but they know this founder she went to school with them she built something before she left Microsoft now she's doing that right >> pedigree and you also pedigree you have an a team player you have a bit of innovation in there the product might be a B product >> earlier stage most startups as everyone knows pivots somehow someway. They find out something. But these check writers I would say the evaluation of these investors is very different from say someone sitting over here a and sequoia thrive household names that if you're lucky to get in you write the check and you move on right in the vast middle of so-called you know series B early growth equity it's kind of muddled because the guys over here have come down market because they can and these guys the early stage guys and gals who may not find success here have try to back some of their winners and they're kind intersecting and colliding at series A, series B, right? Driving valuations up and sort of assess impacting overall how venture is done, right? Traditionally, so the evaluation metric on metrics on these type of managers are very different, right? I think in your in your line of work, evaluating a sort of quant fund that only uses blackbox versus like a traditional stock picker.

22:55 Yeah, the ODD is the back end's the same, but like how you ask the questions and go through diligence is going to be a little different versus PhDs versus like the old school sort of stock picker, right? >> It almost feels like there's like the dilution of the traditional value investor is is going extinct. We're seeing that in public markets as well, right? Because of the because of the valuation compression towards the midsection, you have early VC needing to pay higher prices or looking for Right.

23:20 >> That's a great analogy. Right. And and then and then and then those who are in the more established established space, check writers with a higher moat are are able to come down and provide a higher valuation as well. And this ultimately to my earlier point could be sucking liquidity away from capital markets as comps move up. >> Yeah, we we had talked about this on the last trip and I don't think things have changed that much in the sense that you have emerging ma go switching back to venture capital. You have emerging managers that again they have difficulty raising the primary fund. So they may be a specialist in like alternative protein, energy transition, carbon renewability, sustainability or sort of that sleeve, but they have these companies that are graduating in their portfolio. So series A, series B, they have these proa allocation rights and now they have to refashion themselves almost as a multi-stage manager, right?

24:12 >> So that's kind of the encroachment over here. Whereas those big brand names can literally find a company, come in, say, I want to write a check. You're going to take the money and then they come down. Right. Y. >> So the hedge fund, I guess the public markets hedge fund comparable is spoton. I don't I don't know how to talk about it, articulate it as well as you, but I would say that that leaves this broad middle of like competing interests because I think someone wrote really eloquently on like the the the misalignment. Before it was get these companies to a certain phase, a certain multiple, hand it off to that growth equity manager, let them run and move on. But then now because of early stage needing a bigger return, they want to hold longer which encroaches into the early growth equity which then pushes everything else out. I think it was Charles Hudson that wrote this at Precursor Ventures.

25:00 >> Wow. >> And I and I'm sort of botching it, but you should read that if you if you get a chance to read it, you know, look it up. But that misalignment, I think, has dramatically impacted early stage managers, right? On top of not having enough capital. The good ones do still, but how do they position their portfolio where their bread and butter has always been early stage seed, preede? >> So, how do you evaluate when you talk to a new manager now? Do you tell him? Do you do you require that he's a multi-stage manager?

25:25 >> Good, good question. So you require that he has a minimum AUM that is 10 times more than it used to be the requirement was 10 years ago. >> So that is that is the that is the question to ask and the answer is sort of unfortunately it's dependent. So the really interesting and really experienced emerging manager investors have been doing for 20 years right I count my co-founder Revier Eric Woo as one of them. He and I built this rating system that evaluated emerging managers without a track record, right? And we found out that the top three sort of metrics were not like social media presence or sort of where they worked before like at a VC fund. It was operator experience like they had been engineer of one of a startup that went rocket ship. They were like head of go to market at a good company. They they were founders themselves that took companies public. They were the best emerging managers by different metrics that we saw over the data set. Right.

26:15 The second one was pretty obvious. It was people that are able to keep their companies alive through pilots, the fundraising rounds. They can demonstrate that, hey, I made that intro to that series A investor, >> Survivor, >> Survivor, right? And helping them. And then third was it was it was mainly those two. The third one didn't matter as much. It wasn't social media followers. It wasn't the use of the word grit in their decks, which everyone uses grit. How do you define grit? I don't know how to define grit. Read the book.

26:40 So, we found that interesting, right, for those managers. But to your point, when they start moving to later stage, a lot of really smart emerging manager investors are like, I'm picking you for Asia prop tech, right? Early stage, because when I do the modeling, I can see that you can make this. If you're a zero, it doesn't impact the rest of my portfolio across Asia AI, European this, US that. But if you guess what if you start going outside of AI because AI is touching hardware logistics everything then your the modeling here and the backing your winners then it becomes you're you're doing this on the portfolio versus this right marketing versus >> so some investors love it because they allocate to a certain number of managers and that's their VC bucket and they move on right but for the pro the pros that invest in 50 plus managers right 100 you are fitting certain buckets and if get out of that bucket, you may be flagged by that investor and trying to be like >> it's like style drift in public investing. Style drift. Exactly. Just like style drift, right?

27:41 >> It's 100%. >> But then where do you draw the line? Right. You have style drift and then you have diversification. >> You know, diversification in venture capital. >> That should be the allocator's decision, right? Not the >> it is 100% the allocator is it's their money. They have the duty to sort of run it or if it's their money, it's their money. So there are different schools, right? concentration, you know, these type of layers, foundational models, application, whatever, to like I like food tech this versus that. It's in the eye of the beholder. I I don't make an argument either way. There's been successes I in in both camps. And anyone I would argue that tries to say one way or the other is talking their own book, right? Full stop. Right. But I I I understand like these really intelligent, sort of, highly thoughtful LPs that have done very well through the years with that sort of this is your bucket. the club deals and kind of those party rounds where everyone gets in is maddening to them. They're just like this is it's style drift. Sometimes it's off thesis where like a super duper like you know cognitive brain tech GP, right?

28:42 There's those out there suddenly does like anthropic at late stage because they got in valuation or like because the valuation or their friend ran in and got them in, right? They're like >> what is this doing to your portfolio? Right? Yeah, you made money, but then for that instant investment, I think LPs are like, "Okay, you made money on their whatever." But guess what? On the second fund raise, they're going to nail you for it because they're like, "You're off thesis, right?" Right?

29:06 >> Conversely, when you think about that manager spinning out, right? Like say if Alvin, he's not going to do it, guys, don't worry. But he's he comes out and says, "I want to run a fintech focused AI fund because I know that these emerging managers in hedge fund world need this, and I found this little space, 10 million." I would back Elvin because he knows that space. He's operated in that space and then basically he's a specialist focusing on certain things. That's interesting, right? Contrast if Alvin suddenly came out and said, "Hey, I got an NBA. I'm doing food tech now because I want to get healthy." I'd be like, "I'm running from the hills for the hills from Alvin doing that." Right? So that's kind of the analogy, right? So anyways, he's not going to do it, but I just use him as, you know, >> you never know. Everybody's got a second career coming up, right? When let's talk about Okay, so let's let's go into the sectors that you're excited about. Right now it's kind of broken down into >> subg genres, right? You have AI and digital assets, crypto, what's happening with Neo Protocol right now is insane and that's triggered by obviously valuations valuation madness on enthropic. SpaceX purchasing cursor was a a massive deal. So every everyone is now looking at these harness models and then there's applied AI as well. So >> and that's just off the top of my head in you see the flow much earlier than anyone else. Yeah.

30:22 >> So, what are you seeing coming down the pipe? I think let's talk about alpha. >> Okay. Okay. So, again, going back to >> I I rely my venture is a young person's game. It's hard to like chase these companies, especially when they're 20-year-olds in hoodies. They don't want to talk to this guy. I mean, look what they're wearing, right? They don't want to talk to me. Okay. So, because they don't want to talk to me, I talk to the emerging managers that they those founders are talking to, right? So when you think about different application layers and different sort of specialization infrastructure and AI obviously that stuff is exciting right I think the data centers play because cheap capital is coming in the smarter money is rebalancing and getting out already and you can kind of look this up do a do a Gemini search and look at the news on who is getting out versus who is coming in right on the data center play and all >> sorry so when you say smart money sorry cheaper money meaning >> demand for yield is lower >> demand for yield was lower the big boys and girls that were in earlier here are basically selling those assets, right?

31:17 And we you can look that up. We won't name names here, >> right? And now that the data center centers are mature, the the cheaper money is coming just looking for the annuities. >> There's always going to be a need for that because again, when you look at those documentaries of, you know, and I'm from Houston, Texas, like those random cities that no one from Houston would ever go visit and they're sort of building these communities of, you know, energy this, subsidized, rent that, all the entertainment options, etc. It's like oil and gas rigs offshore since like god time immemorial that's being basically applied for, you know, feeding the need of energy for AI, right? It's insane. It's it's there's so many documentaries on Bloomberg. Go watch one. Okay.

31:53 >> The second part I think to your question is that the specialization of early stage venture capital is so neat. I can't think of a better word, but it's just so awesome seeing like operators who are like the best in this space like sustainability regenerative technologies which is captured under the broad sort of climate. But basically like these things can be you know you can take shrimp shells and turn them into foam. >> Wow. >> Like that kind of stuff for me is like UTF, right? That's incredible, right?

32:22 They're fund managers that basically back those kinds of companies. Okay. So for me like whenever I get an inbound from LPs, friends and whatnot where I need to get smarter, I just spend time with these emerging managers. I like hey what are you seeing? Right? And they will spend 30 minutes an hour or whatever with me breaking down what they're seeing and I just like level up there. Right. >> Right. So we have sustainable regenerative technology >> technologies uh you know different application infra layers within AI and I would always say that like financial services despite the slowness of adopting certain things I mean blockchain that blockchain was never a fat it's just you know not accessible enough for everyone where not everyone wanted to be their own bank right it's like I want to deal with this man AI I think is sort of leaping that and when you put those two together that's also fascinating for me right I think logistics supply chain hardware where you know not everyone likes that space because of the capital intensity they're really cool managers that are focusing on the the supply chain aspects of that um and I think sort of when we saw sort of US China kind of going off the rails uh straight up moves and sort of all these different things that relate to our supply chains people are like how do we move from letters of credit that have been around since the 15th century like something a little more modernized and streamlined that for me being the nerd that I am I love that stuff right >> so those are all I give those spaces.

33:42 But if you use that as a an example, you can literally have different sectors, silos, verticals, subverticals of anything and there's going to be an emerging manager backing those companies in those spaces. >> Thank you. That's that's real alpha. If anyone's paying attention, I'm sure you're going to be doing your your homework on Gemini right now. >> Yeah. >> I want to I want to pick up something that you mentioned earlier about the oneman companies. And maybe this is an observation I and I don't know if I'm extrapolating it too much, but most of the guests that I've had on the show, we've talked about how the the new generation is kind of cooked, right? The the fresh crowds, those who don't have the the experience like like we do in our gener, we're probably the last generation to have judgment, to be able to to be critical about the outputs of AI because the interns that I have now, the new generation, they don't have that. So they don't know what they don't know.

34:36 >> So let's just put that on one side. The point that you kind of alluded to earlier where you now have older generation founders with the use of AI and technology can spin out early product designs. They own patents and can use technology now to replace the product goto teams that are younger than them. Are we seeing a trend here where you know the OGs might make a comeback almost like the boomer of this generation? Yeah, that's a great question. I I would say that, you know, in my in my sort of life, I have a nine-year-old and a four-year-old, Annabella Cohen. Um, my four-year-old, when he was two and a half, knew how to do voice prompts to Google Home, right?

35:17 Like, that's how crazy it was. He knew how to swipe away things when notifications were coming down when he was watching like his space video, right? My nine-year-old, like Canva AI, designs spreadsheets on our own, like just, you know, all that, right? I also adjunct. I I'm not an adjunct, but I speak with a lot of adjuncts who bring me in to talk to, you know, college students 18 to 22 in the United States. And all of them when they send their CVs first, they're much more mature. Like they they actually pay attention.

35:42 They're taking notes. They ask questions. Feels like you're at an investment conference, right? It's insane. Versus like when we were in college, it's like, you know, like that just like, "Oh my gosh, I'm hung over from yesterday." Whatever. Right? >> You're still hung over. You still I landed yesterday. Not time not enough time to drink. So when I think about that in their resumes whether it's finance, liberal arts, they all know how to vibe code and they all have spent time sort of doing that and when you test them they actually can do it right.

36:07 So my belief is that there's a middle crust of people I think you talked about this class of people that kind of saw AI but went through sort of traditional schooling and now are facing difficult realities in the workforce, right? And my and I'm confident because they're young and intelligent that they'll sort of up up level their upskill their skills and they'll figure it out. Okay, so that's that, right? This younger generation, good lord, like I don't know what they're going to come out. The schools are going to be different, curricula, etc. And it remains to be seen, right? Like I'm a parent. We'll figure out how that goes. Like we're seeing it real time, right? But Alvin's point about the OGs, certain OGs, you know, their adaptability is pretty incredible to see. Like the the cool thing when I talked to this one guy, he's an engineer, expoing, couple of patents, did like the breaking technology. He was like, I know that there going to be like a hundred different if not more competitors building what I'm building, right? It's like an HR HR tech AI thing. And he's like, he's like, but you know, I kind of know my space. I know the lane. I know what to develop. And I have other suitors that may buy this part of it because I've been through this circus before, right? That's interesting because if I'm, you know, going back to an emerging manager, I want to back that founder that kind of knows what they're doing because the 20-y old kid >> because the 22-y old kid, if they've got this brilliant idea, and they do, a lot of them do, but go to market commercialization, right? All these things, these muscles, a lot of these things cannot be outsourced to AI, right? That one person in team is usually that little little older guy or gal that has been through, you know, battle scars, in the trenches, worked at big tech, has, you know, usually exited a company or two, some failed. That's interesting because they can get to where they go and then the go to market muscle and all that stuff. Yeah, you got AI agents for agents and sales this and blah blah blah that but you know at the end of the day a lot of the selling is still human to human and those people have social skills where a lot of those younger kids just do not right it is what it is where they're hiring those old guys and girls to do the go to market and all that. So that that that push and you know sort of that tug you know back and forth and all that is nothing new right like we've seen that different generations different technology but you know every everyone jokes it's like this time is different but this time it kind of feels a little different right may not be different but it feels a little different at least right now >> you know a lot of work that you do I'm going to pivot a little bit now to we all we have to talk about geopolitics to some extent China soft power seems to be working to some extent doing nothing seems to be winning to some extent We just saw the visit of Trump to meet with Shei. A couple of deals came out of it.

38:34 More of a handshake than anything else. When when you're when you're now looking at companies in Asia and in China or Korea, which has been super hot the last 18 months, versus what you're seeing in say San Francisco, which is still the hot bed of innovation. Mind you, you're probably due for a trip to Shenzhen this time. >> I am. >> Where are you seeing the trend now? Because right now Hong Kong has arguably without, you know, without counting SpaceX and Anthropic, it's probably the hottest place for raising capital.

39:06 >> Absolutely. >> We have a backlog of something close to 400 for IPO. Having said this, a lot of the founders and the issuers still prefer going to NASDAQ because of a higher valuation that they would that they would gain. Where are you seeing kind of where the world is going now with that whole market? I would say top down the sort of she Trump getting together and again I'm not a member of any government just macro geopolitics geek okay seriously got to say this these days it's better than nothing the handshakes and all that they're talking the back channels that's good this is a good thing okay because you know when you don't talk in any relationship it just goes off the rails right so that's a good thing I think you know obviously for sort of you know each respective domestic media will will sort of spin it the way they need to spin it which is what media miss most of do, but it's a good thing. Okay, it's great. This trip I'm not going to send in. So, this, you know, this is a end of May, but I will be at Beyond Expo in Macau. So, Jason Hoe, shout out to Jason Hoe and the Beyond Expo team for bringing a delegation of, you know, sort of mostly Hong Kong, US, Singapore groups. We're going to go see what's going on. There's thousands of companies presenting, right? So, that's two. Generally speaking, I think we talked about this I think in 24 and even because I I made my first trip back to Hong Kong in 22 I believe postcoid we hung out here this is before you moved here >> that dual polar system was already here like that was here when I was still here in 19 I believe right that's not going away anytime soon right I think there more and more kind of weirdo I say kind of weird I'm not on TikTok but you see like you know non-Asian people trying to be Chinese where they did the whole Marine condo thing. They did the Korean K K-pop in Korean soft power is still at its zenith, not going away anytime soon.

40:48 But like, oh, how to be Chinese, right? Which I found kind of amusing because >> I hear it a lot now. People are you met me at a very Chinese time of my life. That's that's the >> I was like that's the opener now. >> I was like, what is what does that mean, right? Because the Chinese are I always joke around >> the Gen Alpha thing. >> The Gen Alpha thing. But in Chinese, as you know, like you're Canadian, Hong Kong, Cantonese. I am Taiwanese, Shanghai, American, but we get along because, you know, we were always these lone China bulls. We're like, people are like, "What are you doing here?" Right.

41:17 Yeah. Are you going to go back to Canada, the US? I'm like, "Well, maybe." And you're smart, right? So, that's that's that. So, like, when you think about these different groups, it's like, "Are you Shanghai? Are you from the south? Are you a northerner? Are you, you know, where what Chinese are you?" Right? Because they're so different, right? Like you come here, the Chinese are like, "Oh, the southerners are this, north that, this and that." But then when you say one thing about China, they're like, "Oh, okay. Can't say it about China, but we could criticize each other." Correct. So I asked these people who, you know, China max it like tell for more legitimacy. Say which part of China you're from. Say you're Shanghai.

41:49 Say you're from Banzo. Say you're from the north and you like your dumply thing dumply skin thick or thin, right? Then you'll get more sort of cred, right? But anyways, I digress. I would say that going back to kind of what you asked, the bipolar thing is here to stay. I think you talk about >> so investors are still on coming ABC trade is still on the table. >> It's still on the table. It's still on the table. I think those who could put take off their kind of geopolitics I'm in whatever camp hat stand to make money, right? If you understand I take these trips and I bring mostly like investors with me and service providers because I want to them to see what's going on, right? They have a view of I'd say Hong Kong or San Francisco, right?

42:30 And it's always a negative view. It's like, oh my gosh, San Francisco is like the walking dead >> Union Square. Yeah, that's what I think. Oh my lord. But you know, the new mayor, Daniel Lur, well, newish mayor, Daniel Lur, has really changed things. Like, you can feel it being different in San Francisco. When I come to Hong Kong, I'm like, dude, it's like it hasn't changed. It's just maybe some of the signs are different, the restaurants have moved around, but it's still an incredible place to do business. It's full stop.

42:53 It's so you can set up a company in like three hours, right? So like these are the kind of things where I I think about >> but Cal Bass says that we're we're uh we're we're dying. >> Cal Bass says we're dying. >> You know, you know they're at the end of the day like they're short if people are shorting you know every stock in Hong Kong. They're going to say that right on the flip side like you know you mentioned about going to NASDAQ to list.

43:16 Yeah. They're hiden list you know I used to be an IPO lawyer. It's like he hiden listing requirements and all that, but it's also like, you know, a lot of the the powers that be in different countries are not stopping their homegrown native sons and daughters and their winners to go list over there because it's still incredible to list overseas. It's incredible list anywhere. But NASDAQ, NYSC, you know, it's incredible. So, those things haven't changed, right? But at the end of the day, like domestic technologies where like I look at the cars, like I I ride in like a BYD, I drive a Tesla Model Y, you I got I still haven't gotten FSD because I'm like I'm an old school driver and people are like why aren't you getting FSD?

43:50 >> Everyone's got FSD. >> I got to get FSD and I will, right? Versus like riding in a BYD that's like a third the price in the suspension. I'm like good lord, right? If I import a BYD to San Francisco, I might as well buy a Ferrari because of the the taxes and the import duties if I can get it down. >> So, it's it's the powers that be, right? So for me like this dual polarity world or multi-polar world is kind of what we're seeing probably going to be here for a while but as an investor it's like can you take off your home like sporting sort of whatever hat jersey and understand the other place you're going to be better off in the long run.

44:23 >> That's an information edge. >> Simple as that. >> Yeah. Yeah. It's an information edge that that you know folks like you can obviously take advantage. >> Yeah. >> Right. So yeah, >> when you know when you look at the next six months and if I were to ask you you know what's one project >> just one >> I would say >> and you're not allowed to say anthropic you're not allowed to say you know SpaceX >> I would say the moment it hits the tape that trade is done >> project do you mean like a opportunity like a company or >> could be yeah just >> okay I would say what I've learned and this is more US- ccentric given I'm there post SpaceX and sort of those bigger names that you mentioned the kind How how should I say this? Uh we call it dual use, right? So civilian, military, government applications. That's just getting started. I think you see similarities in China around sort of more humanoids, which I think I saw some pretty crazy sort of military videos about like how an amphibious invasion would work with humanoid robotics. I'm like, whoa, that's kind of wild, right?

45:20 Yeah. Anyways, you guys can look that up. I can't believe it got through. Like I saw it, I'm like unitry, right? >> Yeah. Pretty interesting. It might be that >> versus like what in the US you're seeing that sort of through the Ukraine Russian conflict in sort of what's going on the Middle East that you know tomahawks versus this you know sort of naval superiority versus nimble sort of attack drones that cost like 500 bucks to make that is kind of leaning back that way right to the future. That for me is fascinating because um geopolitics I think you know I'm also exhistory major.

45:51 My family was very much sort of dispersed during World War II from Asia and that's kind of how we ended up where we ended up. I'm also a military sort of geek, history geek, right? And I think es and flows where you know sort of firepower superiority and sort of all that war fighting capabilities are good until something suddenly shifts and then you have to kind of catch up and kind of go there, right? war is sort of changing versus like you see those historical picss with like Napoleon, you know, like this and charging across the ice.

46:18 Obviously, war is not fought like that anymore, right? And the weapons change and the tactics change. The technology will also change with that too, right? Or guide that. So, keep a lookout for that. That's pretty interesting. Obviously, it's going to be hard for a a US investor to invest over here and then for a Chinese investor over there, vice versa, right? >> Company other than Palanteer Anduro, your your friend Palmer Lucky. >> Yeah, there's a lot of interesting companies. Yeah, I I would say a lot of interesting companies doing things naval drones, small ordinance, low orbit satellites. That's the future. And this is the stuff that I think made the United States post World War II the technology leader. And then now obviously China has built its own ecosystem and sees a lot of the things the same way, right? Despite being competitors and sort of the usual. So that for me is fascinating. Keep an eye on that. I think once these other bigger companies go public andor sort of reach the upper strata like the canvas, the data bricks, the stripes, etc. You're going to have a wave of these dual use companies, you know, Seronic, Varta, Loft, you name it. They're going to be doing really, really interesting things.

47:20 >> Excellent. Well, look, uh, you know, I'm I'm mindful of time. I do want to thank you so much for coming by. >> Thank you for having me. It's always good to see you guys. And, uh again, you know, I think communication is the key. Like if you guys are looking to do stuff obviously in hedge funds and alts, this is the guy to do it. We we're going to be back in October doing a full road show with a bunch of people from the states that want to see what's going on.

47:42 We'll be in Hong Kong, Singapore, and Bangkok seeing some of the bigger investors. Uh just doing events and all that around F1 milk in Asia token 2049 and obviously with my friend Alvin. So you know, thank you guys for listening today. >> That's right. And we'll see you guys on the next one. And definitely for the F1 milk in quarter three. I think that's quarter three. >> End of September, early October. >> Yeah. Cheers. >> Awesome.

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