(upbeat music) - Welcome to Swimming with Alligators. - The VC podcast from the LP perspective. - With your hosts, Alexa Bins. - And Ernest, you ready? Let's dive in. Today, we are thrilled to have Chris Shen, an entrepreneur allocator and lawyer with an extensive experience in private investments and family offices, both in the US, Greater China, and Asia. While Chris is co-founder and COO of Revere, we've asked him on today to share his LP perspective. Originally from Texas, Chris has lived in Asia from 2006 to 2019. He's a voice in cross-cultural dialogue. Today, we'll hear from Shen about US, China, geopolitics, history, and macroeconomics, and his work with the Asian-American Foundation and the Committee of 100. Welcome, Chris. - Thank you, Harry, and Alexa, a good C. Ernest, and great to be here. - Thank you so much. We'd love to hear your LP career journey. - A lot of folks don't have veneer careers into investments. I certainly did not. I'm from Houston, as you mentioned, went to UT, then went to law school, and thought it was just gonna be a lawyer, right? Practice law for a while with Baker Mackenzie overseas. And then one of my best friends growing up, co-founded a family office and wanted me to be a part of that founding and getting that stuff and running. So I thought, at the time, getting promoted at my law firm, I was pretty happy being a lawyer, but the work and the hours were tough, right? And I jumped at the chance. So we co-founded West 22nd Capital Advisors, FYI. That's not a street in Chelsea. That's actually in West Campus, where we went to UT. So it's 22nd, 909 West 22nd Street, where we lived in college for charity house, a story for another time. We nested essentially public equities, fixed income, public markets in general, did some privates in fund investing. And given my background, I ran most of the fund investing in some of the early stage stuff. So my journey there was pretty, I would say, kind of random, going from sort of being a lawyer and looking at sort of things microed, to try to understand sort of the macro and the bigger picture and doing portfolio allocation, construction, was literally drinking from the fire hose, jumping into the deep end, that type of thing. Fortunately, I had two partners who were very good and very patient and taught me sort of different things. And I think very much like them, sort of from just osmosis and getting my hands dirty, so to speak. Step down from the family office, the strategy changed a little bit in 2019 and we'll get to sort of some of that. And then co-founded Revere based on my experiences as a allocator overseas in Asia. Namely Revere does two things. We are, I guess you can say, influencing capital through data and software. On the data side, we have the world's largest collection or sort of collective of emerging managers, starting with VC, 550 plus, we have their data, we help people connect to them, startups. Now on the portfolio management side, we work with LPs of large, all different shapes and sizes, institutional to family offices, managing their portfolios through automated AI, data ingestion, custom reporting and dashboard. So my insights and sort of my experiences are from my time in Asia in addition to working with GPs and LPs now at Revere. - Chris, giving your experience internationally in China, obviously, if anybody listening and understanding kind of the macro environment, there's a lot going on. What's your current take for allocators on both sides, whether they're in China or here in the US, on what's going on and what's gonna be the next 10 years and how's that gonna impact the private markets? - Come November, there's gonna be a lot on the line, but I think ironically, no matter who's elected president, I think there's a sort of bipartisan sort of across the spectrum view on sort of China, unfortunately, in ways, a lot of that is misunderstanding and kind of, some things are true, but some things are misunderstanding. And if you take off sort of your politics or whatever hat, all that, and you look at it from an investment standpoint, it's still pretty interesting. I think before we started, there were the Q1, Q2 numbers from last year, 2023, there was only like $5 billion US of activity, private equity activity in all of China, right? There's 1.4 billion people, lots of sort of mergers, a lot of acquisitions, a lot of movement, a lot of companies coming up and stuff like that. So I find that pretty fascinating, to be honest. I think on the LP side overseas, there's never been sort of a healthier appetite and demand for United States US-based startups, namely AI and sort of things like that. That's not gonna end anytime soon. I think it is fever pitch. I would compare it to like a couple of years ago, people were all looking for SpaceX secondaries, some people still are, and then before that, it was like all these other different companies that were coming out, you know, the big fund, coming out of the big funds. So that appetite has not waned in any way. I think when you flip over to the companies themselves and the fund managers, there is a bit of resistance to capital originating from certain countries. For the optics reasons, for KYC, for all these different reasons, some are overblown, but some are more just, you know, they don't wanna deal with the headaches that entail taking capital from certain countries. So that's one. On the US side, I would say, from an LP perspective, appetite has gone down. I think when you look at venture capital in generally private equity, you know, strategies have been shifting, people have been divesting, renaming their funds. We saw things with like GGV and Sequoia, et cetera, a lot of other funds that are not sort of making the news, so to speak. That is a function largely of LP demand. There are bigger endowments, the foundations, the insurance companies are trying to take that risk off the table. Some of that is investment risk, some of that is optics, some of that is just, you know, policies internally, rightfully or wrongfully, it's their policies. But I would say demand on the LP side in the United States where most Western countries going to China has waned a bit. There's a bit of overhang in BC, obviously we've not seen enough exits in addition to perceived regulatory risk with government policies, et cetera. I would add, you know, as a disclaimer that the governments on both sides are, you know, fairly intelligent. They are, you know, nimble, nimble is probably the wrong word. They're fairly intelligent. They will do what's best to unlock sort of flows eventually. So I'm thinking that the governments will do the right things eventually through sort of negotiations and then figure out kind of where policy goes to support allocations to private equity and venture capital in both countries. - Yeah, you brought up a point in the beginning of the last answer, Chris, about just the demand for interest in US companies and exposure to US venture. Is that a fee repeat pitch, especially from Asian countries? That's been consistent with what I've been hearing from large and small fund managers here. While all that is going on with US and China, it's been pretty cold with like, as far as fundraising. And so now people are looking for new, you know, allocators. And so there's a lot of flights going out to Asia. Any advice for, you know, our audience of established managers as well as emerging managers on how to really tap in and develop those relationships? Because, you know, I have assumptions that if there's a language barrier, you're at a disadvantage, that I could be wrong. - Yeah, they're, you know, artists, it's a very, it's a very good question. When you think about the relationship building, I would say that, you know, with exceptions on both sides, right, there's always been the proverbial kind of the family office that looks at your fund one and then doesn't come back for two years and when you're raising fund two, they suddenly show up at the check, right? So there's always these stories from everywhere. But I would say that, you know, in terms of advice, I, we revere right now, my co-founder Eric is actually in Tokyo taking, he took 10 GPs with him from the US and other places on a revere roadshow. And we're doing our emerging horizons, branded events in Tokyo this week. And then he's going to Seoul. The GPs, I was pleasantly surprised at 10 GPs from New York, Florida, LA, and SF, suddenly wanted to go, right? I mean, it's nice to vacation in Japan. Great food, you know, awesome culture, awesome things to see. But, you know, a lot of times we can't even get 10 GPs to fly out from SF to LA, right? Like I'm not dealing with the traffic. So like, to get them to go to that, I think GPs, and to an extent LPs as well, who have joined us, know that this is a relationship game, even more so in foreign countries, where Ernest correctly sort of pointed out a language barrier, right? Now, most folks in the business will speak some form of English and I think some countries are better than others at that. But it's not so much a comment on sort of the English speaking, but more as you showing up, right? So say, for instance, you have a very niche strategy doing like, I don't know, all proteins, synthetic biology, supply chain logistics, what have you, right? These are all sample managers in the revered network. When you go out there, you know, you do the hand the card, you kind of do the pleasantries, and everyone's kind of talking around circles. But what I've found is that a lot of the GP, a lot of the investors out there, allocators, will remember you because you made that trip, right? So when they're thinking about, oh, that person that visited me who is not Japanese or Chinese or Korean or whatever, they'll remember. And when they're looking for that strategy, they'll only think of you, because no one else from those strategies or doing that strategy has visited them and you're the first port of call, so to speak, right? So that's one. I think two, the timing does take longer. I think by nature, the majority of investors out there are a little more conservative, they are looking at funds versus sort of trying to go direct on the cap table with exceptions. So that relationship with that fund manager, you're going to be that person's, you know, horse in the race, so to speak, right? You're his guy or gal, or so to speak, covering that and they're hiring you to basically bring intelligence, you know, look at companies, et cetera, together, because they don't know how to do it in most parts, right? We're trying to amplify the programs. So it's pretty interesting. We've seen like the big names, like Andreessen's been out there. I know 500 startups, Techstars have been doing events all through Asia with their sort of local chapters. On the LP side, we've seen LPs actually come out from the states out there to kind of get a lay of the land. They're under, they have no exposure to Asia or not enough, they want to build that. So we find that to be interesting, but it is one very much, much more so a relationship game when you have a language barrier, and two, it takes time, right? All this takes time. - Is there a flavor of GP that you see do really well in terms of sort of meeting X required criteria, et cetera? - Yeah, it's a pretty interesting split. I think with a lot of investors, and this is not just a comment on Asia-based allocators, even with me, right? When I started out in the business, I knew what Andreessen and Sequoia were, but I had no idea that my $5 million check wasn't gonna get into these funds, right? Like, we just didn't know. So there are a lot of people like me who didn't have the benefit of, you know, born and raised in the US and grew up in the US with the school in the US that simply just don't know the rules of the game, right? There are another group of investors who are big enough, the corporates, that are probably already in the established managers. But for whatever reason, you know, sometimes it's performance, sometimes it's coverage, sometimes it's like looking for co-investments. Those established managers have not met the criteria that they originally invested in, right? The reason why they invested in. So what I like to say, a lot of these investors are already in the big funds or can't get in. This leads them down the path to emerging managers. And I think emerging managers that are, again, willing to play the long game in terms of being patient, putting the effort in, and going through warm introductions through, you know, friends, you know, our network, our friends, et cetera, have a better chance at getting to those conversations that really matter and get sort of capital, hopefully exchanged on the table. I think what doesn't work out there is, you know, we've all met sort of the typical arrogant, maybe, you know, Silicon Valley, New York, where it would have you, maybe even London type of manager that, you know, shows up with a pitch deck and says, I'm the greatest thing since sliced bread, you know, take it or leave it, you know, that type of thing. That's never going to, that doesn't work in most places. It definitely doesn't work in a place where relationship building is at a premium. They have to see you in person and all that. So they are evaluating your track record, but also how you will get along. You know, when I come to you with my team and we need advice on this, we want to meet people, are we going to be able to play ball together, so to speak? - A follow up to that, I guess family offices are notoriously hard to navigate. Any advice on, I think it's something like 10% of family offices are based in Asia, on navigating those relationships in particular? - Yeah, you know, there are new family offices sprouting up and I think the interesting thing about Asia based family offices, and you know, I don't have enough experience to talk about the Middle East or the Europe, but just the Americas and Asia will take those two larger areas. The family offices, there are groups out there that are purely like service-based, like if you think about accounting, estates, running the private jet, all that, right? So that is over here. The vast majority of Asia-based family offices are not that, they are investment vehicles for the next generation, or attached to a operating company that the family is still running, whether it's manufacturing, technology, logistics, blah, blah, blah, blah, right? Once you figure out kind of that arm, because of the entrepreneurial nature, these are not multi-generation family offices, they don't have like 70 members, like the ones we work with in the United States, it's usually a principal, a family member, maybe a person that works for the family in like, you know, admin, right? They are understaffed, they are overbrokered, they have this pressure to go and perform and like get instant results, simply because the families have done very well and they're used to seeing things at a faster clip. So when you kind of identify or diagnose what type of family you're working with, you know, they longer term, are they following a down-and-model, are they just buying secondaries, are they into funds? It's for you to peel back that onion and figure out kind of what they're doing because most of these groups are unfailingly polite, I think it's like a confusion ideal or all this other stuff, right? They're not gonna tell you no straight up if you're, again, if you're polite and sort of do the, so there's a lot of long maybes, so it's your job to kind of pull back the onion and figure out sort of what's going on. I would say that going back to warm introductions, if you can find someone that, you know, a classmate or someone you've invested with, you know, someone you backed, all that, and then take you there and kind of go into those networks, that is huge. I think if you find one, there's that, again, that over-broker and under-covered and like, sorry, over-broker and sort of very busy, but once they invest in you or your company, they're like, oh, I've invested in this and you should take a look because in the families, as you know, Alexa all talk to each other, there's a currency of trust, so to speak, they go back to multiple generations, they're always ready to invest together as a group, if the strategy is right and sort of, you know, it's a warm intro, so to speak. - Chris, what you're getting at is, and what I've been able to like observe throughout my own venture career, as well as doing this podcast is, yes, it's a relationships business, but how can a fund manager quickly understand the motivations of an LP, right? And what gets them going? So I was curious if you like have a take on that, on how, or if you even have an anecdote on genuine ways a fund manager has got to understand your motivations better. - Okay, no, that's a great question. So I'll flip it around. I think, you know, if you're a fund manager observing this or listening to this podcast, I would say that it is imperative to figure out who you're selling to, right? It's like product market fit, right, the basics. Like we've talked about like, I'm sure you've had like endowments and sort of those types on your show. They're not going to look at a $50 million fund outside of an emerging manager program because their minimum check size is this, right? It's 50 million, right? It's just not going to work. I would say for the family offices, it's sometimes like that. They're not, most family offices do not have a 50 million or, you know, a requirement, but it goes back to my point, what is the motivations of that family, right? If that family is coming from financial services, chances are they're probably going to build an asset management, asset gathering entity disguised as a family office, right? They're going to come out with family office, they're going to bring their friends because they can do things that their friends can, you know, they'll invest together. And then from there, they'll become asset gatherers as opposed to a pure family office that's doing like endowment style, investing in preserving from the next generation. They're going to take more risk and they're going to go after certain things, right? Now, from there, that split is essentially, are they looking to become direct investors? Are they setting up a hedge fund? Do they want to be a VC fund themselves? Are they whatever, right, over here? And then there's others that kind of just, okay, we'll set up an MFO and we'll become sort of, you know, asset management firm, but not sort of, you know, a fund per se in terms of the GPLP construct, right? So when you figure that out, you can kind of decide like who's wasting your time, right? Because the ones that are seeking purely alpha, they're probably not going to look at funds and they're just going to be like, trying to get your co-investments, right? That's not a thing. You know, without being an LP and you're kind of like, what is this person trying to do, right? On the asset management side, if they're doing funds, you know, I think a lot of investors out there, because they've gone through different shocks, like, you know, the Asia currency crisis, 97, SARS, no, 203, GFC, you know, Taper tantrum, you know, sort of, you know, COVID and everything. There's an O for emphasis on liquidity, simply because the regulatory and sort of the banking systems are very different there. So they put a premium on liquidity and guess what, a 10 to 12, 15 year fund or worse a 16 to 18 year fund of funds is not going to sort of, they're not going to like it, right? Depending on their goals and sort of what the environment around them. So I think not to sort of throw water on, you know, sort of rain on anyone's parade that's looking to raise out there, it goes back to, again, product market fit and figuring out, you know, who is that allocator? Who is going to make that warm intro and then kind of what their goals are, right? And you can have these conversations pretty candidly once you get to know them. - Yeah, Chris, what about the staying in that kind of international market? What about the rise of corporates out there that are looking for a combination of strategic kind of insights and maybe more modest returns? - Yeah, corporate investors out there, you know, they're split with sort of the CVCs, which we say like they're either investing balance sheet or they've got their own separate vehicle and they've taken outside capital sometimes, right? Or the corporate is a sole LP. And you have the financial investors who are purely investing off of their balance sheet and they could have like a hundred funds on their system and they're just basically putting money to use, right? - Yeah, yeah. - I think we've spent a lot of time with Japanese, Korean and Singaporean corporates, excuse me, in Thai corporates, so there's four main countries. In terms of that's been the split, right? A lot of times these are listed companies, they're trying to figure out again, what's around the corner? When they show up, it's like they don't have the connectivity to again, it was blockchain, AI, some fintech, it'd be consumer with a different kind of company retail. But when they show up, they realize that like, they're just kind of, they don't fit in, right? It's kind of like us going to that country where we don't speak the native language and we kind of, we stand out for our own reasons, right? So when you think about those corporate investors and we work with a lot of these investors, there are different programs that have spun up to help with CVC and all that. But I think when you're a GP and an emerging manager talking to these corporates, it's even more important to figure out again, are they a financial investor or strategic? If they're strategic, they are good for your companies and going to them and say, hey, I know you're looking for this, this series A company is about to go to the mood, you should take a look at that, right? And then you can help them raise capital and all that and they'll remember you. They're likely not going to invest in your fund, but as a fund manager, you're at least doing that part of the job and portfolio and asset management. On the flip side, they're financial investors. That is interesting, right? Because if you've got great pedigree, you've got great track record, a lot of people are already in and in Dreeson, Sequoia, a benchmark. They're probably happy with the results, but they're trying to do other things. Then that's an interesting conversation where I think as you work the channels and sort of go through their diligence, it might take a long time, they'll look at your fund as opposed to just trying to take your cherry pick your investments. - Yeah. - And extending from sort of the fundraising conversation to the actual nuts and bolts ongoing relationship, when you are working with some of these corporate venture capital groups, any suggestions on how to make that work? - Yeah, it's so interesting with these groups. I mean, everyone talks about how family offices are like so different, they are, right? The corporates, when you think about when you think about like the large Japanese conglomerates who kind of do a little bit of everything, like retail, heavy industry, leasing, and all this other stuff under a brand, the larger corporates, I would say that you got to figure out sort of your target. I think it is, there's a joke that in some of these countries they show up at the compliance office or risk management, that means you're on the right track, right? They're trying to figure out what you're doing, how you're doing it, and kind of feeling you out, right? So that's one joke for a couple of countries in North Asia. It is all over the place. I would say that the vast majority of them, everyone right now is looking at some form of AI deep tech because they're businesses or robotics manufacturing, advanced manufacturing, safer biotech for specialist companies, and you can largely lump them in this deep tech category, so to speak, with apologies to our specialist investors out there who are listening to this. That is essentially sort of, they're trying to figure out because they know that a lot of these folks were early on mobile and they knew obviously the internet and so it's sort of accelerated their businesses where there are now, but they also are smart enough to figure that AI could completely rupture, disrupt, make things extinct and all that for certain parts of their business lines, right? So everyone's clamoring and looking for those type of things and trying to find an edge. I would go back to the thing that a lot of these folks have difficulty sourcing, difficulty sourcing, they have to rely on emerging managers because emerging managers, again, they're doing their job right. They'll refer ideas, they're gonna fill their rounds, they're gonna look at that. So I think there's a nice synergy that's coming together around that, but then it goes back to again, which managers are you looking at? A lot of people have been burned by sort of manager programs in the past have not panned out. So again, it's sort of meeting in the middle, so to speak, on sort of the target and who you're talking to. - Do I have the right kind of concept that even if they are interested in sourcing, it might be companies gotta be like Series D or above before they actually have a working relationship? - There, good question. When we take a look at, and we have data, because we work with a few corporates, we know what they're investing in on the portfolio management side and we sort of ingest their data. And eventually we wanna suggest ideas as part of our business model going forward, right? There are, I think there's, well, I'll say this. In the past, in the past couple of years, I think that de-risking, you know, the perception of a de-risk company at Series C, D and beyond, it was a perception, right? Like they can go public, everyone gets their, you know, sort of, everyone has the sort of returns on that and they recycle that. I think everyone's talked about Uber for about 10 years when they stayed private for so long, and that was because it was by choice, right? I think now only the best companies can go public given the market sort of sentiment. And we saw Reddit, we saw Reddit go this and then go like this, right? And sort of, you know, Databricks has been in talks and all these other companies, et cetera. But when you think about the stripes of the world, I don't feel like they're in any kind of rush. So the de-risking where corporates invest at a certain stage, late stage, there's still sort of value that they are trapped in that company that they need to recycle because they're doing sort of forecasting guidance and all that, right? And if it's a big balance sheet item, they need to figure that out for transparency and for disclosure reasons. So with that, if you think about going earlier stage, depending on the type of investor, especially if it's like a strategic investor, if they pinpoint that, and they have like an incubator accelerator program around that, they will likely go earlier, right? Because the markets are very different now than there were five to seven years ago. And then the onus on, we can go in early and be patient when these markets are closed and everyone's, you know, there's zombie companies and M&A activities kind of muted. The corporates I remember attending in event with a bunch of FinTechs, I believe it was like, all the big FinTech arms were there and they were having their moment in the sun, right? This is like mid-2023. They're like, yeah, I can invest in your seed stage company and I'll follow it 'til my analyst covers you when you're a 15 year old, you know, you're stuck, right? And they said that, like almost verbatim. And I found that really interesting because, you know, that's nice to have that partner for so long without them sort of banging on the table and say you have to exit because my fun term is up, right? So I think it's kind of slanted back or tilted back in that direction at the early stage, but it's a function of market dynamics. And if things change post November, if the interest rates start getting really hacked, you know, sort of, and just risk on again because things change, you can see the pendulum swing back to the other side. You know, thanks for unpacking. I've definitely experienced some founders who are saying, "Man, I keep getting these corporate VC requests "or these strategic pitches and they don't go anywhere." And so it's sort of when is it worth your founder's time to be teeing them up for this capital? - It is, I would say that as a founder and by extension of the GP, you should take a look. I think it's not that you have to fly somewhere and do that, but I think hopping on a Zoom, just talking about those things and understanding that and then doing your diligence and sort of homework, you don't want to, you know, there's always the rule of thumb is that you don't want to, you know, bet your company on one POC or sort of all that. But I think within that, these corporates are very competitive, right? Like they're all looking for different things. I'm sorry, they're all looking at the same things, but through different lenses and everything. You know, once you find one, you have a reference customer and then you can basically go in and sort of talk to others and kind of, you know, land and expand. So we find that interesting and we've done that ourselves. - So now we're going to take a quick break to speak with our sponsor. - Next up, we have our industry expert and sponsor, Brian Huber, fun partner at Gunderson Detmer. Pitchbook has named Gunderson the number one law firm globally for investors 10 years in a row. Our guest, Brian's practice focuses specifically on structuring, forming, and operating VC funds. I have used Gunderson in my own fund formation and I can highly recommend them. Thank you, Brian, so much for your advice and expertise. - Absolutely, it's great to be here. - Thank you, thank you. So can you tell us a bit about your firm, Gunderson Detmer? - Absolutely, so we're a relatively young firm. We were founded just under 30 years ago in Silicon Valley and, you know, we distinguished ourselves in a sense in that unlike a lot of our competitor law firms, we have an exclusive focus on what we call the innovation economy. We represent market leading venture capital and growth equity investors, which is sort of the area that I'm in. We represent companies from their founding and inception through their growth maturity and ultimately, we represent groundbreaking public companies as well, all within sort of the global venture ecosystem. - And what's your role in particular? - Sure, so I'm a partner in our fund formation group resident in the Boston office. My focus is primarily on venture and growth equity funds who invest in both tech and/or life sciences companies. My client roster ranges from new first-time emerging managers with very small funds to mature managers who have done a number of funds and anything in between pretty much. And so it's a broad range of exciting stuff that I get to deal with. - Given that you are working with some of these more established managers and also some of the smaller, newer funds, is there anything about the state of VC that you find yourself with a counter opinion to kind of common, I don't know, VC, Twitter, buzz. (laughs) - I'm more nuanced here. - Yeah, what's interesting, and I think, I don't know if it's a counter opinion or it's a sort of a response to what I think folks that are maybe not necessarily in the industry, but have opinions on the industry think. And I think, historically, it's been, venture is viewed as sort of an exclusive club that is conducted in very specific geographic locations. And I think with all that's happened in the past five years, even if that were true historically, I think it's just broadened in scope and location. I think there's been a greater sharing of information. And I think that's led to a more open and widespread ecosystem, not necessarily tethered to a specific one or two or three locations. And I think the benefit of that and the result of that is that there's a much greater diversity of managers. And ultimately, ideas. And I think that leads to a very robust ecosystem that I'm glad to be working in. - And you're based out of Boston. What is that VC ecosystem and ecosystem like today? - It's great. I think Boston as a city has always been a great place. I think there's been a focus in both tech and life sciences, very heavy in life sciences. And I think that's a function of great, well-regarded universities in the city. It's an international culture, I think. Just generally speaking, the city is growing exponentially. It seems like we're located in the seaport district, which 10 years ago was basically parking lots. And now it seems like there's a new building that goes up every other week. And it seems to have some sort of tech company or lab attached to it. And it's great to see. And I think the other thing in the ecosystem that sort of reinforces our buttresses, coming back from the downturn in the economy is folks are going to conferences more now in person. And I think that leads to more networking. And Boston's got a number of great conference centers that really cater to some pretty good industry groups. And we see it all the time just out and about people from all over the place. They're usually wearing badges. And so you know that they're from a conference. And it's great. And I think I'm excited to be in this city. Aside from the traffic that comes along with more people being in person, I think it's ultimately a great thing to be a part of. - No, it's fascinating. Certainly I always thought of healthcare. You've got like the QEDs. There's a lot of sort of money, thin tech. But it's interesting to think about what are some of the new things that are popping up in Boston too. Maven who used Gunderson as fun formation. When I worked there, we only invested in founders who were willing to move to San Francisco. I think that's gone the way of the dodo. - I think that's right. I think that's, I mean, I think that's changing. I think that's a good thing. And I think part of that is because a lot of people who were in San Francisco have relocated to other places that are maybe more tax favorable or just, you know, a different environment. I think that's, I think that all reinforces that sort of broader scope ecosystem, which I think is ultimately a good thing. - Brian, it's been a pleasure to get in touch with Brian or any of the other lawyers at Gunderson.mer. Please visit gunder.com. That's G-U-N-D-E-R dot C-O-M. And now back to our L-P interview. - Chris, you've been in the business for a while and around it for a while and so much has changed. What do you think are the biggest challenges for allocators no matter if they're new to the asset class or established today that's been different from like the past decade? - If we just focus on venture capital, you can see kind of venture capital just completely, not just like a bunch of angels and like pre IPO kind of companies, but it's literally broken down into like separate sub asset classes, different risk return profiles, investment horizon, sort of dynamics, the players between sort of early stage, pre seed, seed, the series A kind of anomaly where it's one million ARR and these things, but the goalposts have been pushed out. And then obviously growth equity in the pre IPO stage. I think it was either Charles Hudson or someone wrote about a really interesting sort of disconnect between the pre seed seed investors and what series A investors. I think this one made the rounds on LinkedIn because he came out and said it, right? Everyone was thinking about it, but no one wanted to say it. And I think it's great that he did. It's like the alignment of interest back 13, 14, 15 was like, let's just get this company to an exit in IPO and like pass the hat and kind of go. I think right now because of the proliferation of emerging managers, because the market dynamics, Windows opening and closing, the companies that are going through these kind of like, it's very clear this is series A, this is going to be series B, it's going to go. That's not as clear anymore, right? And the fund dynamics of like the pressures of fund managers to return X amount of fund on these companies means that they want to hold these companies for longer and/or sort of work with them in a different way. And then like the return dynamics when they're ready to exit and/or sort of pass or move on have also sort of changed, right? It's not a single pane of glass anymore sort of speak. So I find that pretty interesting. I would say we covered kind of company staying private longer and that's, if they can, they're going to do that. It is what it is. I think the SPAC craze has kind of like moved away and sort of dissipated in some ways. Who knows, it's a good comeback, right? So that's been kind of interesting. I think just in VC, I think what's also been interesting is the proliferation data were like 2013, 14. I remember in 2017, I come back to the States once a quarter to visit family and to look at sort of investments. I remember I invested in Amplify LA in Los Angeles, right? And I went, I was like, go to New York. I Googled New York VCs and I got like Fred Wilson's like, you know, I was like, how many people Fred Wilson was but like, that was a newbie. Obviously no response, right? So I went to Amplify and asked those guys like, hey, I emailed these guys and they looked at me like I was like crazy. They're like, okay, well, we'll introduce you to some people we co-invest in, the fourth guy, right? Has no idea what he's doing, right? But I think right now with like different platforms, obviously Revere is building with the largest collection of emerging managers around the world, 550 and counting. If you want to meet any of these managers and hopefully when your funds are sort of fully up and running, we'll connect people to you all, there's so much data now, right? So the ability to do your homework and connect with people and again, peel back the onion, you gotta do the work, right? Like, you shouldn't be talking to investors or, you know, GPs that you have no idea what they're doing and not invest in vice versa for LPs too. There's a proliferation of data and sources and platforms that let you express your view in the market, which is very, very different, I would say, just from five to seven, maybe definitely 10 years ago. - Your Amplify story is so real. Are there any other favorite stories sort of learning the ropes of venture capital? - Yeah, so when we went to Venice to visit them, they're right off Venice Beach, my two partners and I had come from a century city, we were meeting a hedge fund, right? And then we had a meeting with someone else and we were in suits. So we showed up to Venice parked on, like, near that area where the coffee shop is. The surfers and the vagabonds looked at us, it's moving arcs, right? It's like these three Asian guys are definitely narks, right? I don't know what agency they're looking for, but they definitely are. When we looked at them, like, this weird look, like, why are they staring at us? And then we go in the office and Paul recalled in the crispy order and were like, what do you, they were polite because they're the GP, but they're like, oh, did you guys just come from somewhere? And we explained to them, they're like, okay, that's why you got the funny stare, right? That was just, you know, I think, you know, dress the part, right? Dress the part if you go where you go. I think when you go to Asia and sort of, you know, meet investors dressed up a little, like usually it's, you know, at least a suit jacket, you know, that type of thing. So that was pretty funny. I think the anecdote around like, you know, just calling friends who worked at the big funds, but they didn't have the heart to tell you that like, no, that $2 million is not gonna cut it. I think, you know, I'm brave enough to, you know, humble enough to say it on, you know, on recording, but I'm sure, you know, if people are watching, you know, got to up the check sizes, you want to talk to the bigger funds. Simple as that. - Thank you. We appreciate it. - Yeah, people need to know what the landscape actually looks like out there. So thank you. - Yeah, it's, no one tells you, right? Like, I mean, you know, they've got platforms now who like democratize access, right? And they cut the minimums, but like if you're a $100 million, $500 million family office, you're not going those platforms. So when they show up, like, just do your homework. Don't, you know, they'll be polite. They'll laugh at you off camera after the meeting, you know, but not during the meeting. - To that point, you know, when people are starting out, they're venture practice, whether they're a family office or let's say someone, you know, right out of college starts to work for an endowment. What are the first three things? What are the first kind of like six months? What do you think they should be doing to absorb as much? - That's a great question. I mean, my experiences, I came into this pretty late in my career. I mean, not late. I was 34 or so when I started the family, 35. And I remember I took as many meetings as I could, right? In retrospect, you know, I wasn't, I'm not proud that, you know, sometimes we wasted other people's time, but it was a learning experience for me, right? So like we, I looked at, 'cause I covered not just venture capital, but general private equity. I looked at hedge funds. I looked at credit, not so much real estate. And then sort of almost everything in between. I've seen litigation financing. I've seen like, you know, first loss sort of weird stuff and like all this, like everything, right? So drinking from that fire hose and taking like six to seven meetings or calls a day really sort of was a, you know, sort of helped me sort of understand like what was going on, right? And really caught up, so to speak. So I think if you're a junior person starting, you know, you'll have your defined rules, but I would say take as many meetings as you can, use your perch, so to speak as an LP. Don't abuse it. Don't be a jerk. Don't be mean. Don't be like whatever. Don't waste people's time. But if your job is to meet funds and meet companies, don't meet as many as you can, right? I was having a talk with one of my 20-something sort of analysts on the data side yesterday. Yeah, I feel like I'm, you know, I was like, you know, use your perch, right? Revere knows all these emerging managers, no LPs. Guess we're selling software and data, but you don't have to just go sell stuff to them. You could talk to them about what they're doing and all that. And, you know, you're living by yourself, you don't have to deal with kids or a dog or whatever. Just go out there and meet people, right? That's really important. So that would be number two, just being, you know, because I think what's really crazy, you hear these stories of these meetups and all of this stuff. Yeah, some are good, some are not great, but people do, if you follow up and you're sincere and you're not a jerk, there are opportunities that, that could be your next co-founder, right? That could be the next person that hires you. It could be someone you work with, you know, et cetera, et cetera. So that is really, really interesting, right? That's something that I think in this day and age, when, you know, it's not a common on younger folks, I know we're all like, we're all elder millennials, right? Yes, yeah. But younger folks, you know, tend to, you know, with the phone and sort of all that, it's been sort of very easy for them to kind of connect and do stuff and all that. But I still think post-COVID, there is no substitute for in-person things, to be honest. There's just no substitute for that, no matter what you're doing, right? I think the third thing is work hard. I think it's like, that's part and parcel of that. I've been quoted saying, you know, publicly, it's like, when you're in your 20s, it's like, if you can move somewhere else from where you grew up, your country, your hometown, whatever, and live, love, work with, you know, be among people that are completely different from you, that's really awesome, right? Hopefully you have a good job and you're doing it and all that stuff, right? But that's really cool, because, you know, I think work hard in being out of your comfort zone for younger investors, you will see immense growth when you're kind of not, you know, sort of living at home and sort of relying on this and that. That is really interesting. I think myself, you know, just the sort of personal side, after I finished law school, I moved from Houston, Texas to Beijing, China. I'd never seen snow before, like, I'd never, you know, never seen snow before, like, sleep doesn't count. In China, there's like 1.1 billion people men. I do four people in all of China, four people, right? And like, my friends are like, what the hell are you doing, right? Are you, are you, something wrong? Are you running up, you know? I'm like, no, I just wanna give this a shot for a year, two years, I can always come back, right? Texas is awesome, the weather's gonna stay the same, you know, blah, blah, blah, blah, right? And it set me on a path where I just kind of wanted to try something different for a year, I end up staying 13 years in Asia, right? And like, the family office experience, being a lawyer, my family, all these different things, emanated from that decision, right? And not to get to, like, butterfly effect or hokey, hokey, it is really, like, we're having this conversation partially because of that, you know, that experience. Because Ernest, I met Howard out there, we talked about this right? - Yeah, yeah, yeah, yeah. - Shout out to Howard Scott. And like, he was covering me at a hedge fund. The hedge fund has been in the news recently with Disney, right? And I looked at hedge fund. And that's like, and then he introduced me to you when I moved back, right? Chess star we might have connected, but without that, it's kind of crazy to see, like, how these things intersect. So I tell these younger folks and investors or not, you know, try that, right? You have nothing to lose, you know, the present situation may be different for everyone, but you have nothing to lose. - Well, and you've been very gracious to be sort of a cross-border translator for us. Can you also share a little bit about your interest in the Asian American Foundation and the Committee of 100? We sheepishly probably hear more about the Black experience or the female experience. And so thank you, thank you for sort of being a token on our podcast. - No, no, absolutely. It's, no, it's my pleasure to talk about this. And it's very important, right? I think it's not so much like everyone, every group has their own struggles, right? I think, you know, it's never to turn anything to like an impression Olympics where we want to like, you know, we need to highlight sort of the differences and sort of what our collective groups have been through and then respect that, learn from it and not make those mistakes in the future, right? - Yeah. - So that's one. - We are Disney cast, should anybody be hiring for a Disney finance reality show. Here's your cast right here. - Yeah, there you go, right? I grew up in Texas. So I was always around people very different from me, right? You know, depending on the sport, it was pretty much the type of folks I played sports with and in Houston, you know, black population, Asian population, white population, Hispanic population, right? So it's great, like it's a melting pot. So from there, I remember growing up like, you know, a little different, but growing up pretty American and just having fun playing sports and pretty suburban life, right? I moved to Asia 13 years and when I came back for investing and meeting people, I had these looks on these people's faces were like, they're like, oh, you speak English this way. And I'm like, yeah, I'm a lawyer, my SAT score is all that. My English is probably better than 99.9% of population, just from a testing basis, right? Like just objective, right? Standardized metrics. So I found that kind of weird, right? And I have two children, seven and two. And like, I know that now that with like, with US, China and sort of deterioration, the relationship and all that, there's right problems on both sides. We are, Asian Americans are perceived different, right? Like if you have black hair in our skin, you don't know their Korean, Chinese, American, Chinese, whatever, right? Just people don't know, right? Sometimes I don't even know. So like for me, when I move back, I've never been an activist. Like I'm pure capitalist, lawyer, just, you know, there's no activism in Asia per se. It's more philanthropy and all that stuff. I wanted to sort of join organizations that could, you know, very plainly said, changing the world is great, but it's just that to make sure my daughter and my son have the same kind of, or if not better upbringing, then like what me and my white, black, Hispanic friends and other friends had in Texas, right? They're very simple. Like we're all kind of playing sports together. We acknowledge our differences, but, you know, sometimes we say inappropriate things, but we don't have malice or intent with that, right? So TAF is really interesting. The Asian American Foundation, shout out to Norman Chen, the CEO. It was founded by, or started by Jerry Yang, Joseph Bay, KKR, Pong Zao from Citadel, Josai Ali Baba, you know, sort of luminaries and others, Asian Americans, sort of business, politics, technology, et cetera, right? It's one thing I found interesting, we're like the groups like the NAACP, the ADL, if anything happens to one of their members, they mobilize and you know that, that person or that thing, that's not okay, right? Yeah. Most Asian Americans did not have this umbrella entity because our groups are so splintered and very different socioeconomically, politically and all that. But I found that, you know, with the NAACP, with sort of the ADL and sort of other rights organizations, you have very right wing people doing their thing and very, you know, progressive people doing their thing, but you know, they can all kind of get along to get along, right? Like I think about the Adelson family and sort of what they've done in Las Vegas to like the Soross, you know, common family backgrounds and stuff, but pretty incredible that they all sort of, you know, stand up for each other, right? So the TAF does that, TAF will be convening their annual summit next month in New York, you know, and I'm just so happy to be a volunteer for that organization. C100 is a little more specialized in terms of, it was founded by I.M. Pei, the architect and Harry and Henry Kissinger that helped formalize relations with China. So for me, because I'm, you know, Chinese American, but I'm kind of weird and I spent 13 years in Asia, most folks have not. C100 tries to promote dialogue between more grassroots between the two groups, because the two groups are kind of going at each other, right, Americans and the Chinese. So that organization's been very interesting, it's much more specialized, but these are all things that I would like just to do to be involved and give my time and my efforts to help again, you know, selfishly for my children to have a good upbringing, the same as mine, but also for people just to kind of understand that, you know, we are Americans and go different, we're Americans through and through. - Yeah. Well, Chris, I want to thank you for just, you know, sharing your story, your perspective of your illustrious career so far and, yeah, how can people get connected with you? - Chew me an email, I read every email. It's Chris@reverevc.com or Alexa and Ernest, I've exchanged a lot of emails. We're in San Francisco. I read every email and yeah, I just, we're here to help, I think at the end of the day, LPs or GPs where we have this distinct benefit, distinct pleasure and like great sort of fun working with both sides of the market and just kind of understanding kind of the headaches that both of y'all have and the idiosyncrasies of this market and sort of how capital is connected. So we're here to help reach out anytime, let us know. - Chris, thanks so much for being on the pod. We'll have to catch up again on it in a couple years or a year or so if things change, especially after election, so. - No, let's do it, yeah, let's have a do a part two. Or at any time you're in town, let us know, come in the office. Yeah, Alexa, if you free up with the move and everything, we've got events in Austin next week on the 11th and 12th. So I hope to see you in person. - Thank you, Chris. See you later, alligator. - After portfolio tile, investing with a smile. (upbeat music)
