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“EP800”

“Leadership and Innovation”

“Ep 800 - Eric Chen”

"Host"

"Jess Larsen (Host) Welcome to the Jess Larson Show on Innovation and Leadership, where I interview all sorts of people I'm interested in. And this episode it's Eric Chen. Eric or is pretty impressive. Why don't you tell us a little bit about. Eric Chan (Guest) Yeah. So or is a $1.3 billion funds under management as a management firm? We cover alternative investments, mainly venture capital, private equity and alternative credit, which spread across Australia and Southeast Asia with offices in Sydney and Singapore. Jess Larsen (Host) So you know that those are some pretty impressive numbers. How long did it take to get that kind of. Eric Chan (Guest) 12 years. So we started back in 2010 and definitely the growth was not. It was know there was definitely a bit of a Jayco. Most of that growth probably came through in the last sort of 6 to 7 years. And part of that was our expansion into into Singapore. Jess Larsen (Host) Okay. So like, how much was it in the early years? Eric Chan (Guest) So we probably I mean, we obviously started at zero and then our first fund that we launched was back in 2013 and that was only of three and a half million dollar fund. It was a single asset on one single investment. And that kind of became a bit of our playbook in the future. Now we raised money and then we probably were about a couple of hundred million for the first five years or so, and then it really took off thereafter. Jess Larsen (Host) Do you remember how many years it was when you passed the billion mark? Eric Chan (Guest) It would have been two years ago. Jess Larsen (Host) Congrats. Eric Chan (Guest) Thank you. Jess Larsen (Host) So, I mean, my very first question is, there's so many folks in the industry that would like to have those kind of numbers that don't. What are some of the things that you think you've done different that's attracted that kind of that the assets? Eric Chan (Guest) Yeah, definitely. So I think part of it is definitely creating a point of difference in the products that you that need launch. You know, for us, we started in venture capital in Australia back around 2010 actually when we started our business, we went into the funds management business. We were actually a corporate advisory business. Well, we've always the ambition to be an investor, but we knew back in 2010, you know, both my co-founder and I, you know, we didn't have a track record, we didn't have a brand, you know, and we, boy, look a lot younger than we were. Eric Chan (Guest) And we were running around town trying to raise money from high net worth individuals and we just knew it was going to be very, very difficult. So we started as a corporate advisory business advising early stage start ups and then kind of when we kind of built a bit of a presence in a client base, we went into asset management, the first one in 2013. Eric Chan (Guest) And from there we kind of grow grew as a management business. But, you know, we have seen as always gaining venture capital, but we knew over time that it was very difficult to just say in venture capital, especially really early on when people were allocating a very small amount of their capital of their whole portfolio in DC. And also we acknowledged there was a, I guess, a risk in our own business where, you know, if be say it's great when the market is growing and everyone wants to invest in high in high growth investments. Eric Chan (Guest) But when the market is bad, like right now, it is very difficult and people tend to be more conservative in want to invest and do sort of have low yields but, you know, be more capital preservation. And that's why we kind of started expanding into other strategies. And we just thought, you know, what's more in a worry, at the most extreme end of the spectrum, that's going the safest end of the spectrum, which was credit. Eric Chan (Guest) And then we kind of expanded into also private equity, which was kind of in the middle thereafter as well. Jess Larsen (Host) There's so many interesting things to pull out in there. Why do you think that so few firms recognized what you did about the cycles and that you're going to want something to cover for when the market turn? Eric Chan (Guest) Yeah. Look, I think and there's there's no, I guess, perfect answer to actually. Oh, a perfect way to achieve launch a funds management business. But there's certain 77 people which will just really focus on venture capital. You know, you have a lot of these very successful DC firms and that's, that's, that's important when you're kind of wanting to build a brand and presence around DC and you want to demonstrate to your LPs that, you know, that is what you're really good at and that and if you ever want to invest in that, be say, that's what you should. Eric Chan (Guest) You should come to me. But then, you know, full, I guess other people where they diversify in other asset classes, they don't get that kind of benefit, I guess, in terms of being focused. So you typically often kind of get investors or LP's where they they question whether, you know, should I be investing in someone that it's a little bit more, I guess, specialized or someone that's a little bit more general. Eric Chan (Guest) And then for us, what we we I guess we acknowledge that as we were growing our business and we did do other strategies as well, but we decided that actually, you know, we do need to be more focused and we kind of pull back a little to some of the other strategies that we were doing and just drop them and then kind of remind ourselves that we just needed to build squads within each of these strategies and have no single team kind of crossing over multiple, multiple strategies so that we are building, I guess, individual business units covering each strategy within the business so that when people think about us from a venture capital perspective, Eric Chan (Guest) you know, we are the venture capital firm that people should allocate money to. As an example. Jess Larsen (Host) You know, one of my business heroes is David Rubenstein, a co-founders of Carlyle, and he talks about just like how much people made fun of him when he first started doing this. And they they called him like the McDonald's of funds, because, you know, he had, you know, started in leveraged buyouts, you know, became PE. But then he's like, you know, he realized that that his customers were also looking for for depth opportunities and some exposure. Jess Larsen (Host) And so he they went out and recruited kind of experts to come around that then they wanted venture. So they recruited venture experts to come round after that. And he was like, he was like being made fun of until Blackstone and everyone else in the world started copying them because it works, right? Eric Chan (Guest) Yeah, absolutely. And I think the other benefit of what we're doing is that, you know, we cover, I guess, a wider lifestyle call of our founders, right? So, you know, we cover already, obviously they early stage of their lifecycle throughout Fiji. But as they get bigger, you know when they need a credit opportunity, there's potential for that from through our credit teams and then all of they kind of getting to a much larger stage, they want to IPO, etc. and that's when our private equity team could come in as well. Eric Chan (Guest) So we kind of cover the, I guess, investment requirements for our founders throughout the whole lifecycle. Jess Larsen (Host) And then post exit the. Eric Chan (Guest) Cash app's absolutely. Actually our fifth overall founders actually paid enough on that as well. Jess Larsen (Host) That's about So, you know, I definitely get more Americans and folks in the UK and Europe on here. I'm not everybody recognizes just how many great companies come out of Australia. You know, I was lucky enough to have one of the co-founders of Canva on the show. And, you know, I think Cameron and those guys were the first venture backed $1,000,000,000 unicorn, right? Eric Chan (Guest) Yeah, that's right. I mean, the other well-known unicorn, they came out of Australia as a visa last year, but they weren't venture backed. Right. And you're right, I think it needs actually more. So in the last few years where we decided to get a few of these unicorns come out of Australia where people are taking notice. But Australia's been a great environment for launching technology or I mean wi fi came out of Australia out of which a lot of people don't know. Eric Chan (Guest) And you know, one of the things that one of the risks that we identify when we're going into venture capital really early on was actually the lack of liquidity in Australia and things might be different like a lot of overseas B.C weren't investing into Australia and what tend to happen was that, you know, a startup in Australia will often outgrow the capital capacities of Aussie faces, but then they weren't big enough or they're having shown enough traction on the US or in Europe and in order to attract capital from offshore specie. Eric Chan (Guest) And they were also not really kind of looking in Australia, but in the last few years, you know, well obviously seeing like guys like Tiger, Sequoia, Gib, etc. are all kind of, I guess, opportunities in Australia because they they've now noticed that, you know, great companies do come out of Australia as well. Yeah, I. Jess Larsen (Host) I love Australians, they're fun, they're funny, they don't take themselves as seriously as some other places and they're just like welcoming. I'm wondering this, is this according to Jess, but I'm wondering what kind of advantages you think that gives for startups to have that kind of a culture? Eric Chan (Guest) Yeah, look, you know, it definitely allows you to just do things that go right in Australia. So a lot of I've noticed our low Aussie founders, they the great young guys that, you know, haven't even thought twice about running a startup, they just left their jobs and they come out and they just give it a go and everything they do, they just give it a go. Eric Chan (Guest) Definitely be a lot more relaxed in terms of, you know, wanting to need to demonstrate their funding. They need to demonstrate whether, you know, they can do it, they can they just kind of take the leap of faith and actually just give it a go to find the opportunity and just give it a chance. So hopefully, you know, some of those characteristics actually has helped a lot of, I guess, individuals kind of just come out and just start a startup. Jess Larsen (Host) Which is funny when you think about like there can be negatives of not thinking hard enough about what we're doing, but but how many of our regrets in life are for what we didn't do? So many, right? Eric Chan (Guest) Yeah, absolutely. And you're right. Right. Because I think, you know, early on in the days when I first started my business back in 2010, you know, one of the best things I ever did was actually just go, you know what? Like, there's no better time to actually start business. You know, as I get older, as I get more responsibility of responsibilities, it would just get more difficult. Eric Chan (Guest) I might as well take take the leap of faith Now. And my advice to people during that time was always, you know, just give just give it a go. There is no downside, right? You can always go back to you. I mean, you're good at your job. You can always go back to your job in some of what I knew. Eric Chan (Guest) But nowadays you've actually so easy to start a startup. People often forget about, you know, thinking through, am I solving the problem? Do I need to solve this problem? And they just dive straight into building products, right? So, yeah, absolutely right. From that perspective. Jess Larsen (Host) It's like, it's like a balance being where it's so easy to under do it or overdo it, right? Eric Chan (Guest) Yeah, that's right. Jess Larsen (Host) And I know you have offices all over the place. What city are you out of? Eric Chan (Guest) Sydney. Jess Larsen (Host) Is that where you grew up or where did you. Eric Chan (Guest) Yeah, I grew up in Sydney, migrated here when I was five with my family and then just did all my schooling in Australia and build a business initially and. Jess Larsen (Host) SCHRAGER You know, where did your family come from? Eric Chan (Guest) Hong Kong. Jess Larsen (Host) I'm interested. You know, we hear so many stories about, you know, immigrants are four times as likely to become millionaires, at least in America. And I'm interested in what kind of advantages you feel like growing up in the family gave you. Eric Chan (Guest) I think what I definitely learned through my experience was that you need to take every opportunity presented to you and to just give it a go. And also you need to work hard to get what you want to achieve. And I think that's that's also a bit of a cultural thing, right? You know, as I was growing up, I've always, you know, I watched my dad go to work every day. Eric Chan (Guest) I mean, even to now, I think he's you know, he's in his late sixties. He still works seven days a week to the point where I don't think that he can stop working because he's just so much so in love with it. And at the beginning you was like, because that's what happens if I don't work seven days a week, but I work hard and I'm going to afford to pay for everything that I need to pay for for my family and move them to a country. Eric Chan (Guest) And then also, you know, because when we moved, I really it was during that period of time where I call it the Great Migration, because and I everyone in Hong Kong was worried about what will happen after the 97 when China would take back over to Hong Kong. And there was a lot of fear and people would just I guess, migrate to the country. Eric Chan (Guest) And but the problem was, you know, people a lot of their income was coming from the dad's right. So the dad will often stay back in Hong Kong and the rest of the family, the moms who take the kid and migrate to a different country. The bravery from these mothers, my mother right in taking three or four kids outside of of her comfort zone into a country in which where she didn't speak a word of English to raise us purely just because, you know, it was the best thing for us. Eric Chan (Guest) Like, there's a lot of learnings from that that I took from you know, my mom and my dad actually gave up all to give us a better life. Jess Larsen (Host) It's so easy to discount that bravery looking back when it all worked out. Eric Chan (Guest) Yeah, that's right. Jess Larsen (Host) I think about like think about entrepreneurship and investing and the requirement to be able to deal with uncertainty. I mean, your mom was younger, the major uncertainty there. Eric Chan (Guest) Really? Yeah, absolutely. I mean, like, if I look back, like, she would have made she would have had great credit telling it's a good downer. Jess Larsen (Host) That, you know, get before we move on. What's one other a trait you admire about your mom? Eric Chan (Guest) She's passionate, she's loving and she's caring. And I think I picked that up from her in sort of my way of life, which is, you know, you treat people not the way that you necessarily want them to treat you because you just treat them the best that you can and don't sort of ask for anything in return. Because if you treat people expecting them to treat you the same way, then you could often get disappointed. Eric Chan (Guest) But then also, you know, then you're not really doing that for them or the benefit of them. You're doing it really for yourself because you want them to treat you better. Jess Larsen (Host) Uh, motivations matter, don't they? Eric Chan (Guest) Yeah, absolutely. Jess Larsen (Host) So how big is your team these days? Eric Chan (Guest) So we're thinking about 52 people now, about half of that in Australia and half of that in Singapore. Jess Larsen (Host) When you think about expanding internationally, you know, it's something that can be quite scary to CEOs and founders or fund managers or people like that, making that leap and heading over to Singapore. What kind of lessons do you have for the rest of us who haven't done something like that yet? Eric Chan (Guest) The lesson I took was you had you have to have one of your founders being the region I so we how we started was we we knew that Southeast Asia was a great region to expand into because it was we using knowledge that you know the fastest growing growth corridor around the world and it was beneficial not only for us from a deal flow and investors perspective, but also we figured that it was a great place to build network so that we could help our founders expand into an outrageous you can when they want to. Eric Chan (Guest) But when we first started again, there was a bit of uncertainty where was the right thing to do? So we we basically hired someone to basically Lee to grow a beachhead out of Southeast Asia in Singapore, which was great. Like, you know, he's still a very valuable part of our business. He was great. But where we really started taking off was when one of my co-founders broke into Singapore. Eric Chan (Guest) And it wasn't it wasn't a I guess, a reflection of that. We didn't have the right team over there. I just think that, you know, you need a founder mindset to build a new to start a new region because it's almost like starting a new business right? Jess Larsen (Host) That's really insightful. I'm interested. I think sometimes I've had people in my life who have kind of looked at some of my co-founders and thought that, you know, maybe their skillsets weren't as important as mine. And they said, Oh, why do you have those co-founders? You don't need them. Yes. And and things like this. And so my my brother and my mentor, starting back 21 years ago, John Johanson, we've done all these different things together. Jess Larsen (Host) We made a lot, We lost a lot. We made it back. We lost it again. We made it. But you know, like we've just been through the wringer together. Great. You know, And for me, I have a hard time describing, like, why I don't want to do anything without them. Like, I can hire lots of employees, but I can't hire that that co-founder mindset. Jess Larsen (Host) How would you describe a co-founder mindset? Eric Chan (Guest) I believe it's the trust that you have with your Cape Town because you know it's great to have complementary skill sets, but great co-founders are ones where you also have, I guess, different perspectives and views on things. And sometimes you often get into a position where, you know, you've just don't agree on the same thing and it gets so point where you just have to trust the other person and allowed them will allow you to do do to follow one path, right? Eric Chan (Guest) Because otherwise you just kind of get stuck in one position and it's in a stalemate position. And if you don't if you've only just met someone and you kind of brought them in as a co-founder, you just it's very difficult to build that trust with that person immediately. But even with my co-founder, I've known him since I was 14. Eric Chan (Guest) Right now, he I met him when I was working at the KFC down the road from his place and I used to come over and trying to get free chicken from me. And since then it's not. Yeah. And then since then, like, we've been great best friends. You know, we've done a bunch of side hustles when we were growing up. Eric Chan (Guest) And I just know that, you know, even you I disagree and you by kind of just sit back and go, okay, it's time you go, What? Let's just go with what you think I can trust. Whether it's right or wrong, I can just trust him to do the best they can. And I can just trust his perspective on things. Eric Chan (Guest) And I think that trust is very important, and you just don't get that would be anyone. And, you know, it's definitely more important than having someone that have a different skill set of a specific skill set that makes sense. Jess Larsen (Host) Yeah, we have a quote code word for it that my brother invented. He says he goes up the hill to on it is isn't called the die on for you or he'll be like this is a hill to die on. For me that's like a signal like, yeah, like you mean it is. I really mean it. It feels like it's almost like a marriage in ways where it's like, You know what? Jess Larsen (Host) I can give him this one. Like, I disagree, but I don't think it's going to wreck the company. Yeah, And and I'm willing to take it on faith. And I'm like, You can take this one, you know? Yeah, absolutely. Eric Chan (Guest) And you know, sometimes I feel like something to have met co-founders where, you know, they've just met each other because one person had the idea and he's like, Yeah, I need a technical go. He found that. And I just go around and, you know, I just I met this guy at a event and I just brought him as a craft out of followers Grape Seed, you know, he was also interested in my and the I always feel like, you know, like you said, it's like a marriage, but it's also like, you know, it's like living with your partner before getting married, you know? Eric Chan (Guest) And if you've never had you've seen so many relationships where they're having lives together and they break up because, you know, they've just discovered things about them that they love after they lived together and then the marriage kind of Brexit. But it's similar to like just finding a cape down at an event that you have it, you know, for a month or two months and you decide to go on this life long journey with that. Eric Chan (Guest) Right? It's very, very difficult. I mean, some do succeed, but it's it's it's a roll of the dice. Right. Jess Larsen (Host) Well, I heard somebody said that sharing a bank account is fertile ground for growing disgruntlement. And like, this idea of like, is there any way for us to get to date before we get married? Can we do a joint venture? Can we do a profit share? Can we can you know, can we can we do something together before we, like, literally share a bank account? Eric Chan (Guest) Yeah, Yeah, absolutely. And even my co-founder and I mentioned before that, you know, we've done a bunch of side hustles all the way leading up throughout university and we kind of learn a lot about each other through this side hustle. I mean, there weren't big businesses, but it definitely allowed us to learn about each other. Jess Larsen (Host) Yeah. So my next question is about scale. Elizabeth. So some of the big learnings going from managing three and a half million in your first special purpose vehicle. Yeah. To, you know, 50 people manage over a billion. Eric Chan (Guest) So, you know, I'm a big believer that you don't need to be the best person at everything. As the founder, I do believe you're as the I guess as the leader in the business. It's about building or putting smart people around you to help you grow that business. But one of the biggest learnings I had was actually hiring people just based on their CV. Eric Chan (Guest) You know, like we we, we were starting to scale our business and, you know, we just knew that we needed people with a lot more experience. And that's done it before, right? But we kind of took that in, to which I still believe in, but we took that interpretation as we just needed to find someone that worked and big fund managers that, you know, has led big teams, you know, hasn't yet managed a lot of money. Eric Chan (Guest) So they must know a lot. And we did, and that's what we did. And the problem was they just had a completely different culture to us and they just did things completely different to us. And, you know, for us that actually crippled our culture and it crippled our business a lot because when you put something like that into the business and you entrench them, it's very hard to take them out because once you hire this person, you know, obviously you have a conviction in this person will help you grow the business. Eric Chan (Guest) But you also have to convince your team that, you know, this is a person that's going to help us grow the business. And you kind of have to give him the time to actually do that. But then at the same time, it's once you kind of know if he's not the right person is also very hard to just go, actually go. Eric Chan (Guest) I was wrong. I'm just going to take him out of the business and go back to the things he's after. I've done a bit of a dance about how good this person is, but the reality is we were wrong in terms of hiring this person just because he was like in a very senior executive at like one of the largest banks in Australia, because he was just not he just didn't do things similar to the way that we did it and he didn't have the right culture in that we kind of created in the business. Jess Larsen (Host) Yeah. How do you navigate that when you realize we need to bring someone in from the outside and yet we're worried about not. Eric Chan (Guest) Having a culture fit. So, you know, nowadays we're very cautious when we hire senior people, we often will, you know, spoke for us like the experience is important, but we actually caught we have a person for much longer period of time before we hired a senior person. And, you know, there's been like someone more recently, like we literally had plotted for six months. Eric Chan (Guest) So he wasn't even looking for a job. But, you know, we were basically just speaking with the guy, Boy, we're a six month period. You know, we're you know, we'll go for dinners where a is just we build our relationship because we knew that even when he wanted to go out, he'll be the perfect person for us for a specific role in the business. Eric Chan (Guest) And that gave us a lot of the comfort. Now, obviously there's certain times where you kind of need that person down there, but that person was it's hardly like a very senior person, right? So we're typically trying to look 6 to 12 months ahead in terms of, okay, what is the next senior high that we need and start thinking about, you know, talking to people, meeting people and start thinking we'd be now networks who that person could be and start building those relationships today. Eric Chan (Guest) Because what we don't want to do is just get a recruiter where, you know, they're showing us a bunch of CVS of guys that have, you know, 20 or 30 years of experience, which looks perfect on paper, but just not perfect. Fit is sort of like we've found is right. I you know, it's very difficult. I've found, you know, we've had to pitch in, I guess what is the got one back for the last 610 years. Eric Chan (Guest) Right. Which is why even we found is we tried to make founders, even when they're not raising capital and try to build relationships with them to understand what then why as a person, as a founder, before we actually invest into them to an extent that there's some down this that we would have back maybe four years after we first met him and he may not even be the start ups that they were running at the time. Eric Chan (Guest) It was a different startup at the time we backed it. Jess Larsen (Host) That's so great advice. I didn't know you were going to say, but I think my mind was going a little bit more towards like the interview process or things like this, and your answers are just so much more realistic. I really like that. Answer it. Really? Yeah. Eric Chan (Guest) Yeah. I mean, like, you know, this series of things that you can pick up in interviews, right? Because I think once you've done enough of these interviews, you know, when someone has, you know, stage two and it's not that you want to even this is an answer that they genuinely are telling you from their heart. Jess Larsen (Host) So important, you know, a subject we have so many different entrepreneurs and investment managers and people on the show and something that I feel like there's an insatiable appetite for people can never get enough information on is fundraising. When you think about lessons you've learned, what are some things that have evolved for you over the years when it comes to attracting more LPs to choose you guys? Eric Chan (Guest) So what we do is because when we started it was a lot of high net worth. I mean, all this money that's where LP based initially started from. Well, and then as you moving into sort of more institutional world again, like the institutional investors, people that you need to build relationships much longer before they were investing to you. Eric Chan (Guest) So even before we even think about starting a fund, if we think that we're going to be launching a fund in 12 months time, we'll start that activity 12 months prior. In terms of meeting the institutional investors and build relationships. The other thing that it's important is, you know, for me with LP's like these know, it's never bad to overshare in terms of sort of hopefully update performance, etc.. Eric Chan (Guest) And, you know, it's an example, you know, when COVID hit and the market and there was a lot of uncertainties in the market and obviously some industries were doing worse than others and some companies were doing Western love is, you know, the importance of that. The most important thing at that time was actually just constant communication with the LP, giving them as much information as possible so that, you know, they're not only just sitting there, kind of sitting guessing what's, what's happening to the investment now, the communication may not always be great news. Eric Chan (Guest) And often, you know, during a bad period of time, it's often bad news. But that's okay because you're bringing them on the journey. On what's happening with the with the popular company or with the investment. And, you know, the reality is not everyone everyone obviously knows that there's always going to be good investments, there's going to be bad investments. Eric Chan (Guest) But what I guess shocks them the most is thinking that something was a good investment and all of a sudden, you know, you actually was a bad investment because I never heard, you know, I never got communicated about that investment in, you know, for 12, 18 months, whatever you did. Jess Larsen (Host) Yeah. It's a surprise is typically a good thing. Eric Chan (Guest) Yes, that's right. Jess Larsen (Host) So let's let's go back on that journey. Let's go back a little. When it comes to working with high net worth individuals and you're getting started, what are some of the principles that you have that you would you would advise others who are working with that community. Eric Chan (Guest) Be honest and also be grateful. Honest in a sense that, you know, again, be honest. We've invested in terms of what the what the risk profile of that investment is. We are honest with the investors in terms of how the portfolio company is actually doing and be honest in terms of what went wrong and sort of if something if it was a mistake, admit that, you know, and just be upfront in terms of what were the learnings that you actually took from from that investment. Eric Chan (Guest) You know, I think a lot of investors will appreciate that. I mean, some may not, but then those people may not necessarily be the right investors for you anyway and then be also grateful, you know, be loyal to your investors that really backed you really early on when you know you didn't have a brand, you know, track record and be grateful to them for giving you a chance. Eric Chan (Guest) And, you know, I always prioritized people, those people that gave me money, gave me my first dollar over anyone else, sort of later on, even if they kind of write a big enough check. Jess Larsen (Host) Yeah, That's so great. Um, well, let's talk about that. What's the smallest check you've ever taken? What's the biggest allocation you've ever taken? Eric Chan (Guest) Well, I think the smallest take up ever taken is $10,000, which is kind the biggest check we ever taken. Maybe 15 million. Jess Larsen (Host) Yeah. And I'm interested to hear what the similarities are, because you're still dealing with people who are handing over money, who have faith in you. What do you feel like? It's similar whether you're landing ten grand or 15 million. Eric Chan (Guest) So the similarity between the ten reigning best and a $15 million investor is that they both want to understand, but they both want to understand the picture. They're both unknown. And then what are they investing in? What is the what is the risk profile of the investment, etc.? And are you going to make me money? Right. But I guess you know the difference a lot of the times between a smaller investor and a lodging based, it's sort of the amount of due diligence they end up doing off the back of that. Eric Chan (Guest) One other similarity would often be the the the updates that they might want to hear about, you know, why even after they invest, just because they invested $10,000, it doesn't mean that they're going to go away. And then, you know, you can just tell me if I make money on that. I think it doesn't it's not really a matter of how much they're investing. Eric Chan (Guest) It's how much wealth that investment adds up to be. You know, if you're Arabian and you invest for whatever reason, $10,000, obviously you're not really going to care. I and you're not going to spend time and effort in understanding investment or following up on that investment. But if that ten grand it's 10% of your wealth, then you're definitely going to want to understand like what that investment is and you're going to pick up the phone, you're going to call the manager about, you know, what's going on with my investment. Jess Larsen (Host) It's something that I feel like doesn't get talked about. And, you know, we in my late twenties, when we started our first fund, I had we done a retail fund, so I had 1200 investors, you know, and and you really get a sense or what people want to know because somebody out of 1200 is is not going to be shy. Jess Larsen (Host) I think it doesn't it talks about enough and it's like what I found is the more we communicated this is not a shock, but the more we communicated or like, you know, the over communication, the more people could just be calm and live their life. And they were they me, they were such they so much better clients of ours when we over communicated upfront and like so many of my problems had to do with not getting in front of that and not giving enough information early enough. Jess Larsen (Host) I think, you know, I feel like we've had some some big wins, but also some major mistakes in my career. And some of the biggest ones are somebody got a negative surprise and I hadn't communicated enough along the way. That was those are rough spots. Yep. Eric Chan (Guest) Yeah, I totally agree with that. Actually. That's also why I thought, you know, it's one of the questions people always ask me, like, when is the right time for, you know, UPS to get listed? Because, you know, in Australia actually you'll be surprised the requirements in listing a company that you much lower and the size of the companies typically can be much smaller. Eric Chan (Guest) So you often see sometimes start ups listing on the Australian Stock Exchange where they might be doing, you know, $5 million of annual recurring revenue, right? It's just another pathway of actually raising capital. And then so people off the industry will ask me like, well, what do you think is the right time to invest into foresight? Optimist on the best time on the stock market. Eric Chan (Guest) And I said the reality I don't think start ups should be listed on the stock market until they kind of, you know, no longer should be called a startup because, you know, founders are already fighting fires, you know, every day, fighting 100 flies every day. They should be busy. But part of a listed company, part of a list of CEO or founder is that you're going to have to constantly communicate to the market. Eric Chan (Guest) You have to constantly communicate to research people which often don't really understand your business, but they just like the idea and the investing into your business, the distraction that you're going to get from actually being listed, because you have to either communicate to the people and to the market and to research houses. It's just going to take your eyes off actually running the business and growing the business and solving these problems that you have every day. Jess Larsen (Host) I'm interested we talked about some of the similarities. Let's talk about the differences. Um, when when you're asking for a $15 million check, what's a mindset that needs to change for maybe it's a fund manager or somebody listening today who's like, you know, we have never asked for a check that big. When I get that level, you know, what should I hear? Jess Larsen (Host) Eric in my ear telling me like, what's what's the pep talk? What's the guidance? You know, do I just need to take a deep breath and prepare for a lot longer due diligence cycle? What's involved? Eric Chan (Guest) Yeah, look, I think it's there's definitely a long cycle of due diligence, but it's also a matter of it's also a being prepared on that, on that due diligence and having the right infrastructure. Because as an institutional investor, what people also caring about is, you know, is your business going to is your own business sustainable? I you know, as I say, this managing your business is going to be sustainable. Eric Chan (Guest) Are you going to be around for years? You know, are you are your employees of your key people actually getting remunerated properly? You know, do you have the right back office? You are have the right compliance like such that individual investor may not really care about, but the institutional investors are part of the reason also is, you know institutional invested. Eric Chan (Guest) You know, they don't want to just come in for the one check, right. Because they every time they invest into a new manager and actually a lot of resources, that was a big investment for that. So the idea is always that when they come in and out or run more checks. So they want to also make sure that you as a business is sustainable and that they can continue to lead upon you best into you over time. Eric Chan (Guest) You know, so I want you to at the performance. So the questioning that we're going to have is going to be very different. It's going to be more around your business, about your infrastructure, etc., and you do need to be prepared for those questions. Jess Larsen (Host) And can you give people some examples? Is this just like having a really well thought through data room, having, you know, investor questionnaires, answers pre-prepared? What are some examples of structure? Eric Chan (Guest) And so, you know, I will break down our data room into our A number of segments. So obviously you have just actually given just overall the business actually think of it almost like, you know, when you go into a data room investing into a startup, right what do you expect that is not too dissimilar with what your all your institutional investors are going to want to expect something about that your company information, your performance, but digging into actually how your performance has been calculated, you'll back into infrastructure, your team, etc., whereas an individual will literally will write you a check off the back of a pitch deck. Eric Chan (Guest) Right. It's really what is the supporting information that is that is underlying this or that underpinning this investment presentation that you're providing. Jess Larsen (Host) We've covered a few different topics here. What's a question I haven't asked that it should reassure. Eric Chan (Guest) I guess, learnings, I guess learnings that we've had as a tubeless and that's this obstinate Christian will always laugh for me is that I mean the reality is that there's so many learnings, you know, the even to today I'm learning something new as an investor, as a venture capitalist. Right? But some of the key learnings that I've had over the years is you know, everything starts with a problem of products. Eric Chan (Guest) All right. You know, you've got to build conviction in you found this thesis as opposed to that as opposed to, you know, the product that they've built because you've got the if you believe in the thesis, you have conviction and you believe in the founder and have the right to to receive, then the ability to build and ship product is just a part of the price set. Eric Chan (Guest) And often what you end up when you say is that the product that they create today is not necessarily going to be the product that solves the problem is just the main sin and just the beginning of it, right? So I wouldn't dive too deep into the actual product itself, but more into the problem in the founders, when you're investing sort of around the seed in series A roots climbing, that is like, you know, we're always looking at big markets, but you know, it's is and big problems that we try and be solving. Eric Chan (Guest) But the reality is, you know, sometimes you have an obvious problem or big problem that doesn't need to be solved tonight. You just know that the adoption rate isn't going to be there. You know, alternative date is actually a big example of that. Right. And then another same another learning would be something like, you know, it's important to build muscle memory and identify and be able to identify patterns. Eric Chan (Guest) But, you know, it's also a risk to actually be beholden to those patterns in making investment decision purely on these patterns. Jess Larsen (Host) Let me take it another direction. So if somebody day is listing from Singapore, a listing from Australia or what? Who's an ideal client for you? Who are you that is perfect for? Eric Chan (Guest) So a perfect investor for us. It's someone that wants venture capital as a allocation in their portfolio. People that believe in thesis investments as opposed to just any specialized into a single industry or sector and people that are patient with capital, right? Because venture capital is a long game. You know you might be need before they see return on investment. Eric Chan (Guest) So they need to be very patient with the capital. And then also, I guess, people that have a belief that, you know, Southeast Asia is a imported region. What I mean by that is one of the things that we try to do as an investor is we try to add value to our founders by providing them with access and reach across Southeast Asia from Australia anyway, Australian challenges anyway. Eric Chan (Guest) Because what we learned over the years was that, you know, I often down this will disregards Southeast Asia as a region when they think about global expansion, just because, you know, it seems too complicated or typical for them compared to like the U.S. or Europe, etc.. While this I don't necessarily think that Southeast Asia is the right market for any well, for every or many start ups. Eric Chan (Guest) But but the but the but they need to actually assess the market as part of the thought process as opposed to just completely ignoring them and what we wanted to do. And part of the reason why we expanded Singapore was actually providing them with the right insight and know house in order for them to make the right decision or assessment to determine whether they want to expand into Southeast Asia. Eric Chan (Guest) And they said that even when they want to, we want to be there to help them in that guide. So for down for I guess for LPs that believe that, you know, adding value by giving them access to Southeast Asia, it's in one end unique. These are the right LPs for us. Jess Larsen (Host) That's great. You know, a mentor of mine, he's a good friend we've had on the same is Central. He runs a leadership training organization out of Singapore, training the biggest banks in the military and all sorts of corporations and stuff. And it is kind of a fascinating place. If you had advice for Americans, Europeans, folks in the UK who are interested in Singapore, what what's a baby step? Jess Larsen (Host) What's a principle that you would maybe tell them to look at if if they want to explore opportunity? Eric Chan (Guest) You know, Southeast Asia is definitely a completely different market to most, right and almost ignore everything that you've learned as a product market fit means in your own region, because most likely not. It's completely different in Southeast Asia. Right. And you know, the first thing you probably want to do understand what wherever the problem that you're solving exists in that market or anyway needs to be and where they need to be solved and then understand what your cost, what the customers in that region actually really care about and whether they will be paying money for it. Eric Chan (Guest) So it's almost like launching your startup again in just in the new region. Jess Larsen (Host) Think bringing that beginner's mindset correct? I love it. Listen, where are the best places for people to find out more about the business or connect with you online? Eric Chan (Guest) Yes, I'm I'm I use LinkedIn law and then obviously, we've got a website with a or a blog PSA, which is specifically for our venture capital strategy. And then or Adecco, it's our corporate website as well. Jess Larsen (Host) As we kind of wrap up here, what's something you want to leave people with? Eric Chan (Guest) Look, I think like I think people should again, you know, as I sort of I've been through this journey for so long now that, you know, I want to pass on as much knowledge as possible to people. And what I could leave with people today is probably that similar to when I first started off similarly to what we spoke with at the beginning, which is just very interesting. Eric Chan (Guest) A Changed, but be conscious and prepared before you dive into anything that you do, but then be afraid of doing that. Just but just be prepared before you do advice. Jess Larsen (Host) Well, thanks again for making time for this. Eric Chan (Guest) Thanks, Jess. It was it was great being on. Thanks for having me. Jess Larsen (Host) Yeah. Bye, everyone. "

"Jess Larsen"