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Chris Shen on Private Investors, VCs, Debt Raising & Silicon Valley 

· Podcast Episodes,VC and Angels,VCs,Investing

Venture capital, as everyone knows here, is very hyper local. If you're not putting money to work consistently, you're not getting the best flow. And if you're talking about the majority of asset allocators out there, and talking about them as a very diverse pool, right, at the big top end, you have the sovereign wealth funds, you have the insurance companies, the pensions, superannuation funds. But then when you fill in that big gap in the middle, you have different players like registered investment advisors, private wealth managers, private banks, financial institutions, family offices. And these people and these investors all have a different view on the asset allocation, and basic principles that Eric alluded to. - Chris Shen

Chris Shen (沈偉士) is the co-founder of Revere, where he jointly oversees all investments, asset management, strategic initiatives and operational activities. Chris is also a managing partner of all Revere-managed fund products.

Chris is also a Founding Partner (non-executive) of West 22nd Capital Advisers, a Hong Kong-based single family office and investment firm that is licensed by the Securities & Futures Commission of Hong Kong (SFC). Among other roles, Chris established the firm’s operations, served on the investment committee, and led venture capital and external asset manager investments.

Chris also currently serves on the advisory boards of tech companies FiscalNote, Booqed and Zectr, and is a venture partner with BridgeWood Alternatives and GPO Fund. Previously, he was a special counsel with the global law firm Baker McKenzie, focusing on corporate finance and fund formation matters in the Asia-Pacific region.

Chris serves on the board of directors of the Museum of Chinese in America (MOCA) NYC and is active with the Association of Asian American Investment Managers (AAAIM) and Asian Americans Advancing Justice - Los Angeles. He is also a Type 1/4/9 responsible officer under the SFC, is admitted to practice law in the State of Texas, and speaks fluent Mandarin Chinese. A native Texan who grew up in Houston, Chris lived and worked in Greater China (Beijing, Taipei and Hong Kong) from 2006 to 2019, and now splits his time between Silicon Valley and Hong Kong.

This episode is produced by Kyle Ong.

Jeremy Au (00:00): 

Hey, welcome to the show, Eric and Chris. 

Christopher Shen (00:02): Thanks for having us, Jeremy. 

Eric Woo (00:02):Thank you, Jeremy. Good to be here. 

Jeremy Au (00:06): 

Wow, I'm really excited because I'm an angel investor. You guys impressed me when you both walked into the virtual Zoom room from moment one, and I really agree with your thesis around disrupting venture capital. So, do unto others like you... Well, I don't know how the exact phrase goes, but something about we can disrupt VCs just the way we disrupt old industries, right? So, I guess it's about time. So, I love Eric and Chris, why don't just share very quickly about yourselves, and then we'll get started. 

Eric Woo (00:36): 

Sure. Thank you for having us, Jeremy. So, I would say I come from very much the world of Silicon Valley. Grew up here in the San Francisco Bay Area. Went to Berkeley. A lot of my friends became operators and engineers and entrepreneurs. And I found my way into more of the finance world. And so, really, my start in venture capital was actually a few years into my career, where I did different things from finance, did some search marketing, and had a friend who called me up and said, "We're growing, we're a fund of funds, we've got all this great access, but we need somebody to help write the investment memos, do the due diligence, and work with orders." So, I count myself very blessed to have started in this industry actually learning the nuances of the back office of investment operations. And I think that gives me a unique perception around how hard it is today to run a venture capital fund. And it's something you have to wear multiple hats. 

And so, my background, institutional investor working with two large fund of funds here in the Bay Area. So, was very much trained in the sense of evaluating fund managers. A lot of my passion and the part of the portfolio that I ran was focused on first and second time funds, emerging managers, as we call it here in the US. And so, these individuals who were starting new funds were tremendously successful as operators, they were successful angel investors, but they really were trying to learn the art of being a professional investor. And so, I found my calling in investing, working with them. More recently, I was at AngelList. So, if you think about moving from one end of the spectrum, from the institutional side to a FinTech platform like AngelList, gave me great clarity around the role that technology and democratization using software systematized workflows to really open up the asset class for a brand new set of investors. 

So, with those two collective bookends of experience in venture, decided it was time for disruption, as you call it, right? So, if a big institutional fund to funds and a FinTech platform like AngelList, if they had a baby, that's essentially what Revere is. So, I'll hand it to my partner and co- founder, Chris. 

Christopher Shen (03:05): 

We should have used that analogy, the baby analogy, because I think it always gets a good response. So, if Eric's that insider, the Silicon Valley type that grew up around this, I could not be further away from that. I grew up in Texas, and in 2006, after finishing law school, decided to move to Beijing, of all places. I always kid that in 2006, you could still get onto Facebook without a VPN, but you couldn't get a good hamburger, and you couldn't get good laksa for all of our friends in Southeast Asia. Just, you couldn't get good food out there. So, did the lawyer bit, moved to Hong Kong, and then basically grew up with China in a way, where, as you know, China was more inbound investment, percolating technologies, and just understanding what was going on. I had the privilege of representing founders as they took their companies in different industries public, as well as doing M&A, and debt raising, and stuff like that. 

In 2015, luck, fortune, whatever have you would change. Someone I grew up with, someone I was very close to married into a wealthy family. They're on the Forbes China list anywhere from 400 to 420 on a given day in the markets, and wanted to start a family office. The family was great business owners and great operators, but wanted to diversify, right, like a lot of other family offices in mid 2010s. So, we started, and then I realized having a network in Asia, but trying to find investments elsewhere, buyouts, hedge funds, you can all get pretty good access in Asia and wherever you are by just getting the teams and the coverage, but venture capital, right, it's one of those things where you have to be an Eric out there, but there are not many Erics out in Asia doing VC and getting good, consistent access. A lot of people who say they do, they don't, right? It's not like Mary Meeker, or Peter Thiel, or someone will talk about access, or even Southeast Asia, like an [MX Clark 00:05:00] or these very good investors. They don't brag about access, they just talk about doing deals, right, and ideas. 

So, when you have a lot of people in Asia talking about their access, I was curious to see what they were seeing. So, fast forward to, essentially, a couple years in, we realized that despite having friends in the United States and being American, that VC access was not coming, right? We couldn't get into the Andreessens, Sequoias, Benchmarks of the world. The deals would be very sporadic. The brokers' channels, even back then, were overcharging for everything that was popular, and didn't know what to do. So, being steeped in macro and multi asset class asset allocation, I started thinking, could we do VC in a different way, the way the three of us could buy a Vanguard bond fund, or a BlackRock tech fund, or a US Franklin Templeton, US index fund, right? And that solution did not exist. So, when I moved back to United States for family reasons in 2019, Eric and I had been friends for a while, and he would send ideas, and he'd always send the ideas that he invested in, or that he passed on. Kidding. So that we ended up talking about ideas, and realized that we were looking at the same problem, but from different ends, right? I represent that demand side that wants to look at things a little differently and invest in different products, and Eric represents that classical Silicon Valley supply side. 

So, talked about ideas, put pen to paper, and we launched about 14 months ago, and are honored to have great investors, including you, Jeremy, supporting us as we build the Vanguard, or the BlackRock, or what have you of venture capital. 

Jeremy Au (06:39): 

Okay, so we're talking about solving something, but what's the problem here? Doesn't it look like venture capital and private markets have juicy returns? The economists say private markets are awesome, and public markets don't seem to be getting a bite of it. So, at a very high level, macro view, I'm just opening up The Economist, I feel like everything's fine, right? So, what's the problem here? VC firms are thumping their chests saying everything's doozy, startups are raising one stress rounds. I don't know, what's the problem here? 

Eric Woo (07:14): 

Well, I think, traditionally, a lot of people who were investing in venture, they didn't even call it an asset class, right? They said it's Sand Hill Road, right? If you can get access to the firms that are residing on Sand Hill Road, that's essentially how you get your exposure, your returns into venture capital. And so, while that may have been true in the '70s, '80s, and '90s, there was definitely a fundamental shift. And there's data to support this from folks like Cambridge Associates and other leading publications that says the distribution of returns in venture capital have widened since the early 2000s. And today, there are several hundred investors that are investing in the top 100 companies every year that generate the returns in the asset class. So, the problem statement, if you will, really starts with, is venture an asset class, right? And if it was historically recognized not as an asset class, then that dictates how you try to engage, right? It's like, okay, it's purely about access and who you know. If you know the right people, and you get into the right deals, it's great. Otherwise, you just don't do venture. 

And so, what has shifted in the last decade, especially since I've been investing, servicing different types of LPs, it's now recognized as an asset class. And within that asset class definition, you get the classical asset allocator dilemmas. How do I get diversification? How do I manage risk and return? How do I manage to liquidity? And then all those things have to map into a defined consistent strategy that can be reviewed every year. And those tools just don't exist. And so, a lot of what we try to do in terms of framing the problem is to ask these simple questions, what is an allocator to do who is trying to become a credible, consistent investor in the venture asset class? And that's what we're trying to solve. 

Christopher Shen (09:26): 

And just add to that, venture capital, as everyone knows here, is very hyper local. And I think that does speak to the access issue that Eric obviously knows about very well, and that, Jeremy, you know in terms of being a leader in the Southeast Asia venture capital community. If you're not putting money to work consistently, you're not getting the best flow. And if you're talking about the majority of asset allocators out there, and talking about them as a very diverse pool, right, at the big top end, you have the sovereign wealth funds, you have the insurance companies, the pensions, superannuation funds. On the other end, you have retail. But then when you fill in that big gap in the middle, you have different players like registered investment advisors, private wealth managers, private banks, financial institutions, family offices. And these people and these investors all have a different view on the asset allocation, and basic principles that Eric alluded to. 

There are certain ways to go about asset class, where if, say, you're going to Southeast Asia, you're not doing mezzanine financing in Malaysia day one, right? You're not doing MPLs in Indonesia, and that type of thing. So, with that, venture capital, because of the haves and the have nots, and the geographical dispersion, the hyper local nature, you're almost forced to pick bad deals as an entry into a certain region. And that's, essentially, quote, the equivalent of public markets, timing the market, and just trying to figure out volatility later on. And we think that's just stupid, but people are venturing, no pun intended, into venture capital in ways that you would never do that in other asset classes. And we don't think that makes sense, right? And we're trying to fix that. 

Jeremy Au (11:02): 

Okay. So, what I'm hearing is there's a power law to the distribution of VC returns, that is gated pretty much by the ability of these funds to source deals, right? And when we zoom out one level more, a person who's feeling the problem is someone who is reading Bloomberg, and Financial Times, and The Economist, and is an LP, is an asset allocator making a decision about what goes into the bucket, right, the portfolio market. Is that a pretty fair summary of who you're targeting? 

Eric Woo (11:40): 

Yeah, from a target audience, I think that's a fair statement, because we understand that language, and we also recognize, as we said, that they don't have the tools in their toolkit to do venture in that traditional way. And then on the other point, when you bring up this idea of power law returns, it still very much is, how do you make sure you have enough shots on goal so that you can capture those outliers, right? So, that is absolutely a universal truth, that if you're going to do venture, you have to get those outliers. And I think what has shifted, given my background, and how Chris and myself have come together, it was a very, very closed ecosystem in terms of even your ability to sniff into getting access to those outliers. And so, what has changed is the access points of who are the venture capitalists who are writing the checks in these potential outliers? That landscape has completely shifted. It's no longer the Sand Hill firms writing the first check, it's Jeremy's fund one as a micro VC, right? It's a successful operator, who's doing angel investing on the side. 

So, that entire part of the population in the distribution of that is hundreds, if not thousands of individual people, some of whom are doing their own funds, some of them are angel investors. And so, faced with that daunting dilemma as an allocator, how are you going to sift through all that noise? How are you going to know which individuals do you invest in, right? And you can't write a check in every single one of them, right? So, this is the call to arms, if you will, this idea that there needs to be a product layer that can curate and abstract this entire audience of early stage ecosystem into an investable asset class. 

Jeremy Au (13:36):So, walk us through one of these customers, and they log into your product or sign up. What's the flow? 

What happens? What's the magic here? 

Eric Woo (13:47):Chris, you want to talk about the magic? 

Christopher Shen (13:49): 

Yeah, the magic there, I would say that the profile, again, the people that we're trying to serve and help are single family offices, RIAs, private wealth managers, guys and girls that control... They may be in the middle of nowhere, but they are running like $10 billion assets under advisory, right? Or a third or fourth tier private bank that, again, not because of their rankings, but purely because of the number of clients, they don't get the exposure or are able to hire the teams that can service them right in venture capital growth, equity, et cetera. Because you never hear about people that work in venture capital and say, "Oh, I want to go work at a large bank," or, "I really want to be a private banker," right? It's always the other way around. They want to go to VC, when they get into VC, they become entrepreneurs, and they stay in that industry. 

So, when someone comes on, right, we try to figure out what they're looking for. Because venture capital is very personal, right? Compared to real estate where, look at LTV, look at cap rates, location, location, location, how to develop it, move on, right? It's different. Different projects are different, but the formula's there, right? And every Asian family out there that has done very well is real estate literate or made their money off of real estate or some form of that. So, when you talk about venture capital, and you have people from old school industries, people that don't have the training, were never first technology entrepreneurs, they don't have that domain expertise, trying to sift through, they basically inject what they know onto that asset class, right? So, our job is to figure out, okay, patriarch and family office, the adviser, the CIO, what do they want to do, right? If they're active, they want to pick deals, then that is going back to helping them identify the best emerging managers, which to Eric's point, are writing those first checks into those unicorns before the Andreessens, the Sequoias, and the Benchmarks, and you want to get good with them. 

These guys and girls, they know what they're doing. They're the first port of call for AI, for machine learning, for consumer FinTech, for development ops, et cetera, et cetera, blockchain. And the company will go to them. They're usually not going to excel, index, et cetera for a first check. Usually not, right? So, we get to know them. We try to pair those people up, the active investors that want to learn more. Hopefully, these investors will write a check into those emerging managers and back them. But eventually, this community, when they start understanding what everyone's doing, I think really interesting things come out. And then once those deals come up through those emerging managers, when their return to the pro rata comes up, they have a follow on, they have other ideas in their network, guess who sees the first dibs if they're LPs pass? It's that network that we've built. 

Now, on the other end, the passive types, I would say, maybe I'll let Eric talk about that, but it's a very different story for them, because it brings us back to the problems that they have. And when they look at the lens through real estate or public markets, they really don't like venture capital, because the numbers aren't worth the paper they're written on, but they know they have to allocate. Eric. 

Eric Woo (16:57): 

Yeah, it's product market fit, right? If you think about, we can borrow the pain points that we see in consumer type of businesses, marketplace businesses, and try to attack those vectors of how the increasing demand of a high net worth individual client who says, "I want to do venture." And as Chris pointed out, their perception of venture has a social and cultural element to it, right? There's a story, there's a narrative that they want to tell or be told in terms of how they participate in venture. And so, some of the disconnect or the friction point, if you're an investment consultant or investment advisor who is trying to stay rational in that thought process, you can't ignore this social component, this storytelling component in terms of how you put the client in touch with a venture capital asset class. 

And so, a lot of the way we approach these conversations is we also, I've used this word before, speaking the language. There is a certain type of language for an asset allocator that you need to speak that gets them comfortable to place their client capital or their personal principle capital into our platform. But you also ultimately need to speak the language of that client, and Chris comes from this world, so I'm sure he has stories to tell about this, who simply wants to be at the cocktail hour, and say that I got into this unicorn company before all my friends, right? So, this is the delicate balance. 

And this is really why we find this such a fascinating business to disrupt. Because if you're only servicing one side of this persona, or the other side of that persona, you're never going to win the market over. You're going to be a point solution. But we think this new approach, the productization approach, our content strategy, how we bring all these talented individual emerging managers with amazing, diverse backgrounds, and we bring them to the forefront, and there's that resonance, that connection to that client, saying, "Oh, my gosh, this is amazing individual. I don't care what they do, I want to invest behind them." Getting back to your point about magic, when you see that magic happen on a personal level, it's amazing, because then all the barriers to capital come down. 

Jeremy Au (19:23):Amazing. So, barriers coming down. I love that. So, I've got to ask, who wins when the barriers come down? 

Christopher Shen (19:32): 

It's, I would say, allocators, who generally are the have nots, win, right? Because, obviously, a lot of the good managers are getting... The top 25, top 50 brand name VCs around the world are getting capital anyway, right? There's more than enough capital. It's more trying to figure out where to put it and what they can do to drive that three, five, 10X return, and go from there. But I would say that, though, people that are the have nots, right? And I think interesting enough, we had an article last week that we saw from Fred Wilson, right, Union Square Ventures in New York. And then basically, he was talking about emerging managers outperforming different indices. And he basically caveated by saying that the way to pick these managers is that you need to do something in startups, right? It could be literally anything. But think about the people... Right now, it's picking up, right? But if you ex out people that are not in startups, that don't do this everyday, because we are in an echo chamber, where everyone talks about the same stuff, our insider group that you're in, and all that. There are a lot of other people that don't do startups, right? They just don't... They see stuff in the news, if they read the news, if they're on Facebook, but then they realize that Facebook's been around for 15, 20 years, it's not a startup, right? That's their only interaction with technology. 

So, when they don't understand that, and they're still trying to pick things, or to your point, they're reading The Economist or the Financial Times print, right? They don't do the online subscription, those are the have nots, right? Generally speaking, they just don't have the access, the acumen, the domain expertise that... We've always talked about pattern recognition to figure out what's a good deal, what's bad, what's whatever in the middle. And those people, I think, frankly speaking, control a lot of capital, right? They are a bigger industry than other people that are insiders, right? You're getting to know a lot of them. We have a Twitch co-founder in there. We have someone that used to run NBA China, who saw a lot of media and the interplay between sports and technology. We have an advisor who is a Silicon Valley whisperer, who is in Zanbato, [Adapower 00:21:40], Wish, and all these great companies at the seed round, right? Seed series A. These are the haves, right? These people, we're never going to tell them, "Oh, you should do VC this way," right? We don't need to. But if you think about everyone else who is not that ex-CEO, right, not a co-founder of a Snap, or a Twitch, or a Discord, et cetera, there are a lot of other people there, right? 

And then when you drop down to asset management, where these people have never touched VC, and all the capital that they either advise, manage, or control, they are basically on the outside looking in. It's not to pity them to say they're poor, because they're obviously not poor. But in terms of asset allocation, and the three of us living, breathing and loving venture capital, innovation investing, diversity, inclusiveness, et cetera, we want to proselytize and spread the word and spread the wealth, right? So, I would say that those people are the have nots, and those are the people that stand to gain the most from the productization and the curation of venture capital that Revere's about. 

Jeremy Au (22:42): 

That's awesome. Definitely, I think the people who are winning are the asset allocators who are the have nots and don't have access to Silicon Valley. And of course, by extension, people who have invested assets with them also benefit as well, which ranges both in geography, as well as in terms of distribution. I guess the second winner would be emerging managers, would you say that? 

Eric Woo (23:07): 

We absolutely do believe that, right? So, there are precious few access points and avenue for emerging managers to get consistent capital, right? So, if you overlay the founder journey and imagine all these first time fund managers themselves who are entrepreneurs, we call them ventureprenuers, venture capitalists and entrepreneurs, then they're absolutely going to win. Because if we can introduce new modes and approaches for how they can get capital, and that can be very much indirectly, right? So, as Revere creates our managed products and different strategies, and we have an online portal, through our brand, through our curation, if we get that trusted capital on board, then that funnel stream that trickles down to the emerging manager category. And I think what's fascinating, having invested in emerging managers for 10 years, the people, the diversity, the inclusiveness that is happening within that emerging manager category. This is truly the talent that up to this point, did not exist in venture capital. 

So, I think there's a fabric of how that investor profile and how that is going to shape the capital that is going to go into startups. That, to me, is something where there's a whole nother leg to the upside, because we have such different perspectives of these investors that are now investing in these startup companies. 

Jeremy Au (24:47): 

Yeah, that's amazing. And if I may, I may also say that other people who win are startups that did not fit into the traditional Silicon Valley mode because they are in a different geography, or because they look different, or they don't pattern match right with what has succeeded before. And so, you're getting a whole new batch of startups and founders who are going to get new bets from these ventureprenuers or emerging fund managers. And because of that, actually, I'll even go one step further, I'll say the world benefits, right, because the future has to be created, right? In the future, obviously, things have to be managed, and change has to be accommodated for those who can't catch up. But it's a great experience when technology trickles out, right, as well. And so, I think it's amazing that I think you guys, by bringing down the barriers of capital for asset allocators, the have nots, you help the venture fund, managing fund, entrepreneurs, as well as the emerging founders that are underrepresented, which then leads to consumers who are underrepresented in today's Silicon Valley led world, right? 

Eric Woo (25:59):That's right. We 100% agree. 

Christopher Shen (26:03): Absolutely, absolutely. 

Jeremy Au (26:03):So, who wins, and the question then becomes, naturally, who loses, right? So, who loses? Is it exorbitant 

management fees? Is it... Well, who loses? 

Christopher Shen (26:17): 

That's a long list too. I think anyone who's basically using an information advantage, or benefits from opacity, or just a lack of information, right? A lack of transparency into price discovery, it's not going to be very good for them, right? We know enough brokers, placement agents, people that have an access or they create the demand, they create the supply from the demand that they foment for like a ByteDance, right, SpaceX, Stripe, all these different names that have been floating around for the last two years. All those brokers, those secondaries funds, and those types of players that thrive off of the inability to figure out what the price is for these assets, they're the ones who stand to lose the most, right? That's just... If you have companies like Zanbato, if you have JP Morgan building in an internal process to help their bigger whale clients get access and pricing information, and you have all these secondary exchanges, like our friends at AngelList, obviously CartaX, et cetera, et cetera, and the thing that we build around just sharing information, they stand to lose, right? That's pretty easy to go from there. I would also say, I'll let Eric rant on the management fees issues and the stuff I would complain anyway, but it always sounds better coming from an insider. 

Eric Woo (27:53): 

Yeah, I think anyone historically, where their business model relied on dangling capital as the value add, they're very much at risk of losing, because capital is flowing into the asset class at such a rapid pace, and from very, very large, sophisticated investors, that it's very much commoditized today. So, what that means is the leverage has shifted over back to the founding teams, those angel investors, the seed investors, the one who really put risk based capital at work when the company was just an idea. So, I think at some point, you have to redefine what access means. And so, if you think about those players in the ecosystem who embrace this idea that says, I have the access, you don't have the access in terms of venture capital performance, that's why you should put your money with me, they have to rethink their business model. So, you can imagine who might be some of those types of firms

Jeremy Au (29:09): 

How do you think they'll react? Everybody's been enjoying the system. It hasn't been a very long system as well. It's been what? Tops, maybe 20 years of struggle to get it up and running after venture capital being invented in Boston, then maybe another 20 years of maybe actually enjoying some access to that. So, what's the reaction, do you think, is there? 

Eric Woo (29:34): 

Honestly, some don't have to react. And that's okay, right? I think that's perfectly fine. I think the entrenched incumbents who are doing a great job of providing exposure, not losing money for their particular clients, if it's, let's just call it a big pension plan, right? It's very hard to win money from a pension plan, but once you're in, it's very sticky capital, right? As long as you do what you need to do to make sure that you can deliver the minimum threshold returns. So, I think there's a lot of people, by nature of the stickiness of the capital that they're managing, they don't have to react. But what it does mean is they are not the only players who are playing the game. It opens up. 

Christopher Shen (30:24):It's not the only game, yeah. It's not the only game in town. 

Eric Woo (30:27): 

So, that's where we think whether they react or not, we're somewhat agnostic to it. There's clear differentiation of what we're trying to build that's very different than the traditional models. So, again, we're not saying they're going to die, but we think that there's different ways of accessing the asset class, and there's new entrants trying to attack that, including ourselves. 

Christopher Shen (30:54): 

Yeah, I would say, to Eric's point, that the big top 50 GPs, right, or the early movers in Southeast Asia that we all know, they'll do fine, right? The stickiness of the capital, known brands, they know what they're doing, absent the GP getting in a fight, or imploding, or something, or doing anything stupid, they're going to be okay, right? That's just the name of the game, and there's enough capital servicing enough companies out there for them to keep doing what they do and doing it well, right? But then, if you think about where Eric came from, right, a fund of funds, right? What's innovative about a fund of funds, right? Myself, on the outside sitting in, we had just said, "Okay, let's just stick to our lanes. I'll fight tooth and nail not to get an Andreessen, Sequoia, Benchmark, but I'll drop it down to a tier three fund," right? Get my top half, maybe lower quartile, whatever returns, and just call it a day, and go find money elsewhere. Or Eric just stuck to his fund of funds, and doing fund 27, fund to fund vintage, right? 

There's not this innovation, right? And I think us coming on together and looking at this as an acknowledgment that the old models aren't necessarily broken. They'll still do fine, some of these models, but I think adding in different layers, this customization, this prioritization, the way the financial engineering and the really wizardry that we've seen in public markets, or you can slice, dice any asset that can be traded with some transparency and pricing information, whatnot, how many derivations of something swaps... Eric can talk about swaps later on? The ingenuity that you see in the public markets, in real estate and all these other asset classes, why can't it be here, right? VCs are smart, cool companies. We're doing really interesting stuff too. Can we inject some of this innovation into innovation investing, and then see where it sticks out, right? So, that's where we see it. I think there'll be losers and whatnot, but at the end of day, we want to service people, again, going back to the have nots, that are a bigger and bigger growing group than the haves. 

Jeremy Au (33:04): 

Okay, so two arguments here, right? You're saying, okay, for the current market, only the lazy folks will get out-competed by this new branch and and tranche of emerging leaders. And the ones who are established and fed will continue to maintain some level of edge, leadership role in the current ecosystem. And then what you're also saying is that you're expanding the market, right? And so, that's less competitive, less painful. That's the picture. 

Eric Woo (33:35): 

Well, and Jeremy, we're going through a phase of transition, right? So, if you look at all the innovation cycles, the Gartner Hype Cycles, there's always some phase one, phase two, phase three, and we're very much in phase one of how the asset class approaches are being disrupted. So, you're going to get a lot of players, you're going to get a lot of hype of a lot of different models, but those mature incumbents, they're not dying away, right? It may take a long time. So, it's going to be... What I think will be fascinating is, since we are in that first part of the hype cycle, the pace of the innovation, the pace of the discourse of this disruption is happening very, very rapidly. So, what that means for us and also the incumbents included, is if you decide to take this step, to iterate or change your business model, you have to be very, very receptive to pivoting, right? And the good news for us, since we are in that startup mode, we can iterate and pivot very quickly by nature of being small and nimble, whereas a lot of these big firms, they can't. 

So, as you mentioned, maybe in a few years from now, let's talk and let's see where this settled out. We have this recorded, and we can see who we thought were the winners and losers, where did they ultimately turn out? And so, as somebody who's a casual observer, I think it's going to be a fascinating movie to watch over the next few years. 

Jeremy Au (35:17):Definitely. Well, looking forward to that retrospective when we're hopefully 10 years older, and hopefully 10 years wiser. 

Eric Woo (35:24): 

And hopefully, we made you a lot of money. 

Christopher Shen (35:25):And 10X insurance, right? 10X insurance. 

Jeremy Au (35:29): 

Well, you can host me on your yacht. I'll just bring a bottle, right? So, I think there's a truth here, right, which is, I think we're seeing this wave of productization of venture capital, right? You have venture capitals that love venture capital products. And we still have AngelList with the rolling funds, and obviously, Eric, you've had experience with that. So, we're seeing a lot of, you said, different ways for people to access the capital markets that were formerly private and opaque, and at least get in in a way that has the portfolio diversification built in, that has the... I love the weird risks, that idiosyncratic ironed out, which is obviously better, like you said, for investors that are currently less sophisticated or still entering the market. Doesn't that cause that whole dynamic, where... Everyone in VC is complaining that startups are overvalued, and it's heating up. So, this is just like pouring more gasoline to this giant fire of people who are raising up pitch tags, and... 

Eric Woo (36:46): 

To me, it's the tip of the iceberg, right? We're only seeing the top of the iceberg. And you may complain that that tip of the iceberg doesn't look good, but what you don't know is all the innovative founders, innovative startup companies that are below the surface, right? Whether they're in stealth, whether they're not known, whether they're going to be created. Because the one thing that I think is fundamentally different, and given your presence in Asia, and Chris's background in Asia, it was socially unacceptable to say you're going to be a founder, right? Historically, you had to be a doctor, a dentist, you had to go to a good university, get a good job, get your pension. 

But that whole concept of stigma around starting a company or going to work for a startup company, it's completely different. It's completely different. And this is what encourages me as somebody who has been in this asset class for 10 years, and this is what brings me back to that point about what's below the surface, that huge chunk of the iceberg. We're just paving the way for more and more generations, larger scale of entrepreneurs, right? And so, we need to build that fabric, that foundation in terms of how you access the asset class to be ready, to be equipped for this next wave that comes behind the wave that we're in now. So, to me, that's what I think is fascinating. 

Christopher Shen (38:16): 

Yeah, from a macro perspective, going up 30,000 feet, there's always going to be too much money in the system, just with accommodative monetary policy, governments putting more supply in, trying to tamp out volatility, blah, blah, blah, blah, blah, right? Inflation's obviously coming back. Unemployment's a little choppy. But all in all, everyone is telegraph that they're going to accommodate what's going on in the market and make sure that things don't go crazy like in '08, and '12, and for a few weeks in last year, in 2020. So, all that saying, in addition to Eric's point about more people coming in, where, I think we're in Asia, right? So, Asian parents like dentist, doctor, lawyer, right? If you have to do this, do it well, and not bring shame to our families. Now, that's changing, right? The kids these days, you can talk about being a TikTok influencer, putting YouTube videos, families make several million dollars off kids doing toy reviews and stuff like that. It's changing, right? It seeps into the culture and changes. 

And one thing I would also add is that following consumption patterns and trends, secular trends as opposed to macro going on right now, is that's a moving target. Because what's going on right now, and the money that we're throwing in and leading into the next wave of iteration, that is just... It's like technical analysis, right? You're looking backwards a little bit to do things in the future, but you're not looking, say, five, 10, 15 years beyond, because most people have to generate returns on a quarterly basis, and that's what they got to do. So, if you're talking about things related to how AI can defend against quantum, quantum cryptography, as well as really sci-fi crazy stuff, we're not even looking at... Most people aren't looking at that, right? So, being that steward and pushing more capital toward this innovating as things move along in this timeline is awesome, and it's what we all signed up for. 

Jeremy Au (40:12): 

Wow. Okay, so let me... That was really interesting, right? Because I'm not sure whether the listener gets how interesting this conversation is, right? Because, okay, so you're saying is that all these VCs who are currently an incumbent, and they're crying into their champagne and glasses, onto their Patagonia vest, and saying, "Boo-hoo, these deals are really hard to get in, and I blame people like Revere for getting more stupid capital into the system." But actually, you're saying a couple levels, right? The first is saying, number one, it's not you, it's the Treasury, right, going... Right, right? Printing cash into the system. And obviously, this is it jacking up the cash flows into the public markets, the late stage private markets, the large check sizes, the other LPs, okay, got it. So, you're saying, one is, you're not the root cause, right? There's a broader root cause at a government macro level. Well, we'll have another chat about that.

Eric Woo (41:16):I wish we were the root cause, because if we were the root cause, that means you'd be like, that's 100X that’s

Jeremy Au (41:22):review dollars, right? 

Eric Woo (41:25): Yeah, yeah. 

Jeremy Au (41:26): 

Okay, so there's that piece, I agree. Now, what you're also saying is, okay, the tip of the iceberg, right, there's a bit of... What we're seeing on the public news is like, yeah, to some extent, it's a snowball dynamic, where there are people who raise a ton of capital and who knows what the investment returns are for those. But we talked about this earlier, right, one of the winners are those founders who never got a bet, right? Because their wrong geography, or they're doing something too hard like space, or biotech, or nano, right, or whatever it is, or quantum. And then now, these people, these verticals are going to become possible because the capital is now going to move with that bias towards the future, right? So, new verticals open up, new geographies open up, new types of founders open up. That's really interesting. 

Christopher Shen (42:15): 

Yeah, just, the follow up to that is in the '40s and '50s, after World War II, and you think about what Stanford University did, where the faculty were encouraged to... They were encouraged to start their own companies, their side gigs, right, before side gig became a millennial, Gen Z thing, right? This was happening in the '50s and '60s, right? Defense research, DARPA, all these different things, it was a moving target, because they were doing emails, I would say, the predecessor emails, I would say, were invented in the late '60s, maybe '70s, in terms of script that was passed on. It was very slow, it was on the Ethernet, but that that foundation was there, right? If you talk to people, they're like, oh, my God, the apex of jet technologies, hydrogen bombs, DARPA, Ethernet, and stuff like that, big computing, whatever, that was really awesome for the '70s, right? But then in the '80s, you saw personal computing, Apple, Microsoft, et cetera, et cetera. So, it's always a moving target, right? 

I would love Revere to be the problem, the root cause of inflation and excess liquidity in the markets. I would love to be... I'm not Janet Yellen, right? So, unfortunately, you guys are both Berkeley people, we're not Janet Yellen. But it's one of those things where it's a moving target. So, what we do now, obviously, forebodes for what's going on in the future, but it's hard to pinpoint one certain issue, or one certain trend that lets this become linear going forward. And I think going back, it could be founders that are neglected, or not from represented groups, or in four corners of the world where no one invested. It could be that too, right? But then that curation element comes back in, where guys like us have to go find those deals, because if everyone's still pounding on the door of Andreessen, Sequoia, and Benchmark, those types of founders or companies or ideas do not get the mainstream press that the others do. 

Eric Woo (44:11): 

Yeah. Jeremy, think about it this way. So, as Chris was talking about it, I was thinking of a very simple framework, or almost like a thought process. If you think about innovation, historically, was chasing the capital. Today, it is the other way around. Capital is chasing innovation. And so, if we study history, and look at other boom, bust cycles, we're in that historical timeline how we're seeing these shifts in both directions. So, if you think about, let's pick the dot com bubble and bust, right? So, a lot of capital, a lot of momentum, a lot of excitement, companies going public at high valuations. When you actually examine the underlying factors, those startup companies, those dot com, the pets.com, that wasn't fundamental innovation. It was just iterative business models that says I'm a copycat of X, Y, and Z. So, clearly, that framework doesn't hold in terms of capital chasing innovation, right? It was still innovation chasing capital. 

And so, what gets us excited in terms of the timing of building a company like Revere, the empowerment of emerging managers is, if you do the drill down underneath the surface of the types of companies, the types of technology that is being funded from venture capital, these are absolutely amazing things. Climate tech, food tech, biotechnology, enterprise software that creates better productivity, brings down cost, mobility, right, that touches all forms of the consumer buying behavior. This is truly innovative business models, right? Innovation, and that's why capital is chasing it. So, as long as that thesis holds, as long as that premise that we can credibly look at each other and say, "This set of companies is truly doing something innovative," then I think we are on the right path. The moment... And again, maybe this is a nod to our cousins in the cryptocurrency space, the moment you look at something without the rose colored glasses, and say, "This is not innovation. This is just a white paper that's saying the same thing in different words," then you've got to question things like valuation. Then you've got to question the existence of capital chasing that innovation. So, not to get too philosophical, but I think that's a general rule that I think is easy to live by. 

Christopher Shen (46:54): 

It separates the men from the boys. Or, sorry, whatever you want to call it, right? Whatever analogy you want to use. It's a big difference from speculation and all this other crazy stuff that's going on, and then what true innovation, innovation investing technology development is, right? And I think when you have that pattern recognition, you can sift through it, it's good. But then the other stuff that gets foisted on people that are the have nots, right, that don't have that skillset to go through that. So, again, trying to solve for that issue as part of the mission at Revere. 

Eric Woo (47:28):Jeremy, it looks like your head is going to explode. Did we just pump too much into... Too many 

thoughts and ideas? 

Jeremy Au (47:37): 

No, it's amazing, because it is so meta, right? We're talking about the future of the world. We're talking about future of startups. We're talking about the future of venture capital, and we're talking about the future of the productization of venture capital. So, there's so many layers to go. I just want to bring it back to the both of you, right? So, when both of you think about the fact that there's going to be always continued productization and innovation, obviously, there's a wild ride. AngelList continues to roll out more products. And I think we see more folks build up more academies and different protocols about, where's the gain? What values do you think you both would hold on to in the future to get ahead of the competition? 

Eric Woo (48:26): 

It's hard. Staying ahead is hard, because there's a lot of smart people, there's a lot of well funded people, right, trying to attack this problem. I think it's still very much for me, again, as you recall, we think about the world of venture, of supply and demand. In terms of how I stay ahead of the game in terms of supply, is where am I needed most? I ask myself this question, is where am I needed most? And to me, where there is somebody who's an aspiring investor, somebody who's thinking about raising their first fund, those are the people who are most in need of the structure, the advice, the help with fundraising. And so, if we continue to be in the service of that category, which is growing every day, and if we continue to double down on that, we will reap the fruits of those relationships, right? Because same way as you invest in a founder when it's just an idea, they remember you for it, right? And they will make sure that there'll be dividends to be repaid back. And so, that's what holds us to how we think about this competitive dynamic. 

And the good news for us, that part of the ecosystem on the supply side is so noisy, right? Unless it was your full time job, it would be impossible for anyone else to really understand the people, the personalities, the community that is being built and developed. And I know Chris has a similar line of thinking when he thinks about the demand side. 

Christopher Shen (50:09): 

Yeah, I would say Eric runs the supply side bunch better than me. As an allocator investor, I get through a rare, do the big unpacking on different layers, because he just knows that I cut through the noise on that side of the ecosystem. I think on the demand side, it's just recognizing where pockets of capital come up, and what they're looking for, right? Because I always use the example of you could build the greatest FinTech fund of funds, right, whatever... A fund of FinTech funds, or whatever category you want to insert as a describer or descriptor. But if no one wants it, it could be the greatest thing, you could promise 10X, 100X, whatever, most people aren't going to buy it, right? You don't want to trot out another FinTech, AI, whatever fund. If you're not an expert, you're just trying to waste people's time and trying to ride the wave, right, that type of thing. 

So, I think for us on the demand side, obviously, if you talk to... The old joke goes that if you talk to 100 family offices, they're going to want 100 different things, and whatever number you want to use, right? So, when you extrapolate that to RIAs, private wealth managers, and all these different other institutional investors, they really do want different things. But if you can identify and hone in, because you have that track record, because you've invested with them, you've helped them, you've done favors, they've done favors for you, you guys are more friends than anything, right? Just, hey, let's do something together, then that becomes a little more interesting, in that when we talk to people who are just pure tech entrepreneurs, right, or bankers trying to do matching and random stuff, they've never sat in the shoes of an allocator before. So, how would they understand identifying the right things for them, as opposed to forcing or imposing what they want to do on other people, right? 

So, I think that is the thing that Eric and I, when we started out, we weren't going to just try out another consumer fund, or SAS fund, or whatever, and impose our will on other people, right? We see, again, on the on the supply side, cutting through the noise, finding the right people, the right deals, and going on the demand side, again, a lot of noise on this side as well, but identifying these trends, again, through our macro and secular trends discussion, and Janet Yellen. Can't believe we've got Janet Yellen in. When we try to identify this and do this recognition, then we build products, and we connect supply and demand so that no one wastes their time, right? I think that's why what we're doing is, I guess, special or unique compared to a lot of the other business models that we've seen. 

Jeremy Au (52:50):Awesome. And to wrap things up here, I love for both of you to individually share just a little bit about yourself in a sense of when in your professional career have you been brave? 

Eric Woo (53:04): 

Well, I think anything... Anytime you leave an existing firm or organization to do something that's entrepreneurial, it takes a lot of bravery to do that, right? And again, this is not to overlook the fact that every single founder has to be brave in that respect. I would say, for me, there's a lot of brave moments when I think about taking a first time fund manager to my investment committee, right? And maybe there's a little bit of track record, maybe there's not a lot of track record, but definitively, I know I spent a lot of time. I've gotten to know the individual, and I've gotten to see how they interact, and how they invest, and how do they think about the market? And so, I think there is also this element of bravery where you build conviction, right? And it's an often used term, adventure. But getting to conviction and convincing other people in your team or others around you, there's absolutely an element of bravery, because there's failure, right? Because not all of them will work. And then when there's failure, it means you have to put yourself in a position to be successful or to fail in that regard. So, I've lived through that as an LP in venture funds, especially with emerging managers, that I've also lived through those moments of bravery where you step out and do something on your own. 

Christopher Shen (54:38): 

Yeah, not much to add to that. I think our jobs, obviously, we get to talk about ideas, and it's awesome, I think, compared to people who are in the military, who are law enforcement, firefighting, when you actually have to be really, really brave for your life, and your physical proximity depends on it, doesn't hold a candle to that, and I will be the first to say that. But I think when we talk about life before COVID, right, the ability to get on an airplane and go do whatever, and look at new locales, understand new things. I think for me personally, and for a lot of people, I think, that either have been in Chinese, when they came over from Asia to the US or UK, and then moved back, I was the reverse going the other way around. I grew up in the United States, and then went back to Asia. I think once COVID... Hopefully, the vaccines will get out, people will do what they need to do protect themselves, et cetera, the bravery around going to different places, and understanding the cultures, and so the business practices and just the people of somewhere where you didn't grow up in, right? Making friends that don't have either Mandarin Chinese, Cantonese, or English as their native languages, things like that, right? 

I think that bravery trickles into understanding the world. And then with things opening back up, land of opportunities are usually in places where you do not first look, right? It's not usually in your backyard, because you know your backyard. So, I would just leave with that. I think my move to Beijing in 2006 set me on a path that I would have never ever imagined. And it corresponds to meeting the closest friends in my life, my business partner, Eric, and family and all that. So, I would just end with that. In terms of geographically, always be brave enough to venture beyond the known, and see what's out there, because you really don't know how it's going to change you. 

Jeremy Au (56:40): 

Amazing. Wow, thank you so much. Well, just a recap for everyone and for myself, I think there were three things that I really appreciated and took away from this conversation and discussion, right? I think that first of all, of course, is about a problem, right? The problem of the current gatekeepers and incumbents of venture capital, who are intent on transforming the world, but are not so intent on transforming themselves, right? And as I now remember, do unto others what you wish others to do unto you. So, disrupting the world and disrupting venture capital. And I definitely see, I think, a lot of the aspects about how tightly you gate kept, how tightly cloistered everything is, and how unfair that is. 

The second thing that was actually really interesting was actually the ripple and consequences down the stream of when you succeed, it's not, of course, not just you succeeding and me succeeding as an angel investor, but also, the emerging fund managers, the LPS who are have nots, and then the downstream founders who would never have gotten a bet, and therefore, the customers would never have got a shot to have their life transformed due to geography or vertical or even theme, right? So, I think that's amazing. And I think the third thing that was really interesting was, of course, I really enjoyed, was, of course, hearing both of your founding journeys, in terms of how you think about the business from a very sophisticated point of view, obviously, as former asset allocators and venture capitalists, but also, from the shoes of a founder, right? So, you already have your own entity and approach, right, and product. So, it's interesting to see both of you hold on, and have, honestly, very deep empathy for so many people around the table, right, all four sides of the table. The asset allocator, the incumbent fund manager, the emerging fund manager, and the founder. So, very different groups of people that we switch between. 

Christopher Shen (58:49): 

I joke around, I think if we didn't have empathy, we'd both be... Eric would be back in doing CDOs and collateral debt swaps, and I would try to be a hedge fund manager. No offense to CDO people or hedge fund managers. 

Jeremy Au (59:04): Yeah, that's how we will become Janet Yellens now in the future, right? Yeah, in 30 years. 

Christopher Shen (59:08): Janet Yellen. There we go. 

Jeremy Au (59:10):Awesome. Well, thank you so much, Eric and Chris, for coming on the show. 

Eric Woo (59:13):Thank you, Jeremy, for having you and believing in us. We appreciate your support. 

Christopher Shen (59:18):Thank you so much, Jeremy. It was a lot of fun. Thanks. 

Jeremy Au (59:21):And for those who want to know more about Revere, yourselves, where should they go? 

Eric Woo (59:26): 

Well, two ways. Go the website, www.reverevc.com. And then the portal, if you're an accredited or up investor, check out the portal, sign up for an account. We can look at curated opportunities across emerging managers, as we talked about, direct deals, as well as Revere's own turnkey branded products, where we try to apply index and ETF methodologies to give you thematic, sector, and geographic exposure to venture capital. Thanks, Jeremy. 

Christopher Shen (59:55): Thank you. Bye-bye.

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