Three Decades of VC/PE Investments in Asia – with Axiom Asia Founding Partner Edmond Ng

Hi everyone, welcome back to the Harbinger VC Podcast. Today we have joined us Edmund Ng, who is a founding partner at Axiom Asia, one of the top performing private equity fund of funds that invests across venture, growth equity, and biodes in a greater Asia region. Axiom has had a stellar run since 2006, recently closing $1.8 billion for the fund 6, managing about $7 billion in total, so they are well capitalized to continue back and growth in the region. Edmund shares with us his formative experiences, including what it was like to join GIC at the height of the Asian financial crisis in 1997, and lessons learned. Edmund describes the founding of Axiom Asia, what it took to survive in the early days, and some of Axiom's best investment decisions. At the same time, Edmund discusses challenges and tough decisions that fund of funds must make with regards to their managers, as well as the differences in private equity investments across the age and region. Finally, we cover some of the shifting market dynamics in China from key technological and commercial trends to financial liberalization and the role of the Chinese exchanges on featuring investments in the market. Hi Edmund, thanks so much for joining us today. As is a customary on our show, before we dive into the details of your story, the careers and investor, as someone who's experienced first-hand the Asia financial crisis in the 1990s, the early endings of the Chinese economic growth in 2000s, and through a lot of the internet and technology driven boom this past decade, which has resulted in very large companies, so $100 billion companies like Xiaomi or Clashel in China to shoppies and the grabs and gojeks of Southeast Asia. Could you start by telling us a bit more about yourself, where you're from, what are some of your forms of experiences before you jump in? Sure. So I was born in Hong Kong when it was still a British colony. Both my parents moved to Hong Kong in the 1950s from Shanghai. My grandparents were from the Jiangsu province and also North and China. So from a very young age, I learned to understand Mandarin, Chinese and Cantonese. Although Cantonese was the only dialect that I could speak as a kid, I picked up Mandarin only after I met my wife when I was a junior in college. I can still order food in Chinese. So in the 70s and the 80s, the Hong Kong economy, as one of the four Asian tigers, was flying at the time. My parents were business owners and really benefited from this trend. Since a young age, I got to travel a lot to different places in Asia and also North America. Recently, a Taiwanese businessman asked me how best to describe Hong Kong. My answer was actually one that I learned from my social studies class in elementary school. And that is, Hong Kong is an entry point. And to me, it's not just an entry point for goods, but also for people. Many of my parents' friends had the goal of moving to another country. Usually, it's Australia, Canada and the US. So Hong Kong people are always looking for better opportunities. Which makes the place a kind of dynamism that you could not find anywhere else. It was truly a city that never slept. People moved there from mainland China to look for better opportunities and then they moved to the West for even better opportunities. So I first visited the US when I was six years old. We went to see some of our relatives and friends in Los Angeles and San Francisco. I think I fell enough with the place right away. It was hard for a kid not to like all the space that you get in the US. Most people in Hong Kong, even the decently wealthy ones, still lived in apartments. It seemed everyone in the US lived in big houses. And I made it my goal to study in the US one day. So when I was 11, my father had to move to Taiwan for work. At the time, I was enrolled at a very good public school in Hong Kong. So I decided to stay in Hong Kong with my grandmother to finish my junior high studies. Eventually, I went to the US as a tentator in a boarding school in Los Angeles. And funny enough, after three years in Clamont, California, I was convinced that I could not lead a suburban lifestyle and I needed to get back to a city. So I applied to really just colleges in big cities like New York, Chicago, and Los Angeles downtown. So I was fortunate enough to get accepted by Columbia in New York, which I believed at the time to be the greatest city in the world, just quoting from Hamilton the Musical. And it was also at Columbia that I decided to pursue a career in finance. So when I first went to Columbia, I thought I would study civil engineering. Because I like physics a lot. And I like building bridges, idea of building bridges and other infrastructure. But I had to give up that idea. Because I still do have a pretty severe allergic reaction to dust and dirt. So visiting construction sites just wasn't a good idea for me. And while at Columbia, quite a lot of my friends were talking about going into finance, I guess being in New York and all. And then cities like New York and Hong Kong are very expensive. I think it was just natural for people to think about getting a job that can pay for the college tuition and also cover the cost of living. So I ended up measuring an industrial engineering, which was the closest thing to finance that the engineering school at Columbia office. And I subsequently went to Stanford to get a master degree in a major called engineering economic system. I think that the department has changed its name to management science and economics now. Oh, sorry, it's management science and engineering. So I guess my final year at Columbia and my time at Stanford, I started reading books about the finance industry. Some were recommendations from friends and some were just random reading. And I read books like Reminacence of a stock operator, Liars poker, Fiasco, among others. But the one that I found was interesting was barbarians that engaged. Yep, good book. So classic. So I've always been a fan of war histories. And the image of a bunch of barbarians laying siege cities really appealed to me. And then private equity became the subsect in finance that I wanted to join the most. And fortunately for me, the government of Singapore investment corporation, GIC, just happened to be recruiting from Stanford for its alternative investment divisions. And GIC already at the time had a global investment program with offices in Singapore, Hong Kong, Tokyo, San Francisco, London, and also Frankfurt. I also really wanted to see how Singapore was like. As you know, there had always been this rivalry between Hong Kong and Singapore. Right. And I just thought it was good to see what the rival looked like. So it was the perfect opportunity for me. And so I accepted that offer and went to Singapore. And that was in 1997. So a lot of stuff happened that year, right? Is that when the financial crisis began there in the regions? Yes, yes. Yes, 1997 was truly an eventful year. And particularly for Hong Kong person, because that's the year when Hong Kong sees to be a British colony. The handover ceremony was on July 1st of 1997, which coincided with the day of the day I started at GIC. So I didn't get to watch the handover ceremony on TV. Wow. Yeah. What timing. And of course, the next day, July 2nd, the Thai government decided to abandon their currency pack to the US dollar. And the Asian financial crisis officially began. No, I think I look back and I think I've always just been a very lucky person. And it was just great working for a company with such a deep pocket. The crisis definitely hit the performance of GIC at the time, right? But, you know, but GIC has such a large program. It was at the time still under-invested. So, the Asian financial crisis actually presented a great investment opportunity for us. However, it was actually very hot to do deals. Most of the good assets in Southeast Asia, most of the good assets in Southeast Asia were owned by big Southeast Asian families. And they were all tough negotiators. Looking back, I would say, you know, I was probably too conservative in pricing some of these assets. And then now I learned the lessons. You know, insisting on buying companies at historical average valuation multiple is probably not a good strategy. Because both the revenues and the earnings of those businesses were way down. So, yeah, we need to be mindful of that. And then some of the other lessons I learned was that that could be a great friend when things are going well. But it could also really kill a business when it is on the way down. I think to this day, I'm still adverse to using too much debt in our investments and also in my personal finance. And other lessons with the, you know, in many emerging markets, enforcing minority shareholders rights or debt holders rights could be very difficult. And then also some of the most successful businessmen in the region, they turn out to be some of the most unscrupulous ones as well. Can name names, but definitely there were a lot of people not honoring their contracts at the time. And it's not just a businessman, even the governments. Governments can, you know, even government contracts could be avoided. And I think to this day, I don't like businesses that rely too much on government businesses. It's a very different world in the emerging markets. It's not like in the more developed markets in the US and also the Western Europe. Yeah, yeah. It's fascinating to hear that over a past couple of decades, what do you feel has changed? Yeah. So the Asian financial crisis mainly just hit Southeast Asia and also Korea as well. So I can't really say how the system has changed since then, because I think the system just hasn't been tested again. When we talk about global financial crisis, it seems like it actually didn't hit Asia that hard. China had been on a rise since 1997. And I think much of the regional economy was more dependent on the growth of China. And China did very well during the global financial crisis. So yeah, so the system hasn't been tested. So I don't know. I think for China, China has actually become a lot more sophisticated. You know, my time at GIC is, you know, we've always been able to exercise our minority show, those rights, maybe just take a little bit more time. To do things, it's just like, you know, for example, redemption rights, if your counterparty doesn't have money, they just don't have money. So you just have to wait for them to find that money to redeem your investment. But it's really, I think GIC's operating experience in mainland China had been very good. And I think that carries over to Axiom Asia as well. So we really haven't had any problems. Right. Well, see how things develop. Getting back to some of what you're sharing, I'd like to get to Axiom Asia, which is the fund that you found with a few other partners in a little bit, and also spend more time on China, kind of what's going on on marketing, things like that. But you mentioned GIC. And GIC is a highly reputable investor, highly reputable investor, and they're a very comprehensive investor and quite large. So I just want to, like since you started with them back in 1997, so today, what are some of the major changes or has GIC evolved anyway since that time? I'm really glad that I started my career at GIC. And maybe because the pay there wasn't very good. So people were just much nicer. And they were very helpful to junior members. So-- and also with GIC with the global presence, I got to work in Singapore, the San Francisco Bay Area, Hong Kong, and also Beijing. It also worked for many, many bosses, built a lot of great friendship there. And by and large, I got along with all my co-workers and bosses extremely well. And at the time, I got to meet a lot of top private equity players as well, and get to learn from the successes and mistakes over the year. So that was just a good experience around. So GIC doesn't really like its former employees to say too much about it. But I think it's safe for me to say that GIC is really one of the oldest and most established institutional investor in the private equity market globally. It started committing to private equity and VC funds in the early '80s. And was among the early investors in KKR and Sequoia funds. It also had a long history of doing co-investments. I think some of the most famous Silicon Valley companies were actually backed by-- well, I wouldn't say completely backed by GIC. But the GIC was investors in some of these Silicon Valley names early on. So to be able to work at such an organization, it's a really-- I just felt really privileged. It is truly an amazing organization, just like the people who had the foresight to start it in the first place. And these people, and they were really the founding fathers of Singapore, the country. They also determined that right at the start, that GIC could afford to take a very long-term view in making investments, which was why they could start investing in private equity funds and venture capital funds. So the changes after I left is-- like during my time, GIC just kept growing. And after I left, it became even bigger. I think the deployment pace of the GIC private equity program now is probably more than 10 times the size when I was still an employee in 2005. And I would say the biggest change at GIC since I left would be its stance on publicity. When I was an employee there, one of the key negotiation points was anonymity. We go out of the way to make sure that the GIC name would not be mentioned in any media. So we would basically have this clause with our fund manager saying that you cannot tell people that GIC has invested in you. Same with the portfolio companies, you cannot use the GIC name in any media release. But now you see GIC's name all over the page. So. So that's a really, really big change. And I think it's important. 'Cause it makes it easier for GIC to do deals. - Yes. - So I think it's a great change. And so former employee, I just feel very proud to see GIC everywhere. And also getting more respect. - Yeah. Certainly. And as I mentioned, GIC has a sterling reputation. And it's really interesting to get your kind of insiders perspective. And what was like working there through the years did not realize that there were some of the, I guess, major early backers of those KGR Sequoia. And it seems like they laid a groundwork for more coin investments and kind of finding different ways to increase returns to the LPs. So that's very interesting. I mean, Singapore is just an incredible example of nation building and seemingly kind of continuous excellence of investments too. So thanks for sharing that with us. So it'd be good to get to the fund that you found it was actually in Asia. Before we kind of talk through some of the investment work that you've done there, could you first share a bit more about what was the origin of the fund? Like who are the key other partners that you worked with? What was initial thought process? How did you try to formulate the initial investment strategy? Yes. So, I guess, after seven years at GIC, I was getting a little bit bored and I've always wanted to have an entrepreneurial experience. So in the middle of 2004, so remember July 2004, I tended my resignation. But GIC asked me to stay on until they could find someone to replace me. So after tendering my resignation, I stayed at GIC for seven more months. So I actually during that seven months, different people within the GIC, different people from different departments of GIC started approaching me and asked me if I would like to join their department or move to another office. I was based in Beijing at the time. So it was natural for Singaporeans to feel that Edmund must really, really want to go back to Singapore. And then of course, the US offices called me as well. But anyway, I made up my mind to leave. So right, pretty soon after I left GIC, two of my former bosses at GIC approaching, and they were still employees at GIC at the time. And they have separately tried to convince me to join their division. But yeah, so they say, it was like, and they basically came to me and say, hey Edmund, we are thinking about setting up an Asia-focused private equity fund of funds. Would you like to join us? Yeah, and, and, and, you know, it's, you know, I've always liked the fund of fund business because I forgot the year, but in 1999 or 2000, I was tasked by my boss in North America at the time to look into the fund of fund space. So I've looked at, I basically evaluated all the fund of funds, you know, active in the US at that time. You know, likes of Habibest, you know, Adam Street and I think Habibest, oh, sorry, I mentioned Habibest already, but Horsley Bridge, and a few others. And, and I thought it was just a brilliant business idea. So, so, so, so when, when these two gentlemen came to me, I was like, sure, let's do this, right? And of course, you know, they were still at GIC, so I was really the only person who could, who could do a lot of the grunt work. So, so that was, that's, that's how I got involved into the founding of Axiom Asia. And then of course, Axiom Asia was only formally set up in early 2006. Got it, got it. Okay, and when you set it up, so this is a, this is like 2005 to 2006 period. You're setting up a fund of funds, it's Asia focused. How do you think through what stage of private equity investment to focus on and what are some of the key markets? How did you figure that out? Yes. You know, I was the more junior member of the free founders. And, and one of the reason why they got me involved was because, you know, I was in the Beijing office, so I know China extremely well. And they knew China was going to be an important market for this Asia focused fund of funds. So, so I don't want to claim any, I don't want to claim credit. So, so, so it's really their idea that there would be this demand for Asia focused fund of funds at the time. Yep. So I think in hindsight, that was the best time to start this business. The US and Western European markets were very, very hot. Institutional investors were seeing rec hot distributions from the investments in PE funds in those markets. And they are running out, they were running out of places to put their money. You know, valuations in the West for private equity views were hitting historical high. Yeah. So, so, you know, Asia just looked like a good place to, to put money. And I think after the Asian financial crisis, some of the US and European buyout firms, they set out, outposts to take advantage of cheaper valuations in the market, you know, post, post the Asian financial crisis. And, and they were, you know, around 205, 206, that's, you know, that's when they started to see real returns and real distributions back. So that got institutional investors in the West more interested in Asia as well. What can I also say? It's, it's, um, yeah, an Asia was doing well in general in terms of economic growth, right? So, you know, China joined WTO in 2001. And then, you know, started growing at an extremely fast pace. And the demand coming out from China, you know, was driving growth in other Asian countries as well. And it's not just the other emerging economies, right? It was also the mature economies. I think Australia, Japan, South Korea, or benefited from, from the growth of China. Yeah. So, so, so, so, so, couple with, you know, investors starting seeing real returns coming out from Asia private equity. You know, people just want to invest in Asia. Yeah. But then, of course, of course, you know, I think the Western institutional investors, they realized that the cultures in Asia could be quite different from that in the West. And this coupled with the language barrier. Made investing in Asia on their own seemed like a very dangerous proposition. Yep. So, the Western institutions, you know, what they were looking for is some local guides to help them build their program here. Yep. Yeah. Accents. And then, yeah. And then, GIC was already very well well known in the LP circle in the West. So, I think a group of investment, investment professional coming out from GIC seems like a very safe bet for, for them. And we managed to raise a $440 million fund. Yep. This was in 2006, right? This is in 2006. The final closing was in 2007. And we weren't the only people who saw this opportunity. So, if you, I'm sure, so we did a study one. So, from 2005 to 2007, there were more than 30 Asia focused private equity fund of fund spawn. Wow. Okay. So, competition for us was pretty fierce. And there was no guarantee that we could raise a second fund. Let alone, you know, six funds. (laughs) Yeah. So, to make matters worse, the fund of funds business model was actually being challenged in the West by gatekeepers like Hamilton Lane and Stepstone. So these firms, you know, Hamilton Lane and Stepstones, they are really in the separate account business, right? And in a separate account, typically, the investors pay a much lower fee than what they would have to pay for fund fund managers. So I would say we were fighting for our survival, you know, and actually many of our old colleagues from GIC do not think we could survive. Yeah, so for me, Accimacy was definitely an entrepreneur experience. Yeah, yeah. Besides looking after our investments in China, I was also the CEO and CFO of the firm. And there was really no money for the founders in the business for our first six years of operation. So my, you know, my initial thought was, you know, Accimacy has been very successful. And I thought, you know, the entry point in China in five to nine six was probably fairly good. It seems early use before the mobile internet boom in China, for example, and some other mega trends. And I thought that Accimacy, you know, benefited greatly from entering early, working hard, doing some good deals and clearly being quite successful as a fund of funds. But what you said earlier was, you know, it was very difficult in the early days. And it was very competitive with many other fund being launched around the same timeframe. So the, it's the simple question for you is, you know, what did it take to differentiate against somebody's other fund of funds? You know, what did it take for you to both survive succeed and continue to raise large amounts of capital from your LPs? (laughing) - Awesome. - Talk to you later, yeah. (laughing) - Yeah, so, so maybe differentiator for Accimacy, we were probably the only truly, or Asian outfit. Most of our competitors at the time, they were, they were outpost set up by other fund of fund managers in the US and Europe. And maybe we just understood the market a little bit better than they do. So, we got our strategy right. Yeah, and so I think that's really a key differentiator. And then all the partners, right? All the decision makers at Accim Asia live in Asia. All right, we don't have an investment committee sitting in the US or in the UK on Switzerland. So it makes, it made us react faster to, I guess, changes in the market. So I think that's really the key differentiator. And I talked about, you know, so you also earlier asked about, you know, our investment strategy and focus. So it could be a little bit, yeah, I think that sets up of hard as well. So, so, you know, there are, there are also some of our fund managers that emerging market fund of funds. All right, so we never marketed ourselves as an emerging market fund of funds. Right, we made it very clear to our investors that we were at, we are in Asia focus fund of funds. All right, so we will invest in both the emerging markets in Asia and also the mature markets in Asia. And we weren't just going to do bio funds. All right, we are going to invest in bio funds, growth, equity funds and venture capital funds. - Yep. - And I think depending on where the institutional investors come from, they react very differently to this strategy. I think a lot of the Europeans, you know, because back then the venture capital funds in Europe didn't produce good returns. So they were very adverse to venture capital. Right, so when you tell them that you have, you're gonna have significant venture capital exposure, they'll just say no. (laughs) No, thank you. - Okay, no, just think. - But that was the wrong thing to do. So I think a lot of our peers, they started out putting a lot of money in bio funds. And, you know, so, and I guess bio returns from Asia, just wasn't that great. So it made it difficult overall, especially in that period, because of the, because of the, because of the global financial crisis. So the major, if you think about it, the major, actually the biggest bio market in Asia at the time was Australia. - Okay. - And, you know, the, now looking back, the Australian investments made, you know, during that period, they didn't do too poorly, but it took them a long time to exit. - Yeah, yeah. So, I think when, then suddenly a lot of institutional investors, when they kind of compared the investment performance of managers in the US with that of Asian managers, they were saying, you know, we're actually not getting that much more alpha by being in Asia as a wide balder, right? So, I think for, for fun, a fun manager is that, that have a very high up focus, they suffer. - Right. - So, but we have growth equity in venture capital, which performed phenomenally during this period. So, we just have better returns to show. - Got it. - So Edmund, are you able to talk through some of the investments that you've made over the course of these, I suppose the early years, and then even over the past decade. - Yeah, so this is the, I have to be sensitive to what I say, to underline investments, because sometimes when you mention some names, and you don't mention others, and people get unhappy, but I think some of the, we are fun or fun. So, rather than talking about no-core PDs, we should talk about some of the managers that, - That's right. - Yeah, we back. So, I think, so I'm gonna mention these three names, because they're very well known. And I think people cannot, we will not get jealous when I mention these names. I sure. The first one would be capital today, which is a growth equity fund based out of Shanghai, started by a lady called Kathy Xu, who used to work at Barring Asia. And I think she decided to set up capital today, because Barring was more focused on buyouts, and Kathy wanted to have the flexibility to do some venture investments as well. Capital today was the, they were the first institutional backer of JD.com. It became a very successful investments for them. So, you know, very proud to be associated with capital today. The other would be your good friend, DCM. DCM have really back a string of good Chinese e-commerce companies, right? I guess the latest major, except being Quysho, but they have also back companies like VIP shop earlier. So they have done well. And then another one is a Gauron capital. So this is a fund set up by three gentlemen coming out from IDG capital in China. And they are also, I guess, the Series A investor in Pingdo or PDD. Scotcha, yeah, I mean, all these funds have performed extremely well, and their investors are highly reputable in China. And, you know, I guess part of understanding a fund and to extend possible the top process, the decision making behind the success that most of the media or the outside world sees is not just the winners, but also the also, you know, what are some of the harder decisions. So to the extent possible, are you able to share some of the, it's more difficult conversations internally or what are some of misses or things that you wish you had done differently? Yeah, so this is this one is hard. I think we are, I think conceptually, we have always known, but in actual, you know, execution, it's all, it's, it has always been hard. And I think it's hard for everyone. It's, it's, it's, it's, you know, private equity is a relationship business. You do in-depth due diligence on a fund manager or, you know, on a, on a company. You became very, very close to, to people that you invest in. So I think one of the most difficult decision to make is when to cut off these relationships. Right. And it's easier if the relationship just completely screw up right now. And they just, they just did very poorly. And it was, then it became, it's, it's easy to break off those relationships. But the worst with the people who, you know, in the past have actually made a lot of money for you. But they are right. But they're, they're performance, the recent performance just aren't that impressive anymore. So we continue to struggle with this. It's, it's basically when to cut off these relationships. So, so, yeah, we, we have to, we have to get better at that. Yep. Yep. Yep. Yep. And there's this vary by asset class or category. For example, you know, based my understanding for venture, you know, good investors or good investors, although there's different ventures and different, you know, market trends and what's interesting in terms of very over a period of time, you know, and it seems to me that private equity and some of their later stage, investing could be a bit more consistent. You know, I wonder what your view is on that. I mean, is it like how, how, how might that dynamic affect we describe earlier on a difficulty of cutting kind of certain relationships? Yeah, I think, yeah, you, that's a good point. I mean, it's of course, when we say performance, we look at both absolute performance and relative performance, right? So, it was just a, it was just bad ventures. I think we could, we could cut people's own slack. But the, make a question is if you, you know, if you, if you keep missing those, you know, the best companies in each cycle, because that they're these cycles, right? I mean, every, you know, every now and then there's a new concept, and you need to make sure that you are in those, you know, in the best companies. Because that's how you generate more deals, right? You, you, you, especially in venture is like, oh, usually the best companies also produce the best entrepreneurs. And then if you have that relationship, then you could, you could, you could, you could back those, you know, the people coming out from these great organizations that set up them, right? Back them early. So, so it's really important to do that. So, so yeah, we look at that for, I think another problem is really, another tough decision is, is just we have big believer that fun sizes is an enemy to return. Fun size is an enemy to return. You know, that it's easier to manage a small fun. It becomes harder and harder as your fun size increase. So it's, it's at what point do you, do you think a fun is too big for the market? So I think that those are the toughest decision is that it's because the good managers, people chase after them. So they increase their fun size. And then that's the harder decision, right? This is like, okay, when do you say that this is this is big of fun for them to manage? Yeah, yeah, totally fair. I mean, when I look in the broader market, whether the US or China just, there's few funds that are very super disciplined and repeatedly raised at a similar size, I suppose in the US benchmarks, a fairly good example, they only have what like five, six GPs, when doing something comparable for many ventures. But then you have some of the larger funds, a six things, and some of the examples that really are getting larger and have more media presence, larger operating value addition type teams and things like that. I mean, the VC business model itself is based on great investing kind of picking out winners and a little bit of luck as well. But the business model itself is like, at least to me, is not necessarily the most scalable business model, right? It's not like a tech driven driven business is still a bit more manual. I get what you mean by that dynamic, at least on a venture side. In terms of, you know, because Axon Asia also does growth equity and private equity and buyouts, I was wondering, you know, perhaps we could spend a bit more time on those categories as well. So you mentioned a couple of fun managers that invested in in China, you know, the few that we mentioned earlier, what about some of the growth or buyout managers, whether in China or broader Asia, they thought were very compelling, they can share about. Growth equity. So when I was still at GIC, I think there was a very clear distinction between what growth equity, both growth equity deals and venture capital deals, right? Usually it's growth equity news are just companies that have a initial profits. You know, venture capital, you know, investments in companies that are not producing profits, sometimes not even revenues. So that's how the things are but now, now the distinction, it's really blurring. Most of the growth equity deals that we see, you know, are investments in companies that are still losing a lot of money. So that's that's so it's actually more late-stage venture rather than growth equity. So I think the dynamics is very similar to to the VC market, right? And and and and it's really about but the difference between the VC fund managers and the growth equity fund managers is I think by the time when the growth equity firms get involved in a particular space, the first round of competition was already over. Yep, this is a very different dynamics from I think from what you see in the US. It's usually there there wouldn't be that many people competing in the same space in the US, but in China it's you know it's once you have a good idea, it's not it's not uncommon to see 30 competitors coming up, right? I think you know I think of the best example would be Groupon, right? So Groupon in the US came up with this group purchasing ideas and then and then the Chinese felt that was a good model so they raised money and then they're probably like 30 or even 40 group buying companies in China. And and ultimately Groupon itself didn't really do that well and and the group purchasing model you know on the laptop on a PC just just didn't really take off in China it well it took off but it didn't really make people that much money, right? So so so the growth but but you know but the growth capital guys when they when they start looking at the group buying space the first round of competition was already over so they're really just looking at a handful of companies and you know so so I guess it's it's about identifying which one is the best company and try to get into it so it's it's very much about winning a location okay it's less so about yeah I would say there's some some investment judgment as well because because at that time there would there would still be a few competitors in the space but but it's just a lot easier by that time to determine which one would be the ultimate winner so so so it is yeah I feel it's it's very much about a location and and that's why that's why the and it's not just the growth equity funds adventure capital funds as well they face the same issue right they they're always fighting for a location I from what I'm from what I understand you don't see that in the US as much And because of that, the growth equity fund managers and the VC fund managers in China need to keep a much bigger team than their peers in the US. It's about staying current. It's about getting in front of the entrepreneur. It's, you know, you hear stories about how managers in China, the partners, they will have to wait for the entrepreneurs in the elevator lobbies and just try to get like 5-10 minutes of the entrepreneur's time. And within that 5-10 minutes, they have to convince the entrepreneurs to work with them. So it's a different game. And growth equity in China is very much like that now as well. Yeah. So for buyouts, buyouts is buyouts is a different market. I think it's, you think about this that's China growth equity and VCs mainly China. But for buyouts is we talk about the Missouri economies in Asia. We talked about Australia. We talked about Japan. We talked about South Korea. And definitely competition level in these countries are not as intense a stat in China. You don't see that many new managers pop out every year. But they have the same challenge. It doesn't require a lot of competition to start a bidding war. But yeah, so because the buyout fund managers, you know, they tend, they usually train investment bankers and management consultants. And they, they, you know, I think they look at views in a pretty similar way. And, you know, and buyout, you know, to certain extent is about the leverage. So as long as, as long as the manager is established in the market, you know, they have equal access to, to, to good financing. So I think they're always just competing at the margin, right? Maybe one partner just know the space better than the other, which allows them to fit the slightly higher price than the competition and they get the deal. So, so for the, so yeah, so for the buyout funds is it's, you really just. Look at the network they have in their local market. So that's two markets as well. That's definitely a pan Asian buyout funds. And these are much bigger players. They look at the news. So XC a measure, we stay away from that space. So we are looking for, you know, for the smaller fund managers that play in the lower market, right? Because that's where that's where the relationship matters. So, so yeah, I don't think you can find truly, provide through deals anymore. But that relationship still counts. So, you know, as long as, you know, you know, manager is offering a fair value, you know, the, for the business, the business owner would do a deal with, with the person that they have a better relationship with. Got it, got it. So Edmund, as you talk through, well, I suppose early stage through private equity, through, through late stage private equity, this importance of getting allocation to certain deals like hot deals, good deals, you name it. And you also mentioned earlier during a conversation that GIC did some of the directing investments or calling messings, right? Even the 1980s, 1990s and early days. So for XM Asia, how important is allocation and coin investing with your, with your GPs and how do you go about doing that? Yes, yeah. So going back to, yeah, then we go back to XM investment strategy, right? So, I mentioned to you that we are not emerging market fund managers. We invest in both, you know, emerging economies like China and India and as well as mature economies like Australia and Japan. And then because of that, we invest in buyout funds, growth equity funds and venture capital fund. But we still have this one problem, right? So, so, you know, the growth, I would say the buyout funds and a growth capital funds, they provide more stable returns for investors. Right. But still high enough, but stable returns and the venture capital is where we can, we can really get the outlier returns. But even with this setup, we start, we have one problem, which is the, which is the longer J curve that fund of funds tends to have. And by J curve, I mean the period of time when, when the fund would be marked in the negative return territories. So, so so so so co investments and secondaries are very important in helping us mitigate that J curve. Yep. So right from the start, we, we told our managers that we would like to do co investments with them. And the key is, you know, when it comes to co investments again, it's different philosophy, right? So some some of our peers, they, you know, they are so active that they. Almost look like they are competitors to the GPs. We are very careful with this, you know, we work with our GPs. We don't compete with them. So, so, so it's really just maintaining good relationship with them. You know, you know, and you know, I think the key is, I guess it's reaction time. So in the beginning, GPs are always worried that if they, you know, they showed the LP a deal, their LPs may not do it and they, and they couldn't close the deal because their LPs couldn't, couldn't commit. So, so it takes time to build. To build that, I guess, build up the confidence level of the GPs in XM Asia. But, you know, if you are, but, but our experience is, you know, you just need to react quickly, right? So they show you a deal. You know, give them a yes or no answer as soon as possible. Right. So, so they, yeah, so you don't, you don't, yeah, you just don't drag them on. Is this typically a case where the GP does not have enough capital and or like, let's say like they exercise their provider rights. They don't have a ton of capital left. They need some more capital. They like to offer it to the GP or is it more of a case where, you know, they have a good deal. They can't invest in it, but want to create some value for the LPs. What does that dynamic look like between the two sides? Yeah, so I would say usually is, it's the deal is too big for them. Okay. So, in the buyout cases, you may have a fun measure that only have 500 million dollars. You know, they, they are trying to do a hundred million dollar deal. So, so, so that's that's that's the opportunity for us. And then I think you was you write on on the on I guess some of the venture venture investments and growth investments is if the GP doesn't have the money to do the to take up their prorod of portion in the later rounds and, you know, why not give it to the LPs. Yeah, that makes sense. I mean, there's a decent synergy there. Okay, good. Well, it's really helpful to kind of get that perspective. And I feel we kind of essentially mapped out to an extent, actually, is approached to Asia, some of the buyouts in the mature markets and then seems like China has a steady dose of a venture and growth equity. And we talked to some of the secondaries and and coin investments as well. I think for the last period of our conversation, we can kind of bring the focus back to China. You know, you do spend a lot of time there and I believe you're you're heading back there later this month, right from Taiwan. Okay, that should be that should be exciting. A lot of stuff happening there. It's basically back to normal. So you have a very, you know, from a fun, fun perspective, you have a both a detail, but also a high level broad perspective and what's going on in the market. Could you share a bit more about what you're seeing? What are some of the categories of trends that you're particularly excited about and talking to your GP's about. Unfortunately, I don't think I can surprise you with any great insights here. Okay. Yeah, I think most of our fund managers are still looking, you know, at companies in just the well known high growth sectors like B2C, ecommerce, B2B, business services. social media. social commerce, healthcare services, biotech. I think those are still the hot areas. We do have, we are in the midst of a technology wall between US and China. And that has, and then I guess the space that is most talked about is semiconductor. So I think, I think China is very keen to build up as semiconductor industry. So I think there will be a lot of government investments in the space. And I think we're just talking to most of our fund managers even the ones that traditionally had not looked into hardware. They are looking at, they are looking at semiconductor companies now. But I think this space is going to be much more difficult. And in the sense, semiconductor is kind of like biotech. Don't really have proof until you put the product in the market. Yeah. So, so I think some firms will pay significant tuition fees. Ultimately, I think it should still be an attractive sector. But we have to be careful with who we want to back in the space. Yeah. Yeah, some of those companies have extremely high valuations both in the private market. But also when they go public, it seems that the, I don't know, what is a P for some of these companies on a Chinese exchange is like 100x. Yes. And it seems like the government is very supportive of these developments as a put in national security. And so almost it kind of feels like thus far it's been a sign that hey, we want you guys to build real technology driven companies, want you to list it, you know, oftentimes in China these days. And we want you to be rich. There needs to be real tech driven companies and a lot of kind of companies with good tech or like, you know, tech that enables to kind of benefit from that from that. And I want to get your perspective on the, you know, that, that piece as well around the Chinese stock exchanges. Because it seems to me that there's been a lot more financial liberalization in China. There's the, you know, so-called start marketing Shanghai. And then, you know, there's, there's another one in, in the things in and, and many more companies that initially, probably previously would have tried to go public overseas are going public within China. This is not even Hong Kong is, this is actually within China. It's like the Segway Ninebot being one example of a company that had a VIE structure, but was one of the first to issue these CDRs in China. I was wondering, do you, how much do you think about that? And, you know, how might that impact some of your work at AxiMajia? Yeah, we, we welcomed the development, right? For us is just additional exit venues for our investments. So the more vibrant domestic markets become, the better it is for us. Yeah, but I, you know, but, but of course, you know, this thing in China comes with other risk. Yeah, that it's, it's, it's not as, yeah, definitely you get very high valuations, but there are also a lot of restrictions when it come to selling your shares. Right. So you can only sell at a very slow pace, especially if you're deemed to be a, you know, influential shareholders, which, you know, I think some of our managers would be considered such. So, so yeah, you know, I think, I think they're, they're always weighing the, the cost and benefits of going for, for local listings. And, you know, that high valuation, they don't really stay. Right. We have seen, you know, since the reopening of the Asia market for IPOs, was that from 209 or so? You know, it's, you always have this initial pop where, you know, companies trade at more than 100 times earnings, right? Then three years after that, it actually, you know, goes to a more earthly, multiple. So it then, and if you are, if you're not in a hot sector at the time, the valuation can actually get to really low level. Right. Well, then what you see in Hong Kong, so, so I think, I think, I think we need to be, we need to be careful and, and don't be too attracted by, by just, you know, high valuation at the moment. It's tough though. It's really, really tough. I think, on true, on true, entrepreneurs are very attracted by, by these valuations. So, so, our managers always, I think most of our managers, because we, you know, we invest in US dollar funds, right? They, they still prefer to take their company, public overseas, right? If not, the US, Hong Kong. Right. Right. Yeah, but definitely it's, there's definitely a positive development for us. And it's a great development for, for R&B fund managers. And because they were investing in companies that were prepared to go IPO on the domestic market. And, you know, and they probably made these investments when evaluations are much lower. Yeah, because they don't face a competition from the US dollar funds. And now there's this except channel. So, so they, they are, they are really, they're really doing well. Right. Right, right, right. Certainly, yeah. Well, I mean, it does take a experience long-term investors really navigate a lot of these developments. I mean, someone, someone, someone that seems to be in the structural and have long-term kind of kind of pay off. But sometimes there is, there's these hype cycles. I think it's not just limited to, you know, like a 100x PE for a semiconductor company on a Chinese starboard. But, you know, some of the SPACs that are going on, or, you know, we'd look at crypto space, even less stable. Right. Like the, the so-called NFT opportunities are market is white hot right now. And, I mean, I actually, that might be a topic for another day. It's actually quite fascinating. And some of the, I guess, the elements that we'd offer is creating real value today. But, yeah, back to your previous point, yeah. Like, these type of things have been out of time. But, really, it takes a disciplined investment approach to, to manage a well. So, you know, wish to you and team best of luck with your continued success. Maybe one last quick question, Edmund, if you have time, is going back to you and going back to XM Asia, you know, what is, you raised quite a large vehicle recently over the past quarter or two. It seems like you're growing your team quite well. What are you looking ahead to? What are you excited about? What are you looking forward to over the next period? Yeah, I think we are still just at the beginning of the Asia private equity boom. So, I think the best has yet to come. Yeah, I think one of the, I wouldn't say I would look forward to it. But, I think some of some of the things that will definitely happen is, is Asian investors would become a bigger driver of fundraising in the Asian P market. I think right now, you know, unless you're talking about the Remindy Fund Universe and also South Korea, most of the most of the private equity money comes from the West. And, you know, we are seeing the emergence of Asian institutional investors. But they are, at this point, they're still more interested in growing the exposure to the US and Europe. Mainly because diversification, because they already in Asia and they feel like they should build the exposure overseas rather than staying in the home market. But, but I think Asia is still where the growth is for years to come. So, so if the returns here stay robust, I think a lot of this Asian institutional money will come back. And, and I think the market will, will be better for it. Okay, we're still very excited about China. to me you know trade war tack war. a side, I think China will just continue to grow and get stronger. And at some point, I just hope the world will realize that the strength of the Chinese economy does not come from its government. It's really from the desire of the Chinese people to, they want to improve their quality of living. It's just poor people trying to get rich. I totally get where you're coming from with that perspective, having spent some time in China. And also to a product extent, some time in Southeast Asia, visit Vietnam, Thailand, Indonesia, some of these other regions. I think yes, a lot of these Asian markets, people there don't have a great standard of living yet. I mean, some do, some don't. But they work very, very hard. This is especially the case in China. Now, let's say Vietnam as well. So it's very inspiring. And look forward to a world where there's more exchange between focusing all these different nations, get to perhaps spend some time in another country and kind of walk in their shoes for a period as well. I think they have a much better perspective. Yes. Totally agree with that. Yep. Okay, Edmund. Well, thanks so much for your time today. Really fascinating perspective on your investment experience on GIC on Accime Asia. And also what's happening in the market. So I love to be in touch and maybe we'll see you again in the future. Yep. Thank you very much, Adam. Nice job, no worries. Yes. You as well. Take care.