WEBVTT

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Welcome back to The Rate of Change with York

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Wealth Management. As advisors to some of the

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wealthiest families in the country, The Rate

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of Change is a podcast designed to help you in

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the pursuit of burning long -term wealth through

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the insights of some of the brightest minds in

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asset management. I'm your host, Murdoch Gaddy,

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and in today's broadcast, we're joined by Eric

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Chan, co -founder and group managing director

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of Aura Group. Starting out in law, Eric went

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on to co -build Aura into... Asia -Pacific leading

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multi -strategy investment house, spanning venture

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capital, private equity, and private credit.

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Eric's main responsibility is overseeing the

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venture fund, essentially hunting for the next

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unicorn, the next company that's going to go

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10X in Australia. How they structured it is a

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seed stage vehicle, conditionally registered

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as an ESVCLP. where investors commit capital

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via stage calls, gain tax benefits once fully

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registered, and back founders across Australia

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and Southeast Asia. A standout holding they have

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had previously is HOST, H -A -S -T, an AI compliance

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platform already used by, currently used by Telstra,

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Zurich. As Eric points out, the best measure

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of AI success and whether or not he's doing his

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job properly is cost savings. So Host has reduced

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compliance costs by roughly 60%, cut review times

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by 80%, and scaled rapidly from a number raising

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over the years. I'll let him dig into that. On

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the other side, since they do have the capital

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call structure, the other issue a lot of clients

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discuss is... What do I do while I'm waiting?

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So they have available the private credit income

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fund, an evergreen wholesale fund that's delivered

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greater than roughly 9 % since 2017 by financing

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non -bank lenders with short duration loans,

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first loss protection, monthly liquidity. It

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also offers stable income and strong risk controls.

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One thing I really liked, which we get into,

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is the logic that... If hypothetically you have

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a million dollars in a private income fund over

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a four -year period, if that's averaging 10%,

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you're looking at roughly greater than a $400

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,000 income from that fund. You can technically

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use the income from the fund to invest in more

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growth -based businesses like the venture capital

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strategy whilst protecting the capital. which

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I find a very interesting strategy, which Eric's

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going to dig into. Eric also explains why venture

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capital must be run as a portfolio, how to balance

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write -offs against a fund. are the cyclical

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nature of venture capital markets and where they're

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hunting for the next unicorn. Specifically, their

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main attention right now is on AI businesses

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and how to spot an AI business that's actually

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solving a problem instead of a legacy business

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that goes, hey, AI is the new flavor of the month.

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We need to tack on the word AI into some part

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of the business when it's not really an AI business.

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So before we get into the conversation, please

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remember this broadcast is made for entertainment

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purposes only. I encourage you to listen to the

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disclaimer at the end of the broadcast and keep

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your feedback coming. You can reach me at mgatty

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at ywm .com .au. So with that being said, I hope

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you enjoyed this conversation as much as I did.

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So sit back, relax, and enjoy. Eric Chan, Aura

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Group. Welcome to the Rate of Change with York

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Wealth Management. Thanks for having me. Good

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to have you on, Eric. Always good to see you.

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Great lunch we had the other day. That was fantastic.

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We could sit here and talk about that all the

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time, but why don't we begin like we always do

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and why don't you tell everyone a little bit

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about who is Eric, how did you get into finance,

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and a bit about yourself. Yeah, sure. So I was

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born in Hong Kong. Came here, went... I came

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to Australia when I was pretty young, about five

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years old, with my mom and my sisters. I, you

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know, did my primary higher education in Australia.

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Throughout that kind of education process, my

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education process, you know, I actually ran a

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couple of businesses, like little startups, as

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you want to call them now. But, you know, back

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then it was just little side hustles. I actually

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did that with my co -founder, my current co -founder.

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So we did everything from selling secondhand

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books on eBay to building computers for people.

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So we always kind of had this entrepreneurial

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spirit. As we finished university, I kind of

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went and became a lawyer. I worked out pretty

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quickly that I wasn't a very good lawyer. I cared

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everything about the deal, but nothing about

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the legals. So there was a pivotal moment. I

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remember in my life when I decided that it was

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just, it was time to move on. Like I've learned

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everything that I wanted to learn and it was

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time to move on. And that moment was when, I

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can't remember, it was like maybe 1, 2 a .m.

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in the morning, we were on a transaction and

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I was working for probably one of the best banking

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finance lawyers or partners in town. And I remember

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turning around and I just saw my partner just

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slaving away, drafting documents at 2 a .m. in

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the morning. And I just thought, I'm the best

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in town and I'm doing that at 2 a .m. I don't

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think that's what I want to do for the rest of

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my life. So at that point, I decided to leave

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and set up my own business. Yeah, I said it once,

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I said it a thousand times. I love in finance,

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everyone has a roundabout way about how they

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got there. And it's the number of people that

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get into this game, they go, I want to be in

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finance. They end up doing a different thing,

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developer. a phenomenal skill set and something

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completely random and then bring it back into

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finance but wouldn't you agree that like things

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like law accounting uh sales or just sales and

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marketing or or i spoke to a bloke the other

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day who had a it was pretty much like a computer

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engineer right it's just fascinating these particular

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these four or five main skill sets are so important

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as a foundation. And then you bring it into finance,

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into also like a deal or be it property or anything

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specific. And people that are coming with finance

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that don't have that, I actually find they're

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missing out. You know what I mean? Wouldn't you

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agree? The majority of what we do is predominantly

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contract -centric or numbers -centric or AI -centric.

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You know what I mean? It's invaluable. Having

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a law, I wish I had a law background. I think

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I did one subject at Sydney Uni. I think I just

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passed with 66%. I'm like, what the hell am I

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doing? I'm not doing a law subject again. Then

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I knocked over a master of commerce and my main

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thing was all strategy, you know, playing chess,

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you know, like seeing the big picture. But, mate,

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having a law background with contracts, even

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though, you know, 2 a .m. would have sucked,

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but how important is that when you're looking

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at deals and everything now? Absolutely. I think

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it gave me the infrastructure to do a lot of

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things that I did today. A lot of people, when

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they're doing investments that's new to the game,

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they don't realize actually how meaningful it

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is if you kind of understood the legals or the

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accounting side of the transaction because it

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just allowed you to actually understand. or call

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bullshit sometimes on negotiations or when you're

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running your own due diligence or managing your

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service providers. I think that infrastructure

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allows you to be a lot more effective in deals.

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But also, when we started the business, we were

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pretty young. I was 26 years old. I didn't have

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a brand, didn't have a track record, didn't have

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any money, which meant that I kind of had to

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do a lot of things myself. having that legal

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background allowed me to really push out the

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use of engaging lawyers right to the end. And

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even then, I was able to manage how much time

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that they got involved and therefore reduce my

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costs really early in the piece because we just

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didn't have any money to spend on the necessary

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things. I mean, engaging legals and lawyers is

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important, but there are certain parts of it

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where you know as an ex -lawyer that we can shave

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time off. yeah devil's in the details i say but

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yeah look one entrepreneur to another mate the

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legals if you don't understand it you can end

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up spending a lot of money yeah it's like i always

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say it's like engaging a builder like if you

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don't understand how building works you could

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end up spending a lot of money on variations

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a lot of money it's like i gotta get a great

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idea that's fantastic here's the boilerplate

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and then you change it six times like why don't

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my bill just go for a you know 40 grand to 200

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grand i'm gonna make money here again again if

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you but if you don't you need a good lawyer right

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but it's all scale and everything like that so

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you look you mentioned um So just while we're

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on the topic, because this is fascinating on

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the entrepreneurial side. So when you were growing

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this stuff, you didn't need the legal capacity,

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right? And you're building this business. So

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what did you find was the easiest and the hardest

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thing about starting Aura and Aura Group? Yeah.

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So when we started the business, it was actually

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back in 2009. So my co -founder and I, we actually

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came out on our own accord. or left our businesses

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or now in a court. So I, you know, it was during

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the GFC, so I was super bored because there was

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no transaction as a lawyer. At that time, I was

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in private legal. My co -founder actually got

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made redundant because he was at Everest Backhocking

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Brown, which was one of the most spectacular

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blowups in Australia. He came out and he was

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kind of doing his own thing. I was doing my own

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thing. And then eventually we just said, why

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don't we just do something together? And the

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truth was no business plan. um was in place we

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just said we want to do something and but what

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did we want to do we wanted to get into early

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stage businesses but we but how do we do that

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if we had no money then we say well the only

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way we can do is invest other people's money

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right um which you know people call it funds

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management eventually um the easiest part for

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us i think was actually at that time deciding

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that we wanted to basically give it a crack and

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um and do something on our own because it was

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during the gfc anyway so it was you know he he

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was out of a job at that particular point in

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time i was bored um and we just always knew with

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the skill set that we um and the experience that

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we had we can always go back to a job so actually

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making taking the punt as hard as a lot of people

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thought it was for us it was actually relatively

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easy the hard part was everything else which

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was you know we you know we even though we wanted

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to get into investments We wanted to get into

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an area where it was completely niche, which

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was venture capital. And venture capital wasn't

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even a terminology in Australia back in 2009,

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2010. We also, as I was saying before, we had

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no brand, no track record. We were 26, 27 at

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the time, but we looked like we were 16 and 17.

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And it was just like, no one's going to give

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us any money. It was impossible to raise money.

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With the entrepreneurship that we had, we started

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off actually as a corporate advisory business

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because what basically that was, was we leveraged

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up the skill sets that we had to advise other

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early stage businesses, whether it's their business

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plans to helping them raise the next round of

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capital. So for us, it was definitely the raising

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capital bit and actually just getting set up

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was definitely the hardest, but coming out and

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deciding to do it wasn't actually that. Yeah.

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It's fascinating what you just said there. So

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if anyone out, entrepreneurs out there listening,

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right? You can't just go get, look, okay, let

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me rephrase that. Doesn't matter what deal it

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is, the single most important, be it property,

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be it venture capital or anything, wouldn't you

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agree? The most important thing is having a good

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deal, right? But... If you don't have the ability

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to raise the money and bank that deal for the

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deposit, right, the next best thing is to, you

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need to develop a reputation in the market for

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understanding what a good deal is and people

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to understand that. So how good is it when you

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have a consultancy business, which is generating

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cashflow, which is number one, the hardest part

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to pay for everything else, then you need to

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build up your reputation. And then along the

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way, you are looking for a good deal. And as

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friends of mine say, like, say you're looking

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at 200 deals, you're not looking at 200 deals.

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You're trying, you're not saying no to every

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single deal. You want to say yes. You want to

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say yes to the right deal that's right for you,

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right? And only maybe one or two or three deals

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that year or the next two years, maybe a yes,

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but you need to see two, 300 transactions to

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go to say yes, because you want to say yes to

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a transaction, right? And then wouldn't you agree

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that, you know, with the cashflow and everything,

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you're building up your reputation. Then when

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one deal lands, how much easier is it to close

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that transaction? You know, when you're in the

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game. I think, you know, one thing I learned

00:13:53.299 --> 00:13:57.080
over the last 15 years is people or fund managers

00:13:57.080 --> 00:14:00.460
always underestimate what it means to run a funds

00:14:00.460 --> 00:14:02.240
management business or build a funds management

00:14:02.240 --> 00:14:06.240
business. You know, you always have exceptional

00:14:06.240 --> 00:14:09.799
investors that come out of big or small firms.

00:14:10.580 --> 00:14:12.639
They've got great track record, great performers,

00:14:12.840 --> 00:14:15.820
and they come out and they just think, I can

00:14:15.820 --> 00:14:17.840
do this on my own. I don't need the infrastructure.

00:14:18.480 --> 00:14:22.120
because there's no value in it. And it's all

00:14:22.120 --> 00:14:24.659
about me and my ability to invest because at

00:14:24.659 --> 00:14:26.639
the end of the day, people are backing my performance

00:14:26.639 --> 00:14:30.659
and not the infrastructure around me. But 10

00:14:30.659 --> 00:14:34.419
out of 10 times, it would be they realize that,

00:14:34.480 --> 00:14:39.039
fuck, I didn't realize how expensive it is to

00:14:39.039 --> 00:14:42.200
build this infrastructure and two, how difficult

00:14:42.200 --> 00:14:46.340
it is for people to actually raise money, right?

00:14:46.860 --> 00:14:48.919
Because sometimes even if you have the track

00:14:48.919 --> 00:14:52.700
record, historically in other funds, it doesn't

00:14:52.700 --> 00:14:54.820
mean that people are willing to invest into your

00:14:54.820 --> 00:14:57.399
new product, your new fund, because no one wants

00:14:57.399 --> 00:14:59.860
to be the first investment or the first investor

00:14:59.860 --> 00:15:02.500
in the door. That was, you know, we always say

00:15:02.500 --> 00:15:04.399
raising the first 10 million in any fund is always

00:15:04.399 --> 00:15:09.700
the hardest. But for us, not only was that difficult,

00:15:09.980 --> 00:15:12.519
it was also, well, how do you create a sustainable

00:15:12.519 --> 00:15:15.639
business? Being a fund manager isn't just building

00:15:15.639 --> 00:15:17.600
a strategy, it's actually building a business.

00:15:17.899 --> 00:15:20.279
And I think that's a big distinction that a lot

00:15:20.279 --> 00:15:22.860
of people don't realise until they really get

00:15:22.860 --> 00:15:26.299
stuck into it. And so if you're building a, if

00:15:26.299 --> 00:15:29.460
you want to build a business, you know, it doesn't

00:15:29.460 --> 00:15:31.759
start with, you don't start at 10, you start

00:15:31.759 --> 00:15:34.559
at zero. And when you start at zero, you need

00:15:34.559 --> 00:15:38.019
cash flow. Or you can raise, you know, if we

00:15:38.019 --> 00:15:39.519
were a tech business, maybe we would have raised,

00:15:39.519 --> 00:15:42.379
you know, a whole heap of money, but we weren't.

00:15:42.700 --> 00:15:46.159
And therefore, we had to basically just be entrepreneurial

00:15:46.159 --> 00:15:48.980
and kind of hustle our way throughout the beginning

00:15:48.980 --> 00:15:52.240
and generate the cash flow outside of not necessarily

00:15:52.240 --> 00:15:55.639
what we thought was our core business. But I

00:15:55.639 --> 00:16:00.960
think what you need to do very quickly is realize

00:16:00.960 --> 00:16:03.840
over time what is not your core and what is your

00:16:03.840 --> 00:16:06.960
core and kind of reduce the non -core part as

00:16:06.960 --> 00:16:11.289
quickly as possible. The flip side of being entrepreneurial

00:16:11.289 --> 00:16:13.730
is actually everything is super interesting.

00:16:13.950 --> 00:16:16.269
Everything could make money and you could just

00:16:16.269 --> 00:16:18.610
get poured into 100 directions and you'll try

00:16:18.610 --> 00:16:21.470
to do everything, right? Because everything sounds

00:16:21.470 --> 00:16:25.629
interesting. So to balance that, it's really,

00:16:25.830 --> 00:16:29.970
you know, how do I then stop doing the corporate

00:16:29.970 --> 00:16:32.009
advisory stuff? Because, yes, it gave me the

00:16:32.009 --> 00:16:34.950
nice sugar hits of revenue, but it wasn't what's

00:16:34.950 --> 00:16:37.210
going to build my sustainable business that's

00:16:37.210 --> 00:16:39.980
going to build them. most terminal the highest

00:16:39.980 --> 00:16:42.539
terminal value in this business over time um

00:16:42.539 --> 00:16:46.539
and and basically say and be willing to say no

00:16:46.539 --> 00:16:50.759
to that cash flow or that revenue here um as

00:16:50.759 --> 00:16:52.820
you kind of get bigger and you will be able to

00:16:52.820 --> 00:16:54.779
but you just learn to have to learn to say no

00:16:54.779 --> 00:16:58.700
at some point yeah it's a it's a it's a lesson

00:16:58.700 --> 00:17:00.860
that everyone needs to learn but you can't have

00:17:00.860 --> 00:17:03.840
a without having b so with with um the with the

00:17:03.840 --> 00:17:08.359
fund right now right um what what is the fun

00:17:08.359 --> 00:17:10.279
what's the what's the philosophy like where did

00:17:10.279 --> 00:17:12.079
you land as you caught it you know what is your

00:17:12.079 --> 00:17:15.799
core now yeah so i run our venture capital strategy

00:17:15.799 --> 00:17:19.920
inside um at awara which was actually our first

00:17:19.920 --> 00:17:24.200
strategy um within the group um but maybe to

00:17:24.200 --> 00:17:27.720
give you some history on how we where we how

00:17:27.720 --> 00:17:29.680
we got here because right now we don't do just

00:17:29.680 --> 00:17:31.460
adventure we do venture capital we do private

00:17:31.460 --> 00:17:34.259
equity and we do alternative credit but early

00:17:34.259 --> 00:17:38.119
in the game um We kind of had a philosophy in

00:17:38.119 --> 00:17:40.500
the way that we invested, which was we believe

00:17:40.500 --> 00:17:43.799
that in order to invest in Australia, in venture

00:17:43.799 --> 00:17:45.680
capital in Australia, you kind of have to play

00:17:45.680 --> 00:17:47.859
a very different game than any other investor

00:17:47.859 --> 00:17:51.920
around the world. So as to you're going to have

00:17:51.920 --> 00:17:54.460
to play the field a little bit. In Australia,

00:17:54.660 --> 00:17:57.000
while it's a great country, you have a lot of

00:17:57.000 --> 00:17:59.220
disadvantages. We're far from everyone. We generally

00:17:59.220 --> 00:18:02.299
have small markets in most industries. and you

00:18:02.299 --> 00:18:05.500
also have less access to capital than anyone

00:18:05.500 --> 00:18:07.960
else not only because it was nascent it was just

00:18:07.960 --> 00:18:11.799
a small market um what that meant was that you

00:18:11.799 --> 00:18:15.880
you know australia has developed this very capital

00:18:15.880 --> 00:18:19.700
efficient dna um and if you look at some historical

00:18:19.700 --> 00:18:22.680
data like australia has been able to deliver

00:18:22.680 --> 00:18:25.819
more unicorns than any other region per dollar

00:18:25.819 --> 00:18:28.839
invested But when you look at the absolute number

00:18:28.839 --> 00:18:31.400
of billion dollar businesses that have come out

00:18:31.400 --> 00:18:33.339
of Australia, it's not that many when you compare

00:18:33.339 --> 00:18:36.420
to the rest of the world. So our philosophy is

00:18:36.420 --> 00:18:39.299
that if you're chasing billion dollar outcomes

00:18:39.299 --> 00:18:42.619
in your portfolio companies and as your only

00:18:42.619 --> 00:18:45.160
way to deliver the returns that you need for

00:18:45.160 --> 00:18:48.160
your fund, then your probability of success is

00:18:48.160 --> 00:18:51.680
relatively low just mathematically. So the way

00:18:51.680 --> 00:18:53.859
we're kind of thinking about it is, well, how

00:18:53.859 --> 00:18:57.660
do we generate? our venture style returns when

00:18:57.660 --> 00:19:00.460
these companies don't have to reach a billion

00:19:00.460 --> 00:19:02.519
dollar outcomes. And the only other way is you've

00:19:02.519 --> 00:19:04.839
got to get in earlier, right? And which is why

00:19:04.839 --> 00:19:07.519
we focus so much on seed. By focusing on seed

00:19:07.519 --> 00:19:11.500
investing, it allows ourselves to focus, to get

00:19:11.500 --> 00:19:14.279
in at the right valuation, get the right ownerships

00:19:14.279 --> 00:19:16.579
in the businesses so as to be able to return

00:19:16.579 --> 00:19:19.220
our fund even before it gets to the billion dollar

00:19:19.220 --> 00:19:23.769
outcome. So what that meant for us was... in

00:19:23.769 --> 00:19:26.690
vc we wanted to basically continue to build muscle

00:19:26.690 --> 00:19:29.750
around a stage of the investing we also took

00:19:29.750 --> 00:19:33.170
the view that you can't actually invest um so

00:19:33.170 --> 00:19:38.029
you you can't be a um a specialist in terms of

00:19:38.029 --> 00:19:40.609
us particularly industry or sector in australia

00:19:40.609 --> 00:19:42.609
because we didn't feel like the market was deep

00:19:42.609 --> 00:19:46.609
enough at that time or even now but we do believe

00:19:46.609 --> 00:19:49.259
that You know, investing, it is a muscle that

00:19:49.259 --> 00:19:51.420
you get better at as you kind of do it, and which

00:19:51.420 --> 00:19:53.579
is why we wanted to focus on a stage of investing

00:19:53.579 --> 00:19:57.440
as opposed to an industrial sector. But what

00:19:57.440 --> 00:20:00.599
that kind of translated to was, well, actually,

00:20:00.640 --> 00:20:02.579
we don't think that you can actually effectively

00:20:02.579 --> 00:20:04.920
deploy hundreds of million dollars in C -stage

00:20:04.920 --> 00:20:08.440
investing in Australia at that time. Arguably,

00:20:08.519 --> 00:20:11.400
I don't think, I think probably 75 to 100 mil

00:20:11.400 --> 00:20:15.470
is probably the most effective. fund size for

00:20:15.470 --> 00:20:18.609
seed stage in Australia today, but definitely

00:20:18.609 --> 00:20:21.130
not back then, even definitely not hundreds of

00:20:21.130 --> 00:20:23.549
million dollars now or definitely not back then

00:20:23.549 --> 00:20:27.349
either. So what we did, so we said, okay, so

00:20:27.349 --> 00:20:29.589
if we wanted to stay true to our philosophy in

00:20:29.589 --> 00:20:31.990
being, I guess, disciplined and high conviction

00:20:31.990 --> 00:20:35.569
in the way we invest, that's fine. But then it

00:20:35.569 --> 00:20:38.190
means that we're only managing 20, 30, 50 million

00:20:38.190 --> 00:20:40.970
dollars at a time for each fund. But how do you

00:20:40.970 --> 00:20:44.460
create a sustainable business that way? And so

00:20:44.460 --> 00:20:47.180
our decision was, well, rather than kind of just

00:20:47.180 --> 00:20:50.079
do bigger funds and kind of compromise the way

00:20:50.079 --> 00:20:52.799
we wanted to invest, we said, well, why don't

00:20:52.799 --> 00:20:56.140
we expand into other strategies so as to we can

00:20:56.140 --> 00:20:58.599
continue to be patient in the strategy that we

00:20:58.599 --> 00:21:01.119
run and be disciplined in the strategies that

00:21:01.119 --> 00:21:05.019
we run while kind of build our overall business

00:21:05.019 --> 00:21:08.900
by introducing more strategies into the fold.

00:21:10.279 --> 00:21:13.420
And as a result, we kind of went into then. private

00:21:13.420 --> 00:21:16.900
credit, and then eventually private equity. But

00:21:16.900 --> 00:21:20.920
I think one thing that kind of applies across

00:21:20.920 --> 00:21:23.559
our business is regardless of what the strategy

00:21:23.559 --> 00:21:27.059
is, we generally believe that you kind of need

00:21:27.059 --> 00:21:31.519
to solve white space, right? So, you know, right

00:21:31.519 --> 00:21:33.940
now we're in the process of, you know, the business

00:21:33.940 --> 00:21:36.519
is in the process of launching a new real estate

00:21:36.519 --> 00:21:39.640
credit fund as an example with a great partner

00:21:39.640 --> 00:21:43.799
that we're bringing on board. The first question

00:21:43.799 --> 00:21:46.380
was, does Australia really need another real

00:21:46.380 --> 00:21:48.420
estate credit fund, right? Like there's so many

00:21:48.420 --> 00:21:52.339
of them out there. But what we've discovered

00:21:52.339 --> 00:21:54.460
or what we worked out with this partner was actually

00:21:54.460 --> 00:21:59.259
there is white space in real estate private lending.

00:21:59.539 --> 00:22:02.900
And it's in this sort of $1 to $20 million construction

00:22:02.900 --> 00:22:06.180
space where the big guys or the successful guys

00:22:06.180 --> 00:22:08.200
don't really want to fund because it's getting

00:22:08.200 --> 00:22:10.309
too big. And the smaller guys don't have the

00:22:10.309 --> 00:22:13.630
skills and capabilities to actually do these

00:22:13.630 --> 00:22:16.730
loans, right? And as a result, there's borrower

00:22:16.730 --> 00:22:20.289
demand and the risk -adjusted returns also stacks

00:22:20.289 --> 00:22:24.690
up in this space. So kind of going back to your

00:22:24.690 --> 00:22:28.890
question there, today we – so the way that we've

00:22:28.890 --> 00:22:33.009
kind of, I guess, grown our business was I think

00:22:33.009 --> 00:22:36.009
we've actually eventually developed not necessarily

00:22:36.009 --> 00:22:38.450
just a funds management business but a fund platform.

00:22:39.000 --> 00:22:42.059
whereby we can consistently grow or develop new

00:22:42.059 --> 00:22:44.900
strategies within the platform that shares a

00:22:44.900 --> 00:22:49.240
middle and back office infrastructure. And it's

00:22:49.240 --> 00:22:52.119
almost the same as the way I look at VC, funny

00:22:52.119 --> 00:22:55.460
enough, which is it's about people. I want to

00:22:55.460 --> 00:22:58.039
find, like I do in VC, I want to find the best

00:22:58.039 --> 00:23:00.440
founders to back. In this case, I want to find

00:23:00.440 --> 00:23:02.700
the best portfolio managers to back and then

00:23:02.700 --> 00:23:04.740
give them the infrastructure to get them successful.

00:23:06.440 --> 00:23:10.769
No, 100%. Completely agree. It's interesting

00:23:10.769 --> 00:23:12.490
you say that because if you look at the history

00:23:12.490 --> 00:23:14.269
of fund managers, like how many fund managers

00:23:14.269 --> 00:23:16.549
have fallen over? And what's interesting about

00:23:16.549 --> 00:23:17.890
when you go back and look at the fund managers

00:23:17.890 --> 00:23:20.690
that may have fallen over, they're normally just

00:23:20.690 --> 00:23:22.970
being a single asset fund manager. They normally

00:23:22.970 --> 00:23:25.690
just only do one particular thing. And that's

00:23:25.690 --> 00:23:28.910
fantastic when the market's ripping and everything's

00:23:28.910 --> 00:23:30.609
in their favor. But when you get a particular

00:23:30.609 --> 00:23:33.769
winter or a tough time and then you get funds

00:23:33.769 --> 00:23:36.880
being pulled out. you know, it's very challenging

00:23:36.880 --> 00:23:39.019
for them. Where's that money go? The money doesn't

00:23:39.019 --> 00:23:43.740
vanish out of the market. You know, like to me,

00:23:43.740 --> 00:23:47.059
there is a unspoken truth about funds management

00:23:47.059 --> 00:23:50.220
that doesn't get talked about a lot, which I

00:23:50.220 --> 00:23:52.160
think it's obvious, but it just doesn't get talked

00:23:52.160 --> 00:23:55.200
about a lot, which is there's a natural conflict

00:23:55.200 --> 00:23:59.279
between growing a funds management business and

00:23:59.279 --> 00:24:04.480
performing. or staying true to your your strategy

00:24:04.480 --> 00:24:07.940
because growing your funds management business

00:24:07.940 --> 00:24:11.160
is means just increasing the amount of funds

00:24:11.160 --> 00:24:14.440
under management you have in that strategy but

00:24:14.440 --> 00:24:17.359
there's a certain inflection point in your strategy

00:24:17.359 --> 00:24:20.099
where there's too much capital and then as a

00:24:20.099 --> 00:24:22.519
result you have to change the way you invest

00:24:22.519 --> 00:24:28.390
right or you know for example As a fund gets

00:24:28.390 --> 00:24:30.589
bigger, you might have to do bigger deals because

00:24:30.589 --> 00:24:32.589
the smaller deals no longer make sense because

00:24:32.589 --> 00:24:36.170
you can't actually manage as many deals if you're

00:24:36.170 --> 00:24:42.650
only still running small deals. Or otherwise,

00:24:42.829 --> 00:24:44.609
you're kind of sitting on too much cash and you're

00:24:44.609 --> 00:24:49.950
causing a cash drag in your fund. And it's interesting

00:24:49.950 --> 00:24:54.089
because we're starting to see this play out now

00:24:54.089 --> 00:24:57.500
across the industry. across the us but also in

00:24:57.500 --> 00:25:00.359
australia where single asset managers are now

00:25:00.359 --> 00:25:03.420
expanding into other asset classes or doing or

00:25:03.420 --> 00:25:06.599
expanding their strategy um you know we're seeing

00:25:06.599 --> 00:25:09.240
like for example lightspeed in the us following

00:25:09.240 --> 00:25:12.140
some of the other large players like your acs

00:25:12.140 --> 00:25:14.940
and zeds of the worlds where they're they're

00:25:14.940 --> 00:25:17.339
no longer if you kind of look at them they've

00:25:17.339 --> 00:25:20.099
they've now registered as a i think a roa which

00:25:20.099 --> 00:25:22.400
basically allows them to unlock the type of deals

00:25:22.400 --> 00:25:25.289
that they can do where in the past it was venture

00:25:25.289 --> 00:25:27.190
capital but now they can do secondaries they

00:25:27.190 --> 00:25:30.289
can do listed equities they can do debt um you

00:25:30.289 --> 00:25:34.369
know they can do um acquisition buyouts etc now

00:25:34.369 --> 00:25:36.809
if you kind of look at that like they're no longer

00:25:36.809 --> 00:25:39.470
just a pure play vc and they've kind of moved

00:25:39.470 --> 00:25:42.210
into multi -asset and we're seeing that in australia

00:25:42.210 --> 00:25:43.950
like if you look at the most recent air wallex

00:25:43.950 --> 00:25:46.509
deal like some of the funds that have gone into

00:25:46.509 --> 00:25:50.009
that deal like you you kind of honestly say that's

00:25:50.009 --> 00:25:52.230
a venture capital investment it was a series

00:25:52.230 --> 00:25:55.809
f it was a you know I think it was a $10 billion

00:25:55.809 --> 00:25:59.450
valuation. And if you're doing a VC deal and

00:25:59.450 --> 00:26:01.609
you're trying to get a 10x return on that, it

00:26:01.609 --> 00:26:03.190
means Airwallex is going to have to eventually

00:26:03.190 --> 00:26:09.450
be $100 billion. I don't necessarily think that

00:26:09.450 --> 00:26:11.670
they... I mean, it could be, but I don't necessarily

00:26:11.670 --> 00:26:14.329
think that's the chase people are going after.

00:26:14.549 --> 00:26:17.250
So I feel like the mindset and the strategy has

00:26:17.250 --> 00:26:21.490
shifted. And that's partly driven by that conflict

00:26:21.490 --> 00:26:25.039
of... the size of capital that the funds under

00:26:25.039 --> 00:26:28.440
management that you grow. So when we've kind

00:26:28.440 --> 00:26:30.759
of thought about that conflict or kind of how

00:26:30.759 --> 00:26:33.059
it's played out is how do you solve for that?

00:26:33.220 --> 00:26:38.220
Which is, well, in order to do that, we could

00:26:38.220 --> 00:26:41.099
have a platform where you have, where we could

00:26:41.099 --> 00:26:44.299
house a bunch of managers that allows them to

00:26:44.299 --> 00:26:46.460
be disciplined on the size of capital that they're

00:26:46.460 --> 00:26:48.480
raised so as to be most efficiently effective

00:26:48.480 --> 00:26:51.660
for their strategy. without overgrowing but yet

00:26:51.660 --> 00:26:54.200
being able to be a sustainable business because

00:26:54.200 --> 00:26:57.539
you then become a house of strategy right um

00:26:57.539 --> 00:27:00.619
that can leverage off the the infrastructure

00:27:00.619 --> 00:27:05.279
and the cost base across the group um and you

00:27:05.279 --> 00:27:07.599
know while but if you were on a single strategy

00:27:07.599 --> 00:27:09.880
there's no way you can do that and be a sustainable

00:27:09.880 --> 00:27:12.220
business which is why you know unfortunately

00:27:12.220 --> 00:27:15.160
in vc in australia what we're gonna what i think

00:27:15.160 --> 00:27:17.220
we're gonna start seeing is we're gonna see a

00:27:17.220 --> 00:27:20.099
bit of contraction in the market because I love

00:27:20.099 --> 00:27:23.380
the pure play feces in the market that came about

00:27:23.380 --> 00:27:26.359
maybe five, seven years ago. You know, their

00:27:26.359 --> 00:27:28.839
funds are probably sub scale in terms of being

00:27:28.839 --> 00:27:30.859
able to run a business wherever they're probably

00:27:30.859 --> 00:27:33.960
managing sub 50 million. And they're going to

00:27:33.960 --> 00:27:36.539
in this particular market, they're going to struggle

00:27:36.539 --> 00:27:39.440
to probably raise the next fund. And if they

00:27:39.440 --> 00:27:42.039
don't, how do you how do you, you know, even

00:27:42.039 --> 00:27:44.420
if they're on a 2 % on 50 million, how do you

00:27:44.420 --> 00:27:48.809
actually, you know, maintain a business? on 100

00:27:48.809 --> 00:27:52.289
grand a year in terms of management fees. Yeah,

00:27:52.289 --> 00:27:56.390
it makes a lot of sense. So in summary, to run

00:27:56.390 --> 00:27:59.690
a good business, you need multiple strategies

00:27:59.690 --> 00:28:01.869
because as you mentioned, the venture capital

00:28:01.869 --> 00:28:05.269
is a long -term strategy that takes time. The

00:28:05.269 --> 00:28:08.009
equity side can become shorter, but you need

00:28:08.009 --> 00:28:10.609
cash flow through the door, right? And then Australia's

00:28:10.609 --> 00:28:13.950
turned into a bridging loan economy and there's

00:28:13.950 --> 00:28:16.250
demand for it, right? There is demand for private

00:28:16.250 --> 00:28:17.890
credit because why the banks aren't lending.

00:28:18.190 --> 00:28:21.569
So the three main strategies you have are private

00:28:21.569 --> 00:28:24.730
credit, venture capital, and the equities. So

00:28:24.730 --> 00:28:28.150
why don't we just do the private credit first?

00:28:28.269 --> 00:28:33.809
So the private credit, what return would a client

00:28:33.809 --> 00:28:36.069
expect to be in there and what are the mechanics

00:28:36.069 --> 00:28:40.170
behind that fund? Yeah, so our private credit

00:28:40.170 --> 00:28:44.910
income fund, that's going into its eighth year

00:28:44.910 --> 00:28:48.450
anniversary. and that's been averaging about

00:28:48.450 --> 00:28:52.690
9 .9 and a half percent per annum over the last

00:28:52.690 --> 00:28:56.329
that entire period since inception. It's got

00:28:56.329 --> 00:29:00.009
monthly liquidity and it pays distributions monthly.

00:29:00.190 --> 00:29:03.329
It prioritizes capital preservation over alpha

00:29:03.329 --> 00:29:07.190
returns and basically what the strategy is to

00:29:07.190 --> 00:29:10.349
provide in simple terms warehouse lending to

00:29:10.349 --> 00:29:15.180
lenders. such that it allows us to scale by and

00:29:15.180 --> 00:29:18.220
create diversification across the book through

00:29:18.220 --> 00:29:20.019
multiple lenders and multiple asset classes.

00:29:20.279 --> 00:29:23.599
So if you look at underlying loans across this

00:29:23.599 --> 00:29:26.440
strategy, there will be tens of thousands of

00:29:26.440 --> 00:29:29.220
loans in there, which provides real diversification.

00:29:31.359 --> 00:29:36.059
These are all corporate loans or SME loans in

00:29:36.059 --> 00:29:40.809
most cases. And so it doesn't have personal lending

00:29:40.809 --> 00:29:47.650
exposure in it. That fund is now, you know, rated

00:29:47.650 --> 00:29:50.650
by multiple agencies. It's on platform. It's

00:29:50.650 --> 00:29:53.970
an evergreen fund. And it's just allowed investors

00:29:53.970 --> 00:29:57.150
to leverage off the credit wave over the last

00:29:57.150 --> 00:29:59.230
couple of years. But it's one of the few credit

00:29:59.230 --> 00:30:01.569
strategies that's been around for about, you

00:30:01.569 --> 00:30:04.869
know, eight years in Australia. How much is in

00:30:04.869 --> 00:30:10.200
the fund now? uh uh in excess of half billion

00:30:10.200 --> 00:30:15.339
yeah right and the private equity strategy so

00:30:15.339 --> 00:30:19.460
private equity was probably one of our latest

00:30:19.460 --> 00:30:23.980
strategies um although we've um probably about

00:30:23.980 --> 00:30:28.400
seven eight years ago it's um at the moment we

00:30:28.400 --> 00:30:32.130
do predominantly spvs um so we don't have a blindfold

00:30:32.130 --> 00:30:34.109
phone but that's probably the next chapter for

00:30:34.109 --> 00:30:38.170
us um across the spvs we kind of focus around

00:30:38.170 --> 00:30:42.490
um sort of sub quite a sub 100 mil ev businesses

00:30:42.490 --> 00:30:47.029
um you know for people that are familiar what's

00:30:47.029 --> 00:30:51.450
an ev business so enterprise value so um so the

00:30:51.450 --> 00:30:53.390
market cap or the market value of the business

00:30:53.390 --> 00:31:01.460
um and the then these businesses Generally, it's

00:31:01.460 --> 00:31:05.519
a situation where you've got a set of founders

00:31:05.519 --> 00:31:07.980
that are looking at taking some money off the

00:31:07.980 --> 00:31:11.380
table, not necessarily want to walk out the door

00:31:11.380 --> 00:31:15.440
today. And there's still a lot of growth trajectory

00:31:15.440 --> 00:31:18.380
to go. And we kind of come in, we help them take

00:31:18.380 --> 00:31:19.980
some money off the table, maybe fund a little

00:31:19.980 --> 00:31:24.019
bit more for growth. And then we've the plan

00:31:24.019 --> 00:31:26.099
to exit over the next sort of three to five year

00:31:26.099 --> 00:31:29.440
period. and is industry agnostic. One thing,

00:31:29.539 --> 00:31:33.019
and so we've invested across Asia Pacific, but

00:31:33.019 --> 00:31:34.900
one particular strategy that we're looking at

00:31:34.900 --> 00:31:38.079
is predominantly across Southeast Asia. And,

00:31:38.180 --> 00:31:40.440
you know, in simple terms, what we're looking

00:31:40.440 --> 00:31:43.660
at is almost like a time machine kind of strategy,

00:31:43.759 --> 00:31:47.380
which is there are certain industries or certain

00:31:47.380 --> 00:31:49.539
models that have played out really well across

00:31:49.539 --> 00:31:53.930
certain regions, which are similar to... um southeast

00:31:53.930 --> 00:31:57.230
asia um so for example china is a big one all

00:31:57.230 --> 00:31:59.069
right so there's certainly um there's certain

00:31:59.069 --> 00:32:01.130
models or industries that have played out really

00:32:01.130 --> 00:32:04.329
well in china and then we look across southeast

00:32:04.329 --> 00:32:07.069
asia where you know where they're similar where

00:32:07.069 --> 00:32:10.529
which regions have similarities um with china

00:32:10.529 --> 00:32:14.130
across that industry um and then we look at um

00:32:14.130 --> 00:32:16.690
where is the market at in terms of maturity in

00:32:16.690 --> 00:32:19.450
those industries and those in um in those sectors

00:32:20.720 --> 00:32:23.180
and we look at that from both you know capital

00:32:23.180 --> 00:32:25.720
kind of that's been invested in this space but

00:32:25.720 --> 00:32:27.519
also liquidity that's happening in this space

00:32:27.519 --> 00:32:31.799
and we look at kind of you know what could have

00:32:31.799 --> 00:32:35.500
the tailwinds that it's um that those comparable

00:32:35.500 --> 00:32:37.619
countries have received over the next few years

00:32:37.619 --> 00:32:39.960
and we kind of look at every opportunity or every

00:32:39.960 --> 00:32:41.680
business in that space and then kind of make

00:32:41.680 --> 00:32:44.059
our bet in one in what we think is the market

00:32:44.059 --> 00:32:47.160
leader at that time um that has room to grow

00:32:47.160 --> 00:32:51.269
um The other thing that we kind of look for as

00:32:51.269 --> 00:32:54.349
founders maybe just looking to take a little

00:32:54.349 --> 00:32:55.769
bit of money off the table or looking for some

00:32:55.769 --> 00:32:59.130
growth capital, it's also possibly a management

00:32:59.130 --> 00:33:02.529
buyout situation where the people that's running

00:33:02.529 --> 00:33:04.829
the business is really the management team, but

00:33:04.829 --> 00:33:07.549
the shareholders that own the business, the original

00:33:07.549 --> 00:33:09.569
founders own the business that's no longer involved,

00:33:09.769 --> 00:33:12.609
own most of the equity, and then we kind of come

00:33:12.609 --> 00:33:15.650
in and do a leverage buyout, a management buyout

00:33:15.650 --> 00:33:18.849
with the team. So unlike traditional private

00:33:18.849 --> 00:33:21.529
equity, we're not stepping in, taking over operations

00:33:21.529 --> 00:33:23.890
and trying to rip out cost synergies. It's really

00:33:23.890 --> 00:33:27.509
about growth capital. And it's really about working

00:33:27.509 --> 00:33:31.029
with our founders in those businesses to grow

00:33:31.029 --> 00:33:32.930
the business or founders on management teams

00:33:32.930 --> 00:33:36.410
to grow the business. So that's why an SPV structure.

00:33:36.609 --> 00:33:38.970
So essentially every single deal is its own standalone

00:33:38.970 --> 00:33:41.250
transaction. So how does the venture capital

00:33:41.250 --> 00:33:46.039
fund work and why is that different? Because

00:33:46.039 --> 00:33:47.660
it sounds like, well, venture capital is seed

00:33:47.660 --> 00:33:53.940
-based investing, right? I'm just saying, to

00:33:53.940 --> 00:33:56.180
a layperson having a listen, they're like, doesn't

00:33:56.180 --> 00:33:58.240
venture capital just sound like equity investing?

00:33:59.000 --> 00:34:00.920
What's the difference and how does the venture

00:34:00.920 --> 00:34:05.220
capital fund operate? Yeah, look, I mean, let's

00:34:05.220 --> 00:34:07.700
talk about the asset classes. So if you simply

00:34:07.700 --> 00:34:10.099
put, venture capital is much earlier in terms

00:34:10.099 --> 00:34:12.619
of the business's life cycle than private equity.

00:34:15.449 --> 00:34:18.150
Even in venture, you separate it from kind of

00:34:18.150 --> 00:34:20.570
seed to post seed and post seed will be like

00:34:20.570 --> 00:34:24.289
your series A, series B, series C onwards. And

00:34:24.289 --> 00:34:26.190
the way that we kind of define it, because we

00:34:26.190 --> 00:34:28.150
don't, you know, even though we say we're a seed

00:34:28.150 --> 00:34:31.670
stage investor, we don't define it based on a

00:34:31.670 --> 00:34:33.630
naming convention. It's not about the round that

00:34:33.630 --> 00:34:37.510
you raise. For us, it's about, you know, has

00:34:37.510 --> 00:34:40.869
the business reached product market fit? And,

00:34:40.969 --> 00:34:43.210
you know, product market fit could be defined

00:34:43.210 --> 00:34:47.239
as, you know, Does the business or the founders,

00:34:47.400 --> 00:34:52.360
are they solving a problem in a way that has

00:34:52.360 --> 00:34:56.440
a material impact to the way that the problem

00:34:56.440 --> 00:35:00.320
is currently solved? And is they solving a problem

00:35:00.320 --> 00:35:03.239
that's meaningful enough and material enough

00:35:03.239 --> 00:35:06.360
that customers are willing to pay for it? And

00:35:06.360 --> 00:35:09.440
you're just generally seeing signs that we normally

00:35:09.440 --> 00:35:12.480
see is just generally this love for the product.

00:35:14.179 --> 00:35:17.579
that the customers have. And that's kind of sort

00:35:17.579 --> 00:35:19.619
of signs of product market fit in very simple

00:35:19.619 --> 00:35:23.559
terms. And in that particular case, it's not

00:35:23.559 --> 00:35:25.659
like you're late stage investing, even in late

00:35:25.659 --> 00:35:28.699
stage VC and definitely not private equity where

00:35:28.699 --> 00:35:31.480
you've got a set of numbers. It's almost like

00:35:31.480 --> 00:35:33.800
partly a spreadsheet exercise where you already

00:35:33.800 --> 00:35:35.980
know what the defined metrics are. You're running

00:35:35.980 --> 00:35:37.480
spreadsheets and you're kind of doing analysis

00:35:37.480 --> 00:35:40.659
of the business. It's really, it's more predominantly

00:35:40.659 --> 00:35:43.989
on who the founder is. basically building conviction

00:35:43.989 --> 00:35:46.010
on the founder, building conviction around the

00:35:46.010 --> 00:35:48.849
thesis in the market and the problem that they're

00:35:48.849 --> 00:35:51.210
solving, how it should be solved, why it should

00:35:51.210 --> 00:35:54.730
be solved, and the way that they see the world

00:35:54.730 --> 00:35:56.349
about how that problem should be solved over

00:35:56.349 --> 00:35:59.150
time. But then also having a product and having

00:35:59.150 --> 00:36:04.329
signs of engagement on that product. So if you're

00:36:04.329 --> 00:36:06.630
going to distinguish VC and private equity, then

00:36:06.630 --> 00:36:08.670
private equity is a lot later stage. So the businesses

00:36:08.670 --> 00:36:11.110
already have product in market. They basically

00:36:11.110 --> 00:36:14.699
have customers. And it's really about, okay,

00:36:14.760 --> 00:36:17.260
what is the next stage of growth? How do you

00:36:17.260 --> 00:36:20.219
then go from what they are now to expand whether

00:36:20.219 --> 00:36:23.239
in product, expanding to regions or to take more

00:36:23.239 --> 00:36:26.960
market share in the business or across the industry

00:36:26.960 --> 00:36:30.159
or the sector? Generally, these businesses on

00:36:30.159 --> 00:36:33.179
private equity side are profitable, right? Whereas

00:36:33.179 --> 00:36:35.679
in the seed stage side, they may not even have

00:36:35.679 --> 00:36:37.519
revenue or they're just on the brink of revenue.

00:36:40.000 --> 00:36:43.780
So very different deal cycles. So naturally,

00:36:43.960 --> 00:36:46.559
if you kind of think about it, like, you know,

00:36:46.579 --> 00:36:49.099
there's one thing that I think in the nascent

00:36:49.099 --> 00:36:51.079
market, when we first started in VC, a lot of

00:36:51.079 --> 00:36:53.219
people didn't understand or LPs didn't understand,

00:36:53.360 --> 00:36:57.280
which was failure rates at normal, like businesses

00:36:57.280 --> 00:36:59.960
not working or going bust is normal in venture

00:36:59.960 --> 00:37:02.900
capital, right? And which is why it's so important

00:37:02.900 --> 00:37:06.800
that you have to run a portfolio. So when we

00:37:06.800 --> 00:37:11.300
first started in venture capital, because the

00:37:11.300 --> 00:37:12.860
market was so nice and it was so difficult to

00:37:12.860 --> 00:37:14.960
raise money, it was almost a means to an end

00:37:14.960 --> 00:37:18.659
where we started off doing SPVs. But we very

00:37:18.659 --> 00:37:22.519
quickly pivoted away from SPVs into a blind pool

00:37:22.519 --> 00:37:28.480
fund or into a fund structure whereby, because

00:37:28.480 --> 00:37:30.480
we just knew that you have to build a portfolio,

00:37:30.679 --> 00:37:33.400
you have to run venture as a portfolio, whereas

00:37:33.400 --> 00:37:38.340
you don't have that type of failure risk. in

00:37:38.340 --> 00:37:40.719
private equity and therefore you can run it as

00:37:40.719 --> 00:37:44.119
SPVs for as long as you want. The benefit of

00:37:44.119 --> 00:37:47.719
running SPVs is it gives investors that certainty

00:37:47.719 --> 00:37:50.000
in terms of I know exactly what I'm investing

00:37:50.000 --> 00:37:52.800
in. Half the time it's actually I'm kind of backing

00:37:52.800 --> 00:37:57.079
the business as much as I am backing the fund

00:37:57.079 --> 00:38:00.719
manager because it almost allows them to pick.

00:38:01.079 --> 00:38:03.400
Now, there's this like overall, there's this

00:38:03.400 --> 00:38:06.320
up and rising syndication model that's coming

00:38:06.320 --> 00:38:08.260
out in Australia. And look, and I think it could

00:38:08.260 --> 00:38:10.760
work. But I think when they start managing LP

00:38:10.760 --> 00:38:12.820
expectations, that's where it becomes difficult.

00:38:13.960 --> 00:38:16.980
But that's the distinction at the moment. Yes.

00:38:17.079 --> 00:38:20.719
So, Eric, with the VC fund and the SPV, you know,

00:38:20.739 --> 00:38:23.380
how is it structured? So, if we're investing

00:38:23.380 --> 00:38:28.559
with all in these types of businesses, how is

00:38:28.559 --> 00:38:30.739
it structured? Do we just... i don't know does

00:38:30.739 --> 00:38:32.619
an investor just give you half a million dollars

00:38:32.619 --> 00:38:36.800
and then the money's in there for five ten years

00:38:36.800 --> 00:38:38.519
because the life cycle of some of these businesses

00:38:38.519 --> 00:38:41.260
can take a very long time like how do you structure

00:38:41.260 --> 00:38:43.340
the transaction because we've had a conversation

00:38:43.340 --> 00:38:45.440
before that it's done a bit differently but do

00:38:45.440 --> 00:38:47.539
you want to explain how that all works please

00:38:47.539 --> 00:38:51.519
yeah sure so on the venture capital side um so

00:38:51.519 --> 00:38:54.670
first of all we don't do spvs anymore like That

00:38:54.670 --> 00:38:56.769
was something that we did at the beginning when

00:38:56.769 --> 00:38:58.710
the market was still nascent. But we generally

00:38:58.710 --> 00:39:01.030
believe that venture capital has to be run as

00:39:01.030 --> 00:39:04.030
portfolios. So we don't do SPVs in VC anymore.

00:39:04.110 --> 00:39:07.710
We do in private equity, but not VC. And the

00:39:07.710 --> 00:39:10.869
fund structures that we run in Australia, it's

00:39:10.869 --> 00:39:14.730
what they call the SVCLP or the Early Stage Venture

00:39:14.730 --> 00:39:18.849
Capital Limited Partnerships. And what that is,

00:39:18.909 --> 00:39:22.289
it's basically a partnership structure. whereby

00:39:22.289 --> 00:39:26.550
our registration has been, if approved by the

00:39:26.550 --> 00:39:28.929
government, it basically provides certain tax

00:39:28.929 --> 00:39:32.489
incentives for our investors or our LPs. And

00:39:32.489 --> 00:39:35.269
these incentives are things like, you know, any

00:39:35.269 --> 00:39:38.130
returns, whether it's income or capital that

00:39:38.130 --> 00:39:42.230
comes out, it's tax free for the investor. There's

00:39:42.230 --> 00:39:44.989
up to a 10 % tax offset for our investors for

00:39:44.989 --> 00:39:49.369
deployed capital from their capital cause. And

00:39:49.369 --> 00:39:52.150
I think there's a pass -through in franking credits

00:39:52.150 --> 00:39:55.510
as well. What's a capital call? You said capital

00:39:55.510 --> 00:39:57.730
call. What is that? Yeah, so the way that the

00:39:57.730 --> 00:40:00.070
fund works is it's a capital call structure,

00:40:00.210 --> 00:40:03.750
meaning that we call capital as when we need

00:40:03.750 --> 00:40:06.070
it or as when we find opportunities to invest

00:40:06.070 --> 00:40:09.949
in the fund. So let's just say an investor wants

00:40:09.949 --> 00:40:12.909
to invest a million dollars. So they come in

00:40:12.909 --> 00:40:16.610
a million dollars with us up front. And basically

00:40:16.610 --> 00:40:18.789
they're investing off the back of our strategy

00:40:18.789 --> 00:40:22.070
and our track record. So we take that commitment.

00:40:22.989 --> 00:40:26.730
Typically on day one, they might fund 5 % of

00:40:26.730 --> 00:40:29.250
that commitment. So they give us 50 grand from

00:40:29.250 --> 00:40:32.710
day one when we do the first close. And then

00:40:32.710 --> 00:40:35.710
thereafter, as we find opportunities, we'll make

00:40:35.710 --> 00:40:38.269
capital costs, generally between 5 % to 10 %

00:40:38.269 --> 00:40:42.989
capital costs. So progressively... we will over

00:40:42.989 --> 00:40:45.610
the next sort of three to four years call this

00:40:45.610 --> 00:40:51.909
capital until it's fully called. And what happens

00:40:51.909 --> 00:40:58.090
is we combine, in terms of our strategy, we do

00:40:58.090 --> 00:41:00.110
our first check investments and we do our follow

00:41:00.110 --> 00:41:02.130
-on investments in the same fund. So what that

00:41:02.130 --> 00:41:06.630
means is we'll build a portfolio of assets or

00:41:06.630 --> 00:41:09.579
companies. and for the ones that we think are

00:41:09.579 --> 00:41:12.260
potential outliers we'll continue to follow on

00:41:12.260 --> 00:41:15.599
on their future round of capital raisins so we

00:41:15.599 --> 00:41:17.840
combine those two exposures together into one

00:41:17.840 --> 00:41:21.079
fund so you know for the first probably two to

00:41:21.079 --> 00:41:23.199
three years we'll probably call more of the money

00:41:23.199 --> 00:41:25.539
faster because we're building out the portfolio

00:41:25.539 --> 00:41:29.760
and then We will reserve an amount for follow

00:41:29.760 --> 00:41:32.539
-on investments and that reserve will get called

00:41:32.539 --> 00:41:34.900
based on, it's a little bit less predictable

00:41:34.900 --> 00:41:36.780
because it just depends on when the company is

00:41:36.780 --> 00:41:38.480
raising the next round and we want to participate.

00:41:39.539 --> 00:41:42.940
One thing that we've leaned into is one of the

00:41:42.940 --> 00:41:45.360
benefits of a capital core structure is you're

00:41:45.360 --> 00:41:47.360
not sitting on cash, right? So you don't have

00:41:47.360 --> 00:41:51.199
the pressure to deploy capital. But I think there's

00:41:51.199 --> 00:41:54.599
a natural pressure to deploy capital when LPs

00:41:54.599 --> 00:41:57.489
are saying, you know, from LPs where if they've

00:41:57.489 --> 00:41:59.590
committed to something, mentally they've kind

00:41:59.590 --> 00:42:01.849
of set it aside. So they want to deploy it, right?

00:42:02.849 --> 00:42:06.050
And this is general, well, why, you know, if

00:42:06.050 --> 00:42:08.150
you're slowing calling capital. Let's call it

00:42:08.150 --> 00:42:10.510
what it is. It's called cash burn. And if cash

00:42:10.510 --> 00:42:12.650
is sitting in that bank account not being used,

00:42:12.690 --> 00:42:15.610
an investor goes, well, I will pull that money

00:42:15.610 --> 00:42:18.050
out and stick it somewhere else or it's costing

00:42:18.050 --> 00:42:20.360
me money. You know, what's going on? cash back

00:42:20.360 --> 00:42:23.480
so there's this like general conflict between

00:42:23.480 --> 00:42:26.539
well i want to be able to um if i have to call

00:42:26.539 --> 00:42:30.039
the capital faster in order to satisfy my lp's

00:42:30.039 --> 00:42:33.099
sort of expectation then i need to find somewhere

00:42:33.099 --> 00:42:36.280
to stick it so for us is well we don't think

00:42:36.280 --> 00:42:38.500
that that's right we we think that we should

00:42:38.500 --> 00:42:40.260
only call it when we find the right deal and

00:42:40.260 --> 00:42:43.179
which is why actually if you look at our last

00:42:43.179 --> 00:42:45.679
find our 2022 vintage we actually did our first

00:42:45.679 --> 00:42:49.349
close in 2020 so we closed off um we did our

00:42:49.349 --> 00:42:52.110
first close on that fund in 2020 and we started

00:42:52.110 --> 00:42:55.949
deploying in 2020 but actually between 2020 and

00:42:55.949 --> 00:42:58.590
2021 we actually didn't make a lot we actually

00:42:58.590 --> 00:43:00.670
didn't call off capital because we didn't make

00:43:00.670 --> 00:43:02.750
a lot of investment because during a period of

00:43:02.750 --> 00:43:05.010
time we just thought the market was too frothy

00:43:05.010 --> 00:43:08.570
we kept getting priced down on valuation um and

00:43:08.570 --> 00:43:11.269
we were just very slow in deploying and that

00:43:11.269 --> 00:43:14.190
us that was us leaning into the ability to do

00:43:14.190 --> 00:43:15.690
that because there's a capital core structure

00:43:15.690 --> 00:43:19.420
um but at the same time we copped a lot of you

00:43:19.420 --> 00:43:22.500
know criticism from investors in terms of how

00:43:22.500 --> 00:43:23.900
come you're not deploying how come you're not

00:43:23.900 --> 00:43:26.260
calling capital um where every other manager

00:43:26.260 --> 00:43:29.880
is deploying um and i've got this money set aside

00:43:29.880 --> 00:43:32.059
for you that's not really earning any money like

00:43:32.059 --> 00:43:36.320
you know what i do with it um but if i kind of

00:43:36.320 --> 00:43:38.219
look back today like it was probably the best

00:43:38.219 --> 00:43:40.420
thing that we ever did right just being disciplined

00:43:40.420 --> 00:43:43.300
in the way that we deployed um So if you look

00:43:43.300 --> 00:43:46.000
at our 2022 fund, even though it was first closed

00:43:46.000 --> 00:43:49.579
in 2020 and technically it's kind of four and

00:43:49.579 --> 00:43:52.380
a half years now, our weighted average in terms

00:43:52.380 --> 00:43:56.559
of time of us holding that capital from investors

00:43:56.559 --> 00:43:58.960
based on the capital cost has only been about

00:43:58.960 --> 00:44:02.559
two and a half years. How many investments in

00:44:02.559 --> 00:44:05.559
that fund? So that one's got 12 at the moment.

00:44:05.780 --> 00:44:09.420
That's got 12. I want to dig into this a bit.

00:44:09.690 --> 00:44:12.130
Because I've known you guys for a long time.

00:44:12.329 --> 00:44:15.510
A colleague that used to be with you guys used

00:44:15.510 --> 00:44:17.230
to go to school with us. I've known Aura for

00:44:17.230 --> 00:44:21.670
a long time. From an investor and advisor's perspective

00:44:21.670 --> 00:44:24.030
where we look after a client's capital, we might

00:44:24.030 --> 00:44:26.570
allocate 10%, 15 % of a client's portfolio to

00:44:26.570 --> 00:44:30.190
these investments. Early on for me, a capital

00:44:30.190 --> 00:44:34.130
call structure is very challenging to go into.

00:44:34.269 --> 00:44:36.309
When you're an advisor allocating money, if you're

00:44:36.309 --> 00:44:38.570
a private investor, really simple, easy because

00:44:38.570 --> 00:44:42.500
you can account for it. Yep. Because how can

00:44:42.500 --> 00:44:44.039
I tell the client they're going to stick $100

00:44:44.039 --> 00:44:46.179
,000 into something and it may get called down

00:44:46.179 --> 00:44:48.039
if and when it does? Because the other issue

00:44:48.039 --> 00:44:50.000
is if I'm, say, hypothetically using your private

00:44:50.000 --> 00:44:52.300
credit fund or someone else's, that money might

00:44:52.300 --> 00:44:54.239
be stuck in there quarterly, half -yearly, but

00:44:54.239 --> 00:44:57.239
you need that money out within a timeframe. We

00:44:57.239 --> 00:45:01.119
get in trouble. And the other thing with an investor

00:45:01.119 --> 00:45:03.800
is we're doing an asset allocation to a particular

00:45:03.800 --> 00:45:05.659
strategy. The money is sitting there. They know

00:45:05.659 --> 00:45:07.400
it's sitting there for four years, but if it's

00:45:07.400 --> 00:45:09.159
not... But the money is actually sitting somewhere

00:45:09.159 --> 00:45:12.320
else. It doesn't make sense. So we actually discussed

00:45:12.320 --> 00:45:15.880
at lunch a solution to this problem that you

00:45:15.880 --> 00:45:18.519
currently have that you're starting to discuss

00:45:18.519 --> 00:45:24.420
with other financial advisors about how to restructure

00:45:24.420 --> 00:45:29.500
the venture capital fund with the use of private

00:45:29.500 --> 00:45:31.940
credit. Do you just want to walk through how

00:45:31.940 --> 00:45:35.059
you've gone about solving that particular problem?

00:45:35.659 --> 00:45:39.320
Yeah. It's quite important. It's quite important

00:45:39.320 --> 00:45:42.219
because I love what you do. We love the upside.

00:45:42.619 --> 00:45:44.239
We'll get into the deals. The deals are fun.

00:45:44.400 --> 00:45:45.840
Like your back channel, it's been magnificent.

00:45:45.940 --> 00:45:49.219
But solving this particular part, which people

00:45:49.219 --> 00:45:51.519
aren't familiar with, is very important to get

00:45:51.519 --> 00:45:55.659
their head around how best to work with you regarding

00:45:55.659 --> 00:45:58.800
the capital calls. Yeah, it is. It is a structural

00:45:58.800 --> 00:46:02.449
issue that has... been a barrier for us in the

00:46:02.449 --> 00:46:07.969
past. So how we solved it initially was actually

00:46:07.969 --> 00:46:11.150
similar to exactly what you said. Investors are

00:46:11.150 --> 00:46:12.670
like, well, I've got this cash sitting aside.

00:46:13.250 --> 00:46:16.610
On one hand, I want certainty that I'll be able

00:46:16.610 --> 00:46:19.269
to fund your capital cause if you call for it.

00:46:19.309 --> 00:46:22.449
But at the same time, I don't want it just sitting

00:46:22.449 --> 00:46:27.079
in cash and not earn any money from it. So what

00:46:27.079 --> 00:46:29.159
a lot of our investors have done, and this is

00:46:29.159 --> 00:46:32.059
the benefit of us being multi -asset where we've

00:46:32.059 --> 00:46:33.880
got venture capital and we also got private credit,

00:46:34.000 --> 00:46:37.139
is they basically park the committed capital.

00:46:37.179 --> 00:46:38.519
Let's just say they committed a million bucks.

00:46:38.599 --> 00:46:40.519
They park the million dollars into our credit

00:46:40.519 --> 00:46:42.760
fund, which has a monthly liquidity profile.

00:46:44.019 --> 00:46:47.039
Because we manage, because it's under the same

00:46:47.039 --> 00:46:51.019
tent, we kind of obviously have insights into

00:46:51.019 --> 00:46:54.079
how, when we're likely to be calling capital,

00:46:54.219 --> 00:46:58.579
right? And we know what the redemption window

00:46:58.579 --> 00:47:02.780
is for the private credit fund. So it's a lot

00:47:02.780 --> 00:47:06.059
easier for us to actually manage a redemption

00:47:06.059 --> 00:47:08.619
for one fund to move into the next fund because

00:47:08.619 --> 00:47:12.900
we just understand the processes behind it. Now,

00:47:12.920 --> 00:47:16.019
you could obviously do it with a third party

00:47:16.019 --> 00:47:17.900
credit fund and someone could do it themselves.

00:47:17.980 --> 00:47:21.280
But I think, you know, where they could put.

00:47:22.090 --> 00:47:24.110
you know the money into another credit fund that's

00:47:24.110 --> 00:47:26.130
with a completely different manager but it's

00:47:26.130 --> 00:47:30.849
just the the because without the insights um

00:47:30.849 --> 00:47:34.449
behind the operations of the two funds um and

00:47:34.449 --> 00:47:36.349
the insights in terms of the timing of the capital

00:47:36.349 --> 00:47:39.949
cause etc it isn't very hard to match it as well

00:47:39.949 --> 00:47:42.510
as we would by owning the two funds in the same

00:47:42.510 --> 00:47:46.949
in the same group um so that's how we kind of

00:47:46.949 --> 00:47:49.199
have currently solved for it I think in the future,

00:47:49.260 --> 00:47:51.179
one of the things that we're considering is actually,

00:47:51.179 --> 00:47:52.960
does it make sense to kind of do a feeder fund?

00:47:53.119 --> 00:47:56.679
Basically, it's a feeder fund that has the ability

00:47:56.679 --> 00:47:59.139
to invest into both funds. But the intention

00:47:59.139 --> 00:48:01.980
is whatever you invest into the feeder fund,

00:48:02.119 --> 00:48:05.639
that is 100 % commitment into the venture fund.

00:48:05.900 --> 00:48:08.519
But while it hasn't been called, we will invest

00:48:08.519 --> 00:48:11.400
into the credit fund and move it across. That

00:48:11.400 --> 00:48:15.559
way, you will be able to get distributions. when

00:48:15.559 --> 00:48:18.719
you're basically making a venture capital investment,

00:48:19.019 --> 00:48:22.500
right, on a monthly basis to a certain level.

00:48:23.280 --> 00:48:26.380
And you don't have to worry about sort of the

00:48:26.380 --> 00:48:28.840
cash drag on your capital just sitting in the

00:48:28.840 --> 00:48:30.900
bank account doing nothing for the period that

00:48:30.900 --> 00:48:33.219
it's not being called. And still at the same

00:48:33.219 --> 00:48:35.880
time, we have all the benefits of actually, you

00:48:35.880 --> 00:48:38.300
know, having the capital core structure in the

00:48:38.300 --> 00:48:40.340
venture capital side and not impacting performance.

00:48:41.679 --> 00:48:45.219
Yeah, it's very important. uh topic to discuss

00:48:45.219 --> 00:48:48.860
because like i find with these podcasts you can

00:48:48.860 --> 00:48:50.780
read through all the information get your head

00:48:50.780 --> 00:48:53.840
around it right but then the same one thing with

00:48:53.840 --> 00:48:55.800
every single fund manager pops up the one problem

00:48:55.800 --> 00:48:57.900
they have and i found with uh all right it's

00:48:57.900 --> 00:49:00.280
that capital call because like you do great work

00:49:00.280 --> 00:49:02.000
the deals you do a great the team's fantastic

00:49:02.000 --> 00:49:04.079
right but that capital call not knowing when

00:49:04.079 --> 00:49:06.929
the money's gonna hit but I've been chatting

00:49:06.929 --> 00:49:09.730
to another one of our colleagues that oversees

00:49:09.730 --> 00:49:11.989
a number of fund managers. He's fantastic. And

00:49:11.989 --> 00:49:15.429
how myself personally and him, we've been running

00:49:15.429 --> 00:49:17.050
money is very similar to what you're discussing

00:49:17.050 --> 00:49:19.269
now for clients. But we've actually been doing

00:49:19.269 --> 00:49:21.829
the same thing where instead of, we don't have

00:49:21.829 --> 00:49:23.570
a credit fund, right? But we've been using, say,

00:49:23.630 --> 00:49:25.110
your credit fund or other people's credit funds.

00:49:25.489 --> 00:49:28.010
And that's a defensive part of the portfolio.

00:49:28.190 --> 00:49:30.469
The defensive part of the portfolio generates

00:49:30.469 --> 00:49:35.230
income. And then we're taking that income. And

00:49:35.230 --> 00:49:37.730
then going offense. Yep. So we've been doing

00:49:37.730 --> 00:49:40.730
that for the past handful of years now. And it's

00:49:40.730 --> 00:49:43.230
been fantastic. Because guess what? You don't

00:49:43.230 --> 00:49:46.230
get as volatile choppiness. You get very little

00:49:46.230 --> 00:49:51.389
risk on the original equity, right? So capital

00:49:51.389 --> 00:49:55.949
drawdowns are less. People psychologically are

00:49:55.949 --> 00:49:57.489
a lot more comfortable because when people are

00:49:57.489 --> 00:50:00.230
taking risk on money which they made from a profit,

00:50:00.369 --> 00:50:03.130
guess what? right yeah you know they're only

00:50:03.130 --> 00:50:05.269
potentially if the market goes down on the profit

00:50:05.269 --> 00:50:07.489
piece they don't feel as comfortable as say you're

00:50:07.489 --> 00:50:10.349
losing a 20 drawdown on a three million dollar

00:50:10.349 --> 00:50:12.070
asset which you spent your entire life building

00:50:12.070 --> 00:50:15.510
right yeah so i'm a really big fan of the solution

00:50:15.510 --> 00:50:17.670
which you've come up with but it's inside a fund

00:50:17.670 --> 00:50:20.090
structure so we're just doing this based on you

00:50:20.090 --> 00:50:21.969
know a normal portfolio right you know having

00:50:21.969 --> 00:50:24.690
these uh you know alternative assets generating

00:50:24.690 --> 00:50:26.670
a large amount of income than taking the income

00:50:26.670 --> 00:50:29.119
and allocating it to strategies like yourself

00:50:29.119 --> 00:50:31.420
i just find it very interesting that you're now

00:50:31.420 --> 00:50:33.659
you know looking at it from internally or the

00:50:33.659 --> 00:50:36.179
other thing which was discussing at lunch is

00:50:36.179 --> 00:50:39.159
that you're helping um financial advisory firms

00:50:39.159 --> 00:50:43.599
create their own uh managed fund so to speak,

00:50:43.639 --> 00:50:46.360
or their own particular vehicle where the clients

00:50:46.360 --> 00:50:48.559
can go in, where there is an income component

00:50:48.559 --> 00:50:51.300
and then the income's used to essentially assist

00:50:51.300 --> 00:50:54.179
and help with the capital calls, you know, as

00:50:54.179 --> 00:50:56.280
they come about, right? Have I got that correct?

00:50:56.420 --> 00:51:01.039
Because it's brilliant. It solves a lot of problems.

00:51:01.719 --> 00:51:04.699
Yeah, and the way, and, you know, at a very high

00:51:04.699 --> 00:51:07.320
level forecasting, what we've kind of worked

00:51:07.320 --> 00:51:11.860
out is about 40%, so you could potentially cover,

00:51:12.329 --> 00:51:14.909
um your cap your commitment in the venture fund

00:51:14.909 --> 00:51:20.050
which equates to about 40 of um sorry the distributions

00:51:20.050 --> 00:51:23.929
of the way that you can um ensure that the distributions

00:51:23.929 --> 00:51:28.210
out of your credit fund investments matches your

00:51:28.210 --> 00:51:32.510
um venture capital exposure is it's it's circa

00:51:32.510 --> 00:51:35.409
40 so let me explain how that works so let's

00:51:35.409 --> 00:51:37.449
just say hypothetically you committed a million

00:51:37.449 --> 00:51:42.110
bucks into um invested into the credit fund Based

00:51:42.110 --> 00:51:44.929
on the average yield over the last eight years,

00:51:45.230 --> 00:51:48.309
call it, and based on the timing of capital calls

00:51:48.309 --> 00:51:50.949
historically that we've done, what we've worked

00:51:50.949 --> 00:51:55.929
out is the distribution that comes out will allow

00:51:55.929 --> 00:51:58.829
you to invest about 400 grand into the venture

00:51:58.829 --> 00:52:02.269
fund and be purely funded by the distributions

00:52:02.269 --> 00:52:04.989
from the credit fund. Love it. How good is that

00:52:04.989 --> 00:52:08.449
strategy? Yeah. And then it's all compounding.

00:52:08.469 --> 00:52:11.449
It's great. And it's actually on the venture

00:52:11.449 --> 00:52:15.389
side. Yeah. And you're taking the income from

00:52:15.389 --> 00:52:17.489
an asset which you're not risking to take the

00:52:17.489 --> 00:52:19.230
income to then have a nudge on something that

00:52:19.230 --> 00:52:22.349
may go nuts. Correct. But okay, let's talk about

00:52:22.349 --> 00:52:23.750
risk, all right? So you've been doing this for

00:52:23.750 --> 00:52:25.809
a long time, right? What do you reckon the true

00:52:25.809 --> 00:52:27.869
numbers are on... Sorry, true is the wrong word.

00:52:27.929 --> 00:52:35.070
What are the numbers based on... deals that have

00:52:35.070 --> 00:52:36.730
been successful compared to the ones that have

00:52:36.730 --> 00:52:38.389
failed. And the reason for anyone listening,

00:52:38.489 --> 00:52:40.489
why I'm discussing it this way instead of what

00:52:40.489 --> 00:52:42.469
are the percentage returns, right? Is in the

00:52:42.469 --> 00:52:44.969
VC game, everyone knows that we're at the risky

00:52:44.969 --> 00:52:47.949
end of, but there's a lot of upside, but you

00:52:47.949 --> 00:52:50.530
know, deals, businesses can fall over, right?

00:52:50.570 --> 00:52:52.550
And we account for that, right? So what do you,

00:52:52.550 --> 00:52:55.070
what do you reckon the, the, how many deals have

00:52:55.070 --> 00:52:58.170
you done and you know, what has been, you know,

00:52:58.170 --> 00:53:00.130
successful and you know, what has gone by the

00:53:00.130 --> 00:53:02.710
wayside? What do you reckon the actual? statistics

00:53:02.710 --> 00:53:04.409
are because that's the only way i can really

00:53:04.409 --> 00:53:09.730
gauge a venture capital strategy yeah so the

00:53:09.730 --> 00:53:12.250
rule farm in the market and this and now going

00:53:12.250 --> 00:53:15.250
to what our our data is so the rule farm in the

00:53:15.250 --> 00:53:18.050
market is you expect a third of your portfolio

00:53:18.050 --> 00:53:21.050
to go to zero you expect the third of your portfolio

00:53:21.050 --> 00:53:23.590
to do kind of what's 2x and then you expect the

00:53:23.590 --> 00:53:26.170
third of your portfolio to do kind of 2x plus

00:53:26.170 --> 00:53:30.940
yeah um What we've seen is because we take a

00:53:30.940 --> 00:53:33.960
more high conviction approach, we've made 25

00:53:33.960 --> 00:53:40.380
investments in VC over the last 13 years. Four

00:53:40.380 --> 00:53:49.340
of those have gone to zero. We've had about three

00:53:49.340 --> 00:53:53.500
or four of those that have gone and done 5x plus.

00:53:57.119 --> 00:54:00.639
And then everything else is in between kind of

00:54:00.639 --> 00:54:03.820
probably call that a third is kind of in between

00:54:03.820 --> 00:54:06.019
one, two, three X, and then everything else is

00:54:06.019 --> 00:54:11.360
in between. And which is very different to the

00:54:11.360 --> 00:54:15.920
third, a third, a third. But ultimately, I think

00:54:15.920 --> 00:54:23.139
the message would be like failures in venture

00:54:23.139 --> 00:54:26.639
portfolios. it's expected like you are expecting

00:54:26.639 --> 00:54:29.340
that businesses go to zero certain parts of your

00:54:29.340 --> 00:54:31.639
portfolios will go to zero if you look at the

00:54:31.639 --> 00:54:34.219
success rates of sme businesses in or the amount

00:54:34.219 --> 00:54:37.280
of sme businesses that actually fold in australia

00:54:37.280 --> 00:54:39.199
or around the world in australia in particular

00:54:39.199 --> 00:54:41.300
is a pretty high percentage right we're talking

00:54:41.300 --> 00:54:46.219
about like 80 90 um so you know it is not unusual

00:54:46.219 --> 00:54:48.480
for a business that you invest in to go to a

00:54:48.480 --> 00:54:51.400
part of your portfolio go to zero um and i think

00:54:51.400 --> 00:54:53.059
that people just need to understand that which

00:54:53.059 --> 00:54:55.960
is why we believe that venture capital has to

00:54:55.960 --> 00:54:58.440
be done as a portfolio. It can't be done as SPVs,

00:54:58.519 --> 00:55:04.260
right? And then you will always kind of have

00:55:04.260 --> 00:55:07.300
a number of your, maybe a small percentage of

00:55:07.300 --> 00:55:10.579
your portfolio that becomes outliers that will

00:55:10.579 --> 00:55:14.139
return your fund. The way that we look at investing

00:55:14.139 --> 00:55:18.019
is every time we make a first investment into

00:55:18.019 --> 00:55:22.179
a new portfolio company, We take the view of,

00:55:22.340 --> 00:55:26.280
do we have conviction that this investment could

00:55:26.280 --> 00:55:31.699
potentially return our entire fund? So let's

00:55:31.699 --> 00:55:36.139
just say our fund was a $75 million fund. We

00:55:36.139 --> 00:55:38.059
have to take the view that we'd be able to build

00:55:38.059 --> 00:55:40.820
a position in this portfolio where it can ultimately

00:55:40.820 --> 00:55:43.900
deliver me $75 million of return, as an example.

00:55:44.019 --> 00:55:47.199
If it's a $20 million fund, then can this portfolio

00:55:47.199 --> 00:55:49.690
company deliver me $20 million of return? And

00:55:49.690 --> 00:55:51.690
I'm going to make sure I do three of those. That

00:55:51.690 --> 00:55:55.010
is very different to actually how some of the

00:55:55.010 --> 00:55:57.590
guys in the larger markets will play, which would

00:55:57.590 --> 00:56:00.349
be, you know, if I was in the US, I might say,

00:56:00.489 --> 00:56:03.789
I want 5 % of my portfolio companies to do 100X.

00:56:04.110 --> 00:56:08.530
And I want 15 % of my portfolio to do 10X as

00:56:08.530 --> 00:56:11.150
a C -stage investor. And that is the way that

00:56:11.150 --> 00:56:13.610
I can deliver my, you know, four times return

00:56:13.610 --> 00:56:18.300
on my multiple on investor capital. and that's

00:56:18.300 --> 00:56:21.960
palatable in the us where you've got billion

00:56:21.960 --> 00:56:25.480
dollar outcomes that happen every year you have

00:56:25.480 --> 00:56:29.739
10 billion plus outcomes um happening every year

00:56:29.739 --> 00:56:34.519
um and you know if you were one of the best in

00:56:34.519 --> 00:56:37.079
the us you i mean that is what you should probably

00:56:37.079 --> 00:56:39.969
be shooting for in australia While we've kind

00:56:39.969 --> 00:56:41.570
of been, I think I mentioned this before, while

00:56:41.570 --> 00:56:43.750
we've been efficient in the way that we've invested

00:56:43.750 --> 00:56:46.250
and we've delivered more unicorns per billion

00:56:46.250 --> 00:56:49.090
dollar invested than any other region, the absolute

00:56:49.090 --> 00:56:50.849
number of unicorns that have come out of Australia

00:56:50.849 --> 00:56:53.570
is pretty low compared to the rest of the world.

00:56:53.650 --> 00:56:56.929
Which means that from our perspective is we want

00:56:56.929 --> 00:56:58.909
to be able to make sure that we can return our

00:56:58.909 --> 00:57:03.869
fund at least one times with the portfolio company

00:57:03.869 --> 00:57:06.030
not having to reach a billion dollar outcome.

00:57:06.130 --> 00:57:08.429
We just assume that doesn't happen. But it doesn't

00:57:08.429 --> 00:57:09.909
mean that we don't have conviction that it can

00:57:09.909 --> 00:57:13.250
happen. But we don't want it to rely on that

00:57:13.250 --> 00:57:16.050
for it to be able to return our fund. So what's

00:57:16.050 --> 00:57:20.650
been the past returns in the fund you mentioned?

00:57:20.809 --> 00:57:23.010
And what's if you've got a new strategy currently

00:57:23.010 --> 00:57:25.610
happening? So if a client goes into this, how

00:57:25.610 --> 00:57:27.929
long are they looking to hold in this strategy?

00:57:27.989 --> 00:57:32.000
And what's the expected return? Yeah, so when

00:57:32.000 --> 00:57:35.880
we did the SPVs at the beginning, which we've

00:57:35.880 --> 00:57:40.780
stopped doing in 2015, on average across all

00:57:40.780 --> 00:57:42.960
of them, it's been about three times multiple

00:57:42.960 --> 00:57:45.659
in investor capital. In what period of time?

00:57:46.800 --> 00:57:51.960
So the first investment we made in that was 2013

00:57:51.960 --> 00:57:54.519
and then the last investment we made in those

00:57:54.519 --> 00:58:01.530
SPVs were probably 2015. The 2013 one. We fully

00:58:01.530 --> 00:58:04.309
exited, so we exited partially along the way,

00:58:04.349 --> 00:58:08.570
but fully exited in 2023, but we made exits along

00:58:08.570 --> 00:58:12.469
the way as well. So that portfolio is fully gone.

00:58:13.989 --> 00:58:20.289
Our 2017, 2018 vintage, we, again, it's about

00:58:20.289 --> 00:58:24.869
three times multiple in investor capital. That

00:58:24.869 --> 00:58:27.969
we've now, that was, so we did our final close

00:58:27.969 --> 00:58:31.119
on that in 2018. So it's coming. So we're now

00:58:31.119 --> 00:58:36.420
in our eighth year. That has done, we've returned

00:58:36.420 --> 00:58:41.000
about 35 % of 0 .35 DPI or 35 % of called capital

00:58:41.000 --> 00:58:44.900
today. Then we expect that to increase because

00:58:44.900 --> 00:58:46.719
there's an earn now from an exit that we've done

00:58:46.719 --> 00:58:49.679
to come through. So called that, we expect that

00:58:49.679 --> 00:58:53.539
to get to about 0 .45, 0 .5 over the next sort

00:58:53.539 --> 00:58:58.710
of few months. And then on our most recent fund,

00:58:58.789 --> 00:59:02.809
which is our 2022 vintage, that is still pretty

00:59:02.809 --> 00:59:04.429
too early to deal. So that's just sitting at

00:59:04.429 --> 00:59:08.289
one times at the moment, partly because I'm mentioning

00:59:08.289 --> 00:59:12.210
before, while we did our first investment in

00:59:12.210 --> 00:59:16.090
2020, we actually did our final close in 2020,

00:59:16.210 --> 00:59:18.789
first close in 2020. We actually didn't do a

00:59:18.789 --> 00:59:21.730
lot of investments between 2020 to early first

00:59:21.730 --> 00:59:25.659
half of 2022, purely because. We just didn't

00:59:25.659 --> 00:59:29.219
feel like the market was, there was asymmetric

00:59:29.219 --> 00:59:31.500
return opportunities during that period because

00:59:31.500 --> 00:59:34.340
valuations were getting frothy, et cetera. So

00:59:34.340 --> 00:59:36.099
most of our investments were actually done in

00:59:36.099 --> 00:59:39.360
the last 24 months. So on a weighted average

00:59:39.360 --> 00:59:41.719
basis, you know, it's been two and a half years

00:59:41.719 --> 00:59:44.219
and hence a lot of the portfolio companies haven't

00:59:44.219 --> 00:59:45.960
re -rated. So that's sitting at about one times.

00:59:47.239 --> 00:59:49.559
So can you give a couple of examples? Now we're

00:59:49.559 --> 00:59:51.820
into the fun part, the deals and the transactions,

00:59:52.099 --> 00:59:56.519
right? So in the... The only thing I find hard

00:59:56.519 --> 00:59:58.940
with, right, is I get it. You invest in the strategy,

00:59:59.059 --> 01:00:01.239
you invest in the asset class, and I do completely

01:00:01.239 --> 01:00:03.320
agree, mate. Ex -stockbroker that used to do

01:00:03.320 --> 01:00:05.139
a whole bunch of mining IPOs and such, right?

01:00:05.719 --> 01:00:07.719
Completely get it, right? That you're better

01:00:07.719 --> 01:00:09.940
off as an asset allocator when you're dealing

01:00:09.940 --> 01:00:13.159
with lots of money. You know, allocating a portion

01:00:13.159 --> 01:00:16.980
to a good manager, you know, that can do a spread,

01:00:17.179 --> 01:00:19.880
right? I'm all for that, right? But the only

01:00:19.880 --> 01:00:21.619
thing I find a bit touch challenging is when,

01:00:21.739 --> 01:00:25.469
you know, We're saying, we were telling the client,

01:00:25.570 --> 01:00:27.369
hey, let's invest in a private equity transaction.

01:00:27.550 --> 01:00:28.769
It's like, what's the private equity transaction?

01:00:29.190 --> 01:00:31.929
No idea. When's it going to land? Not sure. But

01:00:31.929 --> 01:00:34.329
the strategy is great, right? So I get that question

01:00:34.329 --> 01:00:36.590
quite a bit, right? So I suppose maybe the only

01:00:36.590 --> 01:00:39.650
way to kind of cover that is in the most recent

01:00:39.650 --> 01:00:43.730
vintage, what are some of the businesses that

01:00:43.730 --> 01:00:49.170
you've gone into and why? Okay. So I don't think

01:00:49.170 --> 01:00:54.309
this is a secret, but... We honestly believe

01:00:54.309 --> 01:00:59.530
that we're going through a new technological

01:00:59.530 --> 01:01:02.590
cycle with AI at the moment. We've been watching

01:01:02.590 --> 01:01:07.869
this space for the last three years. And actually

01:01:07.869 --> 01:01:09.929
for the first 18 months, we felt like it was

01:01:09.929 --> 01:01:12.210
a space that it was almost impossible to invest

01:01:12.210 --> 01:01:15.269
in because everything that came out since the

01:01:15.269 --> 01:01:18.389
launch of the release of the first LLM by ChatGPT,

01:01:18.429 --> 01:01:24.730
by OpenAI. was basically just people innovating

01:01:24.730 --> 01:01:30.190
around UXs or user experiences or sort of the

01:01:30.190 --> 01:01:33.489
user interfaces that's wrapped around the large

01:01:33.489 --> 01:01:36.769
language models. One thing that we always look

01:01:36.769 --> 01:01:38.969
for is basically going back to first principles,

01:01:39.110 --> 01:01:41.150
which is what is the problem that you're solving,

01:01:41.289 --> 01:01:43.909
right? Why are you solving it? Should it be solved?

01:01:44.030 --> 01:01:46.429
And then you're solving in a way which has material

01:01:46.429 --> 01:01:48.710
impact that people are willing to pay for over

01:01:48.710 --> 01:01:51.610
time. And we just didn't see that with any of

01:01:51.610 --> 01:01:53.489
the businesses that came out that were basically

01:01:53.489 --> 01:01:59.989
Chachiviti wrappers. But we do believe that AI

01:01:59.989 --> 01:02:05.010
is going to, agentic AI is going to solve a lot

01:02:05.010 --> 01:02:08.969
of industry problems. And it's almost like what

01:02:08.969 --> 01:02:11.630
we were seeing with SaaS 10 years ago, we think

01:02:11.630 --> 01:02:14.289
that's where we are with AI now, which is there's

01:02:14.289 --> 01:02:15.989
still a lot of problems and a lot of industry

01:02:15.989 --> 01:02:18.230
that hasn't actually been automated with AI.

01:02:18.820 --> 01:02:22.820
which can be and will benefit from it. So, you

01:02:22.820 --> 01:02:24.619
know, one of those investments that we've done,

01:02:24.760 --> 01:02:27.760
which actually is a good example to this, it's

01:02:27.760 --> 01:02:29.900
a business called Haast. So Haast is a compliance

01:02:29.900 --> 01:02:33.760
AI business, yeah? So, you know, for yourself,

01:02:33.900 --> 01:02:35.579
you'll probably understand it given you're in

01:02:35.579 --> 01:02:39.599
the financial services space. But if you think

01:02:39.599 --> 01:02:41.800
about highly regulated businesses as opposed

01:02:41.800 --> 01:02:47.059
to consumer businesses, whereby, you know, you...

01:02:47.719 --> 01:02:50.260
the content that you release is highly regulated

01:02:50.260 --> 01:02:53.500
in a sense that you know you need to make sure

01:02:53.500 --> 01:02:56.119
you're not misleading you know um you need to

01:02:56.119 --> 01:02:58.079
make sure you're not greenwashing all these kind

01:02:58.079 --> 01:03:02.619
of stuff so what happens um what happens is in

01:03:02.619 --> 01:03:06.000
the organization like for example a large telco

01:03:06.000 --> 01:03:08.340
to a large financial service business to insurance

01:03:08.340 --> 01:03:12.239
company what happens is you know they would have

01:03:12.239 --> 01:03:14.099
a piece of digital content that was going to

01:03:14.099 --> 01:03:15.699
get released before it gets released it goes

01:03:15.699 --> 01:03:17.599
through a bunch of compliance checks legal marketing

01:03:17.599 --> 01:03:21.139
compliance etc but what happens is once it gets

01:03:21.139 --> 01:03:23.860
released no one's actually really monitoring

01:03:23.860 --> 01:03:27.260
those that content whether it's a blog post to

01:03:27.260 --> 01:03:32.460
a video to a you know linkedin post to a web

01:03:32.460 --> 01:03:38.019
page etc um and the way that it used to be managed

01:03:38.650 --> 01:03:42.469
um or the way that or the status quo is you know

01:03:42.469 --> 01:03:45.489
we would either be businesses will either be

01:03:45.489 --> 01:03:47.750
reactive meaning that you know someone has found

01:03:47.750 --> 01:03:49.630
something or noticed something or maybe they've

01:03:49.630 --> 01:03:51.769
even been tapped on the shoulder by asic right

01:03:51.769 --> 01:03:54.730
and they go oh we've said something here it seems

01:03:54.730 --> 01:03:56.989
misleading we'll fix that and maybe we'll look

01:03:56.989 --> 01:04:00.449
around yeah um or they might be proactive if

01:04:00.449 --> 01:04:01.909
you're large enough like a telstra or something

01:04:01.909 --> 01:04:05.679
you might be proactive and you'll go, I might

01:04:05.679 --> 01:04:07.900
hire an external law firm or maybe I have a small

01:04:07.900 --> 01:04:11.019
internal team that does spot checks, right? But

01:04:11.019 --> 01:04:13.559
your obligation to be not misleading or your

01:04:13.559 --> 01:04:15.820
obligation to not greenwash is not spot checks.

01:04:15.940 --> 01:04:19.559
It's just 100 % coverage. But it is almost impossible,

01:04:19.820 --> 01:04:22.500
well, it is impossible to be 100 % coverage when

01:04:22.500 --> 01:04:24.059
you're a business like Telstra where you've got

01:04:24.059 --> 01:04:26.159
maybe hundreds of thousands or millions of pieces

01:04:26.159 --> 01:04:28.659
of digital content out there. The other issue

01:04:28.659 --> 01:04:31.380
is your digital content is not just written content.

01:04:31.679 --> 01:04:34.079
You could have audio. You could have video. It

01:04:34.079 --> 01:04:37.500
could be an image where there's text within that

01:04:37.500 --> 01:04:40.239
image that's formatted as an image where it's

01:04:40.239 --> 01:04:42.480
got a misleading statement in it. Or it could

01:04:42.480 --> 01:04:46.480
be five seconds within a three -minute video

01:04:46.480 --> 01:04:49.719
that you've said something that could be greenwashing.

01:04:50.480 --> 01:04:53.559
So it's actually almost impossible to manage

01:04:53.559 --> 01:04:56.909
this properly and have 100 % coverage. Is it

01:04:56.909 --> 01:05:00.969
true as well that even like, say you have a license,

01:05:01.010 --> 01:05:03.670
you're an advisor in whatever capacity, if you're

01:05:03.670 --> 01:05:06.090
on social media and you make a comment, that

01:05:06.090 --> 01:05:10.190
can be potentially even a breach? Yeah. Is that

01:05:10.190 --> 01:05:13.469
accurate? So this software you're discussing

01:05:13.469 --> 01:05:15.969
can potentially canvas all of it and just quickly

01:05:15.969 --> 01:05:18.110
flag if there's something that may be a breach

01:05:18.110 --> 01:05:20.010
and needs to be fixed. Is that in a nutshell?

01:05:20.599 --> 01:05:24.400
That's basically it. So basically using its platform

01:05:24.400 --> 01:05:26.320
will allow it to basically screen everything

01:05:26.320 --> 01:05:30.340
that's live, right? But what it does as well

01:05:30.340 --> 01:05:33.739
is, and this is also the other part of the power

01:05:33.739 --> 01:05:35.619
of AI that they're embedding into their platform.

01:05:35.860 --> 01:05:41.420
It's you as the user, maybe you're a large telco,

01:05:41.539 --> 01:05:44.760
you can then put in, you can feed it your rules

01:05:44.760 --> 01:05:49.750
and policies into the platform. But the platform

01:05:49.750 --> 01:05:53.190
will also suck in things like legislations, regulations,

01:05:53.550 --> 01:05:56.469
et cetera. And then you'll process it to basically

01:05:56.469 --> 01:05:59.349
formulate or come up with these rules that you

01:05:59.349 --> 01:06:01.710
can ingest into the platform. And what these

01:06:01.710 --> 01:06:04.510
rules do is they basically bring back anything

01:06:04.510 --> 01:06:06.869
that they think is potentially non -compliant.

01:06:07.150 --> 01:06:10.190
You as the user can then maybe go, here's low

01:06:10.190 --> 01:06:14.250
risk, medium risk, high risk, et cetera. And

01:06:14.250 --> 01:06:16.969
if it needs to be fixed, you can go into a workflow

01:06:16.969 --> 01:06:21.039
to fix it. And that's kind of the basis of the

01:06:21.039 --> 01:06:24.559
platform. But then the second stage of their

01:06:24.559 --> 01:06:27.079
platform or phase of their platform, which they're

01:06:27.079 --> 01:06:29.559
kind of already in the process of doing, is they

01:06:29.559 --> 01:06:33.539
then build AI agents whereby it will work with

01:06:33.539 --> 01:06:38.000
the user to basically fix some of these problems

01:06:38.000 --> 01:06:42.139
with the user. And at some point when users become

01:06:42.139 --> 01:06:45.260
comfortable and trust AI, technically that AI

01:06:45.260 --> 01:06:48.340
agent can go off and fix it alone, right? So

01:06:48.340 --> 01:06:50.860
basically you identify this is a problem and

01:06:50.860 --> 01:06:52.900
then the AI will go and fix it. Like that is

01:06:52.900 --> 01:06:55.920
ultimately the goal. But I think there is a barrier

01:06:55.920 --> 01:06:58.579
between enterprise customers willing to do that,

01:06:58.679 --> 01:07:03.239
at least in the early stages. The platform also

01:07:03.239 --> 01:07:05.539
then trains a model for every single customer

01:07:05.539 --> 01:07:08.739
such that the model will learn about the customer

01:07:08.739 --> 01:07:11.940
and become more hyper -personalized. So a perfect

01:07:11.940 --> 01:07:15.460
example is, you know, you might be a large telco

01:07:15.460 --> 01:07:18.530
and you're... you have a very low risk tolerance

01:07:18.530 --> 01:07:21.030
because it's such a large business. But then

01:07:21.030 --> 01:07:23.889
another player might be, another user might be

01:07:23.889 --> 01:07:28.030
a little suburbian telco that, you know, don't

01:07:28.030 --> 01:07:30.809
really care as much, right? So what the model

01:07:30.809 --> 01:07:32.929
does is it learns about you using the platform

01:07:32.929 --> 01:07:34.909
and then learns about you and your risk tolerance,

01:07:35.150 --> 01:07:37.050
right? And other factors, but risk tolerance.

01:07:37.349 --> 01:07:40.550
And so as to basically be more meaningful in

01:07:40.550 --> 01:07:43.650
the way that it produces you results to the platform.

01:07:44.639 --> 01:07:47.539
And that ultimately, we believe, is what will

01:07:47.539 --> 01:07:49.800
create the defensibility with a lot of these

01:07:49.800 --> 01:07:53.000
businesses, which is the personalized data that

01:07:53.000 --> 01:07:58.579
gets fed through over the time. Because if they

01:07:58.579 --> 01:08:00.380
ever wanted to basically move to a different

01:08:00.380 --> 01:08:03.639
platform in the future, they will lose a lot

01:08:03.639 --> 01:08:07.699
of that data in terms of the model understanding

01:08:07.699 --> 01:08:10.280
who you are. I mean, it happens now. I don't

01:08:10.280 --> 01:08:13.400
know if you use ChatJBT. Yeah. My wife and I

01:08:13.400 --> 01:08:16.640
used to use the same account. And I'm pretty

01:08:16.640 --> 01:08:19.020
sure ChatGPT probably thought we were bipolar

01:08:19.020 --> 01:08:22.020
because we were asking questions completely opposites,

01:08:22.020 --> 01:08:24.779
right? And then eventually she decided, actually,

01:08:24.840 --> 01:08:27.420
I'm going to get my own ChatGPT account because

01:08:27.420 --> 01:08:30.119
it just worked so much better because it started

01:08:30.119 --> 01:08:33.460
understanding who I am as a person and the responses

01:08:33.460 --> 01:08:35.899
and results, which is just so much more tailored

01:08:35.899 --> 01:08:39.229
to me, right? than when we were sharing the same

01:08:39.229 --> 01:08:41.609
account. And that's like a perfect example of

01:08:41.609 --> 01:08:44.489
how that stickiness will happen. The machine

01:08:44.489 --> 01:08:46.609
learning capabilities that are starting to happen

01:08:46.609 --> 01:08:49.449
with AI, it's fascinating. One thing I wouldn't

01:08:49.449 --> 01:08:51.930
mind you covering, because I was chatting with

01:08:51.930 --> 01:08:53.789
your other colleague, when you're looking at

01:08:53.789 --> 01:08:56.470
this particular space, how hard is it to find

01:08:56.470 --> 01:09:02.770
a legitimate company that is an AI service company

01:09:02.770 --> 01:09:06.130
instead of just a legacy business that try to

01:09:06.130 --> 01:09:10.039
just tack on? something with ai and then you

01:09:10.039 --> 01:09:12.119
know come across as hey we're ai when they're

01:09:12.119 --> 01:09:20.600
just not i would say that there is a lot of how

01:09:20.600 --> 01:09:26.260
do i put it there's a lot of ai fairy dust out

01:09:26.260 --> 01:09:31.739
there where a lot of businesses kind of i guess

01:09:31.739 --> 01:09:37.979
image or um uh facade themselves as an AI business,

01:09:38.279 --> 01:09:43.319
but they're not really, right? And kind of claim

01:09:43.319 --> 01:09:46.640
about automation that they don't really do. I

01:09:46.640 --> 01:09:50.479
think that's always going to happen. And you

01:09:50.479 --> 01:09:53.039
really just have to look under the hood as to

01:09:53.039 --> 01:09:56.199
what it is. I think there's two things, though,

01:09:56.239 --> 01:09:59.800
to your question. One is who's going to have

01:09:59.800 --> 01:10:03.079
a better right to win in this space, right? Is

01:10:03.079 --> 01:10:05.539
it the incumbents or is it the AI native businesses?

01:10:06.350 --> 01:10:09.390
On one hand, we think there's pros and cons on

01:10:09.390 --> 01:10:11.689
both sides. On one hand, the incumbents are the

01:10:11.689 --> 01:10:15.789
ones that have a lot of probably the proprietary

01:10:15.789 --> 01:10:18.850
data about the existing customers, right? Which

01:10:18.850 --> 01:10:22.329
I think is very, very useful if they're able

01:10:22.329 --> 01:10:26.050
to leverage of it. But at the same time, because

01:10:26.050 --> 01:10:30.229
AI is almost has created a new baseline, what

01:10:30.229 --> 01:10:32.869
we've seen is a lot of the AI native businesses.

01:10:33.979 --> 01:10:36.300
Basically, and what I mean by AI -native businesses

01:10:36.300 --> 01:10:38.500
is basically AI businesses that build ground

01:10:38.500 --> 01:10:41.180
up thinking AI first, as opposed to software

01:10:41.180 --> 01:10:46.199
and then going into SaaS and enabling AI. And

01:10:46.199 --> 01:10:48.359
these AI -native businesses are able to move

01:10:48.359 --> 01:10:51.300
a lot faster because they don't have the handcuffs

01:10:51.300 --> 01:10:54.220
of traditional thinking. They don't have the

01:10:54.220 --> 01:10:56.500
legacy tech systems that they have to consider

01:10:56.500 --> 01:11:02.359
in terms of building out their AI platform. What

01:11:02.359 --> 01:11:04.159
that means is that we're definitely seeing a

01:11:04.159 --> 01:11:06.819
lot faster speed in these AI -native businesses

01:11:06.819 --> 01:11:09.180
than we do in incumbents. But I think if the

01:11:09.180 --> 01:11:11.819
AI incumbents can actually move quickly, they

01:11:11.819 --> 01:11:13.739
actually have a competitive advantage with the

01:11:13.739 --> 01:11:15.859
data that they've got. I 100 % agree with that.

01:11:15.939 --> 01:11:18.020
So one particular space I'm quite familiar with

01:11:18.020 --> 01:11:20.739
is financial advice, CRMs. There's a number of

01:11:20.739 --> 01:11:22.539
competitors in the market. Everyone knows them.

01:11:22.579 --> 01:11:23.899
You've got X -Plane. You've got a whole bunch

01:11:23.899 --> 01:11:27.319
of people coming through. But one particular...

01:11:28.029 --> 01:11:30.810
way of maybe for people to think about this is

01:11:30.810 --> 01:11:33.850
it's it's scalability making something more efficient

01:11:33.850 --> 01:11:36.310
and actually legitimately solving a problem right

01:11:36.310 --> 01:11:38.649
so one thing with an advisor like yourself we

01:11:38.649 --> 01:11:40.970
have these meetings if you don't record it right

01:11:40.970 --> 01:11:43.409
or you're not writing notes how can you trust

01:11:43.409 --> 01:11:45.430
an advisor giving you advice if they haven't

01:11:45.430 --> 01:11:47.949
taken notes right but the other problem is how

01:11:47.949 --> 01:11:50.630
can you trust someone to physically sit there

01:11:50.630 --> 01:11:52.529
write everything out and be engaged to solve

01:11:52.529 --> 01:11:55.109
a problem if their entire thing is note -taking

01:11:55.109 --> 01:11:56.430
they're not actually listening to what the hell

01:11:56.430 --> 01:11:59.050
you're talking about So the one thing we're seeing

01:11:59.050 --> 01:12:02.890
now, which is coming out of the UK, we use in

01:12:02.890 --> 01:12:05.210
Teleflow, they're bringing out a thing in 12

01:12:05.210 --> 01:12:07.850
months where you can audio record your meeting

01:12:07.850 --> 01:12:10.630
and then essentially pull all the information.

01:12:10.630 --> 01:12:12.930
You take the audio file, drop it into the system

01:12:12.930 --> 01:12:15.270
and it'll pull everything from the transcript

01:12:15.270 --> 01:12:18.750
and the audio and then systematically place all

01:12:18.750 --> 01:12:21.529
that information inside their software as a service

01:12:21.529 --> 01:12:24.560
into their CRM. right and automate it through

01:12:24.560 --> 01:12:26.880
which will save an advisor like four hours from

01:12:26.880 --> 01:12:29.739
a day and then and to your point about compliance

01:12:29.739 --> 01:12:31.920
and regs right they've got compliance and regulation

01:12:31.920 --> 01:12:35.340
feeding into the software and then you can pull

01:12:35.340 --> 01:12:37.560
the audio file and all that information and then

01:12:37.560 --> 01:12:40.100
it all feeds directly into the advice related

01:12:40.100 --> 01:12:42.960
documents so if i'm understanding you correctly

01:12:42.960 --> 01:12:45.279
that business and the business you mentioned

01:12:45.279 --> 01:12:47.520
before is a phenomenal example of what you're

01:12:47.520 --> 01:12:51.680
looking for as an ai business is that something

01:12:51.680 --> 01:12:56.119
that would fit in the type of businesses you're

01:12:56.119 --> 01:12:58.619
targeting? Yeah, I mean, that could be an example.

01:12:58.800 --> 01:13:01.760
I think that if I was to summarize it, it's we

01:13:01.760 --> 01:13:05.340
are looking for businesses. It's not about AI.

01:13:05.479 --> 01:13:08.420
It's about, again, first principles, which is

01:13:08.420 --> 01:13:11.260
what is the problem that they're solving in that

01:13:11.260 --> 01:13:14.439
industry that's meaningful, right? And then it's

01:13:14.439 --> 01:13:17.140
ultimately, you know, should they solve it? Does

01:13:17.140 --> 01:13:19.119
it need to be solved? Is it a real problem that

01:13:19.119 --> 01:13:21.710
people care about? And then it's the way that

01:13:21.710 --> 01:13:25.149
it's been solved. Maybe it's AI that it's allowing

01:13:25.149 --> 01:13:27.609
them to solve the problem in a way which is a

01:13:27.609 --> 01:13:30.810
10 times impact. Or maybe it's until AI came

01:13:30.810 --> 01:13:33.189
along, they couldn't solve the problem in the

01:13:33.189 --> 01:13:35.829
past. Like the company I was talking about, Haas,

01:13:35.930 --> 01:13:39.569
it was, like I said, it was impossible for anyone

01:13:39.569 --> 01:13:43.210
to actually have 100 % coverage of making sure

01:13:43.210 --> 01:13:45.390
that the digital content is compliant. Now they

01:13:45.390 --> 01:13:48.449
can. And that's through the power of AI. Actually,

01:13:48.449 --> 01:13:51.229
just thinking about it then, on the costs, the

01:13:51.229 --> 01:13:55.050
costs alone, like they would have just – from

01:13:55.050 --> 01:13:56.590
a business perspective, how many people would

01:13:56.590 --> 01:13:58.829
you have to hire to cover and look after all

01:13:58.829 --> 01:14:02.170
that stuff? Okay, let's talk about a real example,

01:14:02.369 --> 01:14:04.130
right? In the Biden administration with that

01:14:04.130 --> 01:14:08.930
Biden election and Trump lost, you had – They

01:14:08.930 --> 01:14:11.770
lent on the major social media platforms and

01:14:11.770 --> 01:14:14.369
they said, you need to stop. And quite rightly

01:14:14.369 --> 01:14:16.470
so. You need to stop bigoted speech, you know,

01:14:16.510 --> 01:14:19.189
child sex offenses, you know, all these horrible

01:14:19.189 --> 01:14:21.970
dark things that can exist, you know, on social

01:14:21.970 --> 01:14:25.449
media, right? But in doing so, the human problem

01:14:25.449 --> 01:14:27.710
is human beings are human beings. And if you

01:14:27.710 --> 01:14:30.489
have a large number of people in an organization

01:14:30.489 --> 01:14:33.229
like Twitter at the time, they vote one way.

01:14:33.529 --> 01:14:35.710
And then when they're in the hiring policy, people

01:14:35.710 --> 01:14:38.520
try to hire. people like themselves unfortunately

01:14:38.520 --> 01:14:41.260
you get skewed too far one way too far the other

01:14:41.260 --> 01:14:44.300
what ended up occurring was normal business operators

01:14:44.300 --> 01:14:46.640
that had an opinion ended up getting banned and

01:14:46.640 --> 01:14:49.100
their entire businesses shut down right it just

01:14:49.100 --> 01:14:50.779
it didn't work there was there was a certain

01:14:50.779 --> 01:14:53.460
human bias to it the other problem is they can't

01:14:53.460 --> 01:14:56.579
oversee it and the cost right, of I think when

01:14:56.579 --> 01:14:59.520
Musk bought Twitter, didn't he fire like 80 %

01:14:59.520 --> 01:15:01.340
of like, you know, they're just not required

01:15:01.340 --> 01:15:04.479
anymore? So are you saying as well with, so from

01:15:04.479 --> 01:15:06.960
solving a problem on a scalability standpoint,

01:15:07.460 --> 01:15:09.960
this particular, it's Husk, isn't it? H -U -S

01:15:09.960 --> 01:15:15.340
-K? Husk, H -A -S -T. Husk, H -A -S -T. Yeah,

01:15:15.380 --> 01:15:18.520
okay. So Husk can potentially like a company

01:15:18.520 --> 01:15:21.810
now like X. You can give it parameters with the

01:15:21.810 --> 01:15:24.350
regulation and legitimately sift through it in

01:15:24.350 --> 01:15:27.149
an unbiased format and go, what is actually legitimately

01:15:27.149 --> 01:15:29.590
dangerous and shouldn't be there? And then, you

01:15:29.590 --> 01:15:31.449
know, what is potentially an opinion and why

01:15:31.449 --> 01:15:33.210
we won't kill that person's business, which happened

01:15:33.210 --> 01:15:35.050
quite a lot during COVID and destroyed families.

01:15:36.569 --> 01:15:39.869
Yes. I mean, technically you can apply a use

01:15:39.869 --> 01:15:42.170
case like that. I think, though, but to your

01:15:42.170 --> 01:15:45.109
point before, like the number one thing that

01:15:45.109 --> 01:15:50.220
we are. So when this business kind of goes into

01:15:50.220 --> 01:15:54.039
a proof of concept with a customer, like there's

01:15:54.039 --> 01:15:56.020
one metric that they try to prove in terms of

01:15:56.020 --> 01:15:58.779
proving the value. In the past, when we first

01:15:58.779 --> 01:16:01.000
looked at this, we thought it was, well, it has

01:16:01.000 --> 01:16:03.479
to be the amount of risk that you're reducing

01:16:03.479 --> 01:16:06.640
in the business. But it actually is not because

01:16:06.640 --> 01:16:10.119
it's... them trying to reduce risk is the ever

01:16:10.119 --> 01:16:13.100
going thing. Like no one wants risk, right? And

01:16:13.100 --> 01:16:14.880
they're trying to reduce this compliance risk

01:16:14.880 --> 01:16:18.000
all the time and they're already doing it. What

01:16:18.000 --> 01:16:21.159
the immediate real value that you can actually

01:16:21.159 --> 01:16:25.560
demonstrate and quantify is on your return on

01:16:25.560 --> 01:16:28.260
investment is how much cost you can save. How

01:16:28.260 --> 01:16:30.720
many people you're going to, how many costs in

01:16:30.720 --> 01:16:32.500
terms of external people you're going to reduce

01:16:32.500 --> 01:16:35.319
in terms of hiring like an external law firm

01:16:35.319 --> 01:16:39.619
to do this stuff. And then comparing it to, well,

01:16:39.720 --> 01:16:42.680
if I wanted to increase my coverage from, let's

01:16:42.680 --> 01:16:45.859
just say they were doing 5 % to 10%. I couldn't

01:16:45.859 --> 01:16:47.979
do it before because it means I had to double

01:16:47.979 --> 01:16:51.380
my budget. Actually, now you don't, right? You

01:16:51.380 --> 01:16:53.640
can do the amount, but with the same budget or

01:16:53.640 --> 01:16:56.739
less. So at the end of the day, especially in

01:16:56.739 --> 01:16:59.739
this macro environment, like the easiest way

01:16:59.739 --> 01:17:02.960
to prove value to a customer at the moment is

01:17:02.960 --> 01:17:06.300
how much cost it can save you. and still delivering

01:17:06.300 --> 01:17:10.819
if not the same or more value or more um yeah

01:17:10.819 --> 01:17:13.960
more value to the business wow so with with um

01:17:13.960 --> 01:17:16.739
a client that hast has i don't know if you know

01:17:16.739 --> 01:17:19.560
any numbers off the top of your head like is

01:17:19.560 --> 01:17:22.060
there is there a a client which they have that

01:17:22.060 --> 01:17:24.720
comes to mind that the actual percentage saving

01:17:24.720 --> 01:17:27.359
like the the cost that they've saved this particular

01:17:27.359 --> 01:17:32.359
client yeah so in one particular case um First

01:17:32.359 --> 01:17:34.739
instance, I think they saved them about 60%.

01:17:34.739 --> 01:17:38.699
60%. And the coverage, as you mentioned before,

01:17:38.859 --> 01:17:40.560
like you may have only been seeing 5 % or 10

01:17:40.560 --> 01:17:42.399
% or 15 % of the flow, and now they're seeing

01:17:42.399 --> 01:17:46.260
pretty much as much as they can. So the exposure's

01:17:46.260 --> 01:17:48.340
gone up, the scalability's gone up, the efficiency's

01:17:48.340 --> 01:17:50.739
improved, and they've saved 60 % of the cost,

01:17:50.819 --> 01:17:52.960
which can be redirected somewhere else. Yep.

01:17:55.060 --> 01:17:57.770
That's cool. It's cool, right? That's really

01:17:57.770 --> 01:18:02.010
cool. So just questions of time. Is there another

01:18:02.010 --> 01:18:06.029
business that you're currently looking at in

01:18:06.029 --> 01:18:08.670
the space? Look, we're just about to make another

01:18:08.670 --> 01:18:13.510
investment. And it's slightly different. It's

01:18:13.510 --> 01:18:20.409
not in the vertical AI SaaS enabled space. It

01:18:20.409 --> 01:18:23.670
is in actually the large language model space.

01:18:24.489 --> 01:18:29.390
So one thesis we have is, you know, there's obviously

01:18:29.390 --> 01:18:31.590
an LLM war that's happening in the US at the

01:18:31.590 --> 01:18:33.710
moment. And it's probably a war that we don't

01:18:33.710 --> 01:18:35.229
want to get involved in because I just don't

01:18:35.229 --> 01:18:37.229
think we have enough capital in Australia to

01:18:37.229 --> 01:18:39.850
basically participate, so to speak, especially

01:18:39.850 --> 01:18:44.810
us in terms of our fund size. But where we think

01:18:44.810 --> 01:18:47.229
is interesting is actually not the general LLM,

01:18:47.289 --> 01:18:50.069
but the specialised LLMs, where there's certain

01:18:50.069 --> 01:18:53.210
LLMs which are trained for a specific industry.

01:18:54.899 --> 01:18:57.539
whereby it's actually lower cost to actually

01:18:57.539 --> 01:19:00.260
train that model. It's more accurate than the

01:19:00.260 --> 01:19:04.760
general models generally, or it can be. And it

01:19:04.760 --> 01:19:09.220
understands and has better output for the users.

01:19:09.600 --> 01:19:14.439
And one business that we're looking at and then

01:19:14.439 --> 01:19:17.720
investing in is a business called Isaacus, which

01:19:17.720 --> 01:19:20.359
basically has built a specialized LLM in the

01:19:20.359 --> 01:19:22.710
legal industry. So what they're not trying to

01:19:22.710 --> 01:19:24.890
do at first instance is they're not trying to

01:19:24.890 --> 01:19:28.430
be the next Harvey AI. What they're trying to

01:19:28.430 --> 01:19:33.149
be is actually a model that Harvey AI can plug

01:19:33.149 --> 01:19:37.829
into, right? And especially where everyone is

01:19:37.829 --> 01:19:40.630
now moving to multi -models as opposed to single

01:19:40.630 --> 01:19:46.489
models. And there's actually very little cost

01:19:46.489 --> 01:19:49.949
in actually moving models. So the idea is that

01:19:49.949 --> 01:19:52.189
they... by providing them with a more accurate

01:19:52.189 --> 01:19:54.050
model we're competing against the more general

01:19:54.050 --> 01:19:56.890
models um and they can and we can basically plug

01:19:56.890 --> 01:19:59.930
straight into a lot of these planes um but that's

01:19:59.930 --> 01:20:02.029
another space that we're looking at so the league

01:20:02.029 --> 01:20:04.390
the league the legal one i love like let's let's

01:20:04.390 --> 01:20:06.289
be honest chat gpt anyone else there out there

01:20:06.289 --> 01:20:08.869
that does contracts right or even just normal

01:20:08.869 --> 01:20:10.829
people you know you plug the thing into chat

01:20:10.829 --> 01:20:13.189
gpt but sometimes it spits out something if you

01:20:13.189 --> 01:20:15.449
don't sorry how do i say this if you don't teach

01:20:15.449 --> 01:20:17.949
it correctly and feed it the correct legislation,

01:20:18.250 --> 01:20:20.569
then what you'll get out is not necessarily what

01:20:20.569 --> 01:20:23.390
you want. So when I heard this was happening,

01:20:23.470 --> 01:20:24.869
I'm like, this is genius. This is magnificent.

01:20:25.130 --> 01:20:26.430
Why isn't everyone using it? But then when I

01:20:26.430 --> 01:20:28.010
spoke to a lot of my friends that are lawyers,

01:20:28.250 --> 01:20:31.869
their main concern was privacy, right? So how

01:20:31.869 --> 01:20:34.529
does this company deal with a privacy standpoint?

01:20:34.890 --> 01:20:38.369
Like if you're dealing with, I don't know, a

01:20:38.369 --> 01:20:41.470
major acquisition, right? And you've signed NDA

01:20:41.470 --> 01:20:45.869
agreements and essentially you need... you know,

01:20:45.890 --> 01:20:48.390
an AI, a large language model to plug in to make

01:20:48.390 --> 01:20:50.510
your life easier and go, okay, what am I missing?

01:20:50.670 --> 01:20:52.550
What clause has been pulled out? You know, save

01:20:52.550 --> 01:20:54.449
my ass, please. You know, I've got a three -hour

01:20:54.449 --> 01:20:56.250
deadline to get this thing done. The client requires

01:20:56.250 --> 01:20:58.529
it. I don't want to stay up till 2 a .m. in the

01:20:58.529 --> 01:21:01.630
morning, right? What protections do the users

01:21:01.630 --> 01:21:06.369
have, you know, on that side? And where are my

01:21:06.369 --> 01:21:08.170
thoughts on this? It's kind of like something

01:21:08.170 --> 01:21:10.310
like Snapchat, right? You know, everyone says

01:21:10.310 --> 01:21:12.170
Snapchat's fantastic. You know, don't worry about

01:21:12.170 --> 01:21:14.640
it. The message has vanished. It's great. Fast

01:21:14.640 --> 01:21:16.460
forward a number of years, there's a data bank

01:21:16.460 --> 01:21:19.640
in some dam somewhere that's just collecting

01:21:19.640 --> 01:21:23.699
everyone's data. Or like Ashley Madison is another

01:21:23.699 --> 01:21:26.420
great example. Your data will never come out.

01:21:26.500 --> 01:21:28.880
Someone does a hack, everything's there. And

01:21:28.880 --> 01:21:30.659
then all of a sudden, from a legal standpoint,

01:21:30.720 --> 01:21:34.600
back to the contracts, you're in a whole world

01:21:34.600 --> 01:21:37.260
of trouble, right? So how have they gotten around

01:21:37.260 --> 01:21:40.239
that particular problem? Because they are their

01:21:40.239 --> 01:21:44.500
own model, right? they are actually so and they've

01:21:44.500 --> 01:21:46.220
built it and because it's a specialized model

01:21:46.220 --> 01:21:50.279
they um they have so as a user as a customer

01:21:50.279 --> 01:21:53.279
you can run that model within your own environment

01:21:53.279 --> 01:21:56.899
all right so it's siloed yeah so it's on its

01:21:56.899 --> 01:22:00.340
own server so it uses the language model everything's

01:22:00.340 --> 01:22:03.319
there is the tool that you can plug in and purchase

01:22:03.319 --> 01:22:06.920
your own server and then everything's essentially

01:22:06.920 --> 01:22:10.720
in your own server bank so it's not public it's

01:22:10.720 --> 01:22:13.489
on a private server Technically, but basically

01:22:13.489 --> 01:22:15.689
you can run it in your own environment and it

01:22:15.689 --> 01:22:18.729
can be on -prem or it can be off -prem, but still

01:22:18.729 --> 01:22:22.149
within your environment. Yeah, that makes so

01:22:22.149 --> 01:22:25.289
much sense. Yeah, this has been brilliant. We

01:22:25.289 --> 01:22:26.989
can talk all afternoon. But Eric, is there any

01:22:26.989 --> 01:22:29.210
questions that you normally get from investors

01:22:29.210 --> 01:22:32.989
or large family offices that you'd like to cover

01:22:32.989 --> 01:22:37.489
that we haven't touched on? Look, I think that...

01:22:39.369 --> 01:22:43.550
We're just generally in a market where capital

01:22:43.550 --> 01:22:50.050
raising for funds has been very difficult. And

01:22:50.050 --> 01:22:53.729
one of the questions that investors always ask

01:22:53.729 --> 01:22:59.090
is, why do I want to allocate into venture capital

01:22:59.090 --> 01:23:04.770
today? And I think it's one of those ones where...

01:23:06.609 --> 01:23:08.890
Unfortunately for an industry that's relatively

01:23:08.890 --> 01:23:12.289
nascent, a lot of the managers that they've invested

01:23:12.289 --> 01:23:14.210
in or the funds that they've invested in haven't

01:23:14.210 --> 01:23:16.250
gone through full cycles or where they have,

01:23:16.270 --> 01:23:18.010
they probably haven't created enough liquidity

01:23:18.010 --> 01:23:20.989
for them to demonstrate DPI performance and only

01:23:20.989 --> 01:23:26.390
TDPI performance. But what I would say is regardless

01:23:26.390 --> 01:23:30.590
of what, you know, you've invested anywhere else

01:23:30.590 --> 01:23:32.850
or with the managers that you have and sort of

01:23:32.850 --> 01:23:36.069
what the outcome you've had today. One thing

01:23:36.069 --> 01:23:39.170
that is undeniable is venture capital is cyclical,

01:23:39.210 --> 01:23:43.710
right? And we are at the beginning of a new cycle,

01:23:43.789 --> 01:23:46.829
and we can see that from the balance valuations

01:23:46.829 --> 01:23:50.229
that's in the market. We're also compounding

01:23:50.229 --> 01:23:54.149
that with this AI technological platform shift

01:23:54.149 --> 01:23:57.130
that's happening, which, again, I was saying

01:23:57.130 --> 01:23:58.930
before, it's like what we were seeing in SaaS

01:23:58.930 --> 01:24:02.869
10 years ago, but it's now with AI and valuations,

01:24:02.869 --> 01:24:06.189
what's SaaS. was 10 years ago by an ai right

01:24:06.189 --> 01:24:10.109
and we think that if you miss like because venture

01:24:10.109 --> 01:24:14.130
capital is so cyclical that if you the the risk

01:24:14.130 --> 01:24:17.710
of missing a vintage in the next few years you

01:24:17.710 --> 01:24:21.750
basically run the risk of missing the asymmetric

01:24:21.750 --> 01:24:25.369
return opportunities in this space right it's

01:24:25.369 --> 01:24:29.789
been an explosion anyway now i think it's a lot

01:24:29.789 --> 01:24:33.069
of time it's it's it's logical it's easy to say

01:24:33.560 --> 01:24:37.239
um and people can appreciate it but it's it's

01:24:37.239 --> 01:24:40.819
always hard to do right like i think the reality

01:24:40.819 --> 01:24:44.539
is generally when it's the when no one wants

01:24:44.539 --> 01:24:46.819
to invest is always the best time it is if you

01:24:46.819 --> 01:24:49.140
want to just have an overlay of like a general

01:24:49.140 --> 01:24:51.239
rule right and i think that's what's happening

01:24:51.239 --> 01:24:55.859
with vc yeah it's uh it's been a bit of a crypto

01:24:55.859 --> 01:24:58.520
winter the past three years this whole uh Companies

01:24:58.520 --> 01:25:00.539
want to stay private for longer routine. I think

01:25:00.539 --> 01:25:02.859
we've had the lowest numbers of, you know, IPOs

01:25:02.859 --> 01:25:05.619
on the Australian market for a long time. The

01:25:05.619 --> 01:25:07.920
other thing as well, the IPO market's been very

01:25:07.920 --> 01:25:10.680
challenging because 10 years ago when things

01:25:10.680 --> 01:25:15.060
list, the percentage of things listing at a premium

01:25:15.060 --> 01:25:17.579
or a profit was higher. These days things list

01:25:17.579 --> 01:25:19.579
and they just sink kind of nearly immediately.

01:25:19.619 --> 01:25:23.000
It's been quite challenging. So, but again, it's

01:25:23.000 --> 01:25:28.689
all cyclical, right? Yep. That's right. Hopefully

01:25:28.689 --> 01:25:31.850
the boom times are coming back. Well, hopefully

01:25:31.850 --> 01:25:33.869
the boom time's not coming back too soon because

01:25:33.869 --> 01:25:36.010
we want to get our position set before then.

01:25:36.909 --> 01:25:40.770
Yeah, let's get set first and then let the boom

01:25:40.770 --> 01:25:43.529
time rip. Well, thank you very much, Eric. If

01:25:43.529 --> 01:25:46.810
anyone wants to find you or get more information

01:25:46.810 --> 01:25:50.569
about Aura Group, how can they find you? Always

01:25:50.569 --> 01:25:54.430
send me an email, eric .chan at aura .co or just

01:25:54.430 --> 01:25:57.619
LinkedIn me. Perfect. All right, Eric, thank

01:25:57.619 --> 01:25:59.140
you very much for coming on The Rated Change

01:25:59.140 --> 01:26:00.619
with York Orth Management. Have a great day.

01:26:01.300 --> 01:26:13.880
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