EP4: How Asia Private Markets Operate & India’s Evolution with Chris Loh, of Axiom Asia

In this episode of View From The Top, Ganesh Nayak sits down with Chris Loh, Managing Partner at Axiom Asia — one of Asia's leading private equity fund-of-funds investors.

Chris brings a rare vantage point. He started as an electronics engineer in Japan, moved into Silicon Valley venture investing with GIC during the dot-com years, and joined Axiom in 2009 as the venture capital boom was taking off in China. From that seat, he has watched three full cycles play out across China, Japan, Korea, and India — and seen what made each one move.

Together, Ganesh and Chris explore why India today resembles where China stood in the early 2000s, how Japan's buyout-led ecosystem is now growing a venture layer on top, and why exit pathways are the single most important variable LPs underestimate when they enter Asia.

A recurring thread runs through the conversation: home-market biases do not travel well. LPs from the US and Europe often arrive in Asia looking only at buyouts because that is what worked at home. Chris argues that the firms who succeed in Asia are the ones willing to let go of those defaults and read each market on its own terms.

In this episode:

• How venture capital travelled from Silicon Valley to China, and then to the rest of Asia
• Why India's 2021 IPO ecosystem was the moment that finally unlocked exits for early backers
• What separates China, Japan, Korea, and India in their private market cycles today
• How Axiom evaluates GPs across primary, secondary, and co-investment strategies
• Why team dynamics matter more than individual brilliance when picking venture managers
• The home biases that hold global LPs back when they first deploy into Asia
• How secondary markets in Asia moved from second-choice exit to a credible liquidity path

This is a first-hand account of how Asia's private capital markets actually work — and where the real opportunity lies for the next decade of global allocators.

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Transcript

SPEAKER_02 0:00

Hey there, thanks for tuning in. I'm Ganesh from Avatar Ventures and this is View from the Top, a podcast where we bring the limited partners' perspective to the table. Over the past decade, India has become one of the most exciting destinations for global capital. But amid all the excitement, one perspective is rarely heard. The global limited partners point of view. In this episode, I chat with Chris Lowe, the managing partner of Axiomasia, a pioneering specialist in Asian private equity. For LPs, GPs and founders exploring the next decade of investment opportunities, welcome to View from the Talk. So, Chris, thank you so much for being here and welcome to Mumbai.

SPEAKER_00 0:42

Oh, uh thank you for inviting me to this podcast. I'm very honored to participate in this.

SPEAKER_02 0:47

Great. So this morning we were at the IPO listing ceremony of capillary technologies on the Indian public markets. How was your experience?

SPEAKER_00 0:55

Uh it's been more than 15 to 20 years since I've been working on such uh venture and private equity investment activities. Uh surprisingly, I've never attended any IPO ceremony. So thank you uh for inviting us to participate in the ceremony this morning. It was a very good experience.

SPEAKER_02 1:13

It was our pleasure to have you there, and it'll be this will be the first of many IPOs, I hope, in India for you.

SPEAKER_00 1:19

I'm sure. Uh things are looking uh like they are developing in a very positive manner. Right. I'm looking forward to more opportunities to participate.

SPEAKER_02 1:28

Great. The kick of the conversation, Chris, can you take us through Axiom Asia? How would you introduce Axiom to the world?

SPEAKER_00 1:35

Uh Axiom is a private equity focused fund of fund investor. Uh we only invest in all these private equity companies uh in Asia. And uh we do it by uh several ways. One, we are a primary fund investor. Uh and by committing capital to all these private equity venture capital fund managers in Asia, we get to know some of these uh top-performing companies in the private markets, and uh we can therefore uh participate in co-investments together with our GPs. Right. Uh and thirdly, uh, we also are a secondary investor. So whether it is buying portfolios of uh companies from GPs on a secondary basis or purchasing sticks directly into companies on a secondary basis. Uh we also can uh provide capital to the industry that way. So uh there are multiple ways that we can engage with the industry.

SPEAKER_02 2:38

Right, right. And Chris, what has been your personal journey like? How did you end up being the managing partner of Axiomasia?

SPEAKER_00 2:45

Uh I think it's just uh one step followed another. Uh I was um educated initially as an electronics engineer. Uh I wanted to study overseas after graduating high school in Singapore. Uh and um chance upon a scholarship provided by the Japanese government uh to study in Japan, and I chose to do that. So uh we I had to travel to Japan um in the 80s uh to first learn language uh for a year. And after that uh I was able to study electronics engineering uh in a Japanese university for the next four years. Uh and then after uh I finished studying, uh, there was an obligation on my part to go back to Singapore to serve for uh as uh for about seven years as a civil servant in the Singapore Civil Service. Right. Uh so for that seven years I was working as an electronics engineer with the military of defense and uh working as a tech guy.

SPEAKER_01 3:51

Awesome.

SPEAKER_00 3:53

Um and uh life there was very interesting. I could uh be very focused on doing a very specific piece of engineering work for a long time.

SPEAKER_01 4:02

Right.

SPEAKER_00 4:02

Uh very um intellectually very satisfying. Right. Uh but at the same time, I uh I also wanted to broaden my horizon beyond a very narrow engineering focus. And that was why I was studying for my MBA uh on a part-time basis. So by the end of seven years, my bond application was over. Uh I started interviewing. Uh that was in 2000. It was the peak of the dot-com boom. So every uh tech guy wanted to participate in the venture capital ecosystem. So I followed the same trend and I got a job with uh GIC, the Sovereign Wealth Fund in Singapore. Awesome. Uh, because they were looking for a tech guy to do venture capital investments for them. Right. And that's how my journey into private equity started. Right. Uh and I was working for GIC in their California office.

SPEAKER_01 4:57

Oh, wow.

SPEAKER_00 4:57

Uh it was really a dream come true for me. So that was the cutting edge of the tech revolution. Uh imagine I'm an electronics engineer, being able to land and work in Silicon Valley. That was really a dream come true. Nice. Yeah. So it was so great. Uh I remember driving down the 101 freeway and looking on the left. Oh, that's Yahoo. On the right, oh, that's Intel. Wow. Nice. And this was 2000. There was uh um 2002. Okay. Okay. Starting in 2002, I was in California.

SPEAKER_02 5:26

Uh so the so the boom had already become bus.

SPEAKER_00 5:28

Uh it was a bus, and uh it was actually a good introductory lesson to the volatility of the venture capital industry. Um, fortunately, GIC was a very long-term investor that participated in the venture capital industry right from the get-go. Uh, in the early years, they were um LPs in very renowned names today uh um in VC funds like uh Matrix Partners uh and Sequoia Capital. Right. So uh GIC had a long history of investing in venture capital. So I was part of this team that made venture funding commitments for GIC with some of these top uh Silicon Valley-based VC firms. Right. So very good experience. Uh learned a lot from uh those years in GIC and very thankful for the experience.

SPEAKER_01 6:14

Right.

SPEAKER_00 6:14

Uh and then uh in 2009, as we all know, uh the global financial crisis happened. And um I was uh on the way um back from the US back to Asia. Uh because we we thought we all thought that there wasn't much to do in the US.

SPEAKER_01 6:32

Oh, really?

SPEAKER_00 6:34

Yeah, I mean in 2009 everybody thought uh the US is going to was going to be in these doldrums for a decade. Yeah. So uh people were leaving the Silicon Valley, so I was one of those leaving. And it happened that uh Axiom was raising its fun to my boss was actually the one of the co-founders of Axiom. So I spoke to him.

SPEAKER_02 6:56

So your boss from GIC.

SPEAKER_00 6:58

Yes, my boss from GIC uh co-founded uh Axiom. Right. And so I spoke to him and they said, Oh, uh they were raising fun too. They needed more people to uh do the work, and then I said, Oh, I'll I'll join you. That's why I made a transition from GIC to Axiom, and that's been my last job so far. Awesome. Awesome.

SPEAKER_02 7:20

And and you know, how has it been uh from an investor focus on US? Now you're focusing on Asia. Are there any reflections you have on how that transition has happened in terms of Asia being a very small part of the global venture and private equity ecosystem back in let's say 2009 and where it's today?

SPEAKER_00 7:41

Oh, that is uh quite an amazing journey for Asia. Uh obviously the whole venture capital uh concept originated in the Silicon Valley. They invented the idea. Uh, and it's quite an amazing idea to be able to uh nurture young startups uh with capital, uh, giving all these uh brilliant engineers a chance to prove their business ideas and and create uh big companies that uh completely um overturn traditional industries. It's just an amazing business idea. And uh so I observed that firsthand uh in the Silicon Valley and um I was actually quite disappointed. Why doesn't Asia have the same thing? Right. Yeah. So when I came back in 09, that also coincided with the boom of venture capital industry in China. So uh as many of the audience here will know, uh a whole group of US venture capitalists came to China and set up their own uh China affiliates. Right. Firms like uh renowned firms like Sequoia, Matrix, all set up their China affiliates to invest in venture back startups there. Um so uh there was this transfer of ideas from America to to China. Right. And so those people, uh the venture capitalists that learn all these capabilities very quickly from from the US. And and we as we all know, uh China startups really uh produced strong growth once they were given support and capital. Right. Uh and then we saw a similar trend starting to take off in the rest of Asia, uh um most uh predominantly in India.

SPEAKER_01 9:36

Right.

SPEAKER_00 9:36

Uh so that was a very good timing in 2009. Uh so Axiom started investing in China venture capital funds and also in India venture capital funds.

SPEAKER_01 9:46

Right.

SPEAKER_00 9:46

So it's quite heartening to see this new idea of venture capital going from America to the rest of Asia and all these brilliant engineers having a chance to prove their business idea. Right. It's just an amazing development.

SPEAKER_02 10:03

Yeah. And Chris, when you look at your participation across the Asian markets, how has it evolved? Like in the beginning, in let's say Axiom Funds 1 and 2, what was the portfolio mix like between countries and what is it today?

SPEAKER_00 10:19

Um we have always created a diversified uh portfolio, uh both in terms of country exposure and also uh sector exposure. Right. So uh Axiom had always been investing in all the major economies like China, South Korea, Japan, Australia, and India. Uh and in terms of sectors, uh, we have also invested into buyout, growth capital, and venture funds. So uh this mix of um strategies and uh country existed in every venture fund, uh every Axiom fund. It's just that um different strategies come in and out of um favor because uh of the business cycle. Right. Uh so sometimes uh certain Axiom funds will have more weightage towards China, and the other Axiom funds uh there will be less China and maybe more of the other countries' strategies.

SPEAKER_02 11:17

Right, right. And what about the mix between uh different strategies between primary, secondary, and co-investment? Has that mix evolved over time or is it has it been a constant?

SPEAKER_00 11:28

Oh yeah. Um it how much we invest in each of those um categories all depends on uh the opportunity set at that point in time. Uh there's apps and flows. So uh there's no fixed rule of how much is allocated to which uh particular box in the whole matrix. Right. So it all depends on the bottom-up analysis of the opportunity set at that point in time. Right. Right.

SPEAKER_02 11:56

So Chris, uh let's uh switch gears. Would love to understand your perspective of what you're looking for in GPs. From an axiom perspective, when you evaluate GPs, what are you looking for?

SPEAKER_00 12:09

The question is like asking a blind man what does an elephant look like? We all know the answer, right? Depends on which part of the elephant you're touching, the answer is different. But some basic elements are quite common for all LPs. Uh you're always looking for uh a team of very highly intelligent, highly motivated individuals coming together to form a firm. Right. Uh and that's one thing. Uh the second thing will be um you uh would like to see this team having demonstrated some um track record in what strategy that they are proposing uh to raise a fund for. And then finally, uh we also look at uh the competitive dynamics. Uh uh the investment industry is an extremely competitive industry. So every GP ha believes is his own strategy has a good chance of doing well. Uh but uh that's just from the old GP's own assessment. Then our LP's job is to kind of compare and contrast. Does the GP strategies uh stand a good chance of outperforming all the other GPs who are also competing in the same market? These three sets of analysis that we we uh the LPs work on uh before they decide to make a commitment to a GP's fund.

SPEAKER_02 13:33

Right.

SPEAKER_00 13:33

Yeah.

SPEAKER_02 13:34

And are there any key questions you need good answers to for you to uh understand whether a GP has an edge in that market?

SPEAKER_00 13:42

It is uh yeah, it's a very qualitative judgment. Uh so take the the venture capital fund as an example. Um I I found that uh every GP uh has its own unique way of doing business. And I've seen many of the best performing GPs, both in the US and in Asia. Um there's no fixed formula of how to organize a VC firm, how to make the team work together. Uh whether there should be, it should be a firm with there are many permutations, for example, whether it should be a firm with all partners and almost no analysts or associates. There are firms like that.

SPEAKER_01 14:28

Right.

SPEAKER_00 14:28

And then there are other firms which have a few partners and are supported by a big team of analysts and associates. So that's one example of different permutations. Um and different firms uh work in a different way. And it's uh difficult to say which strategy will work better uh just by looking at the strategy itself. It's always a case of looking at the strategy and whether it fits well for this team of people who are working together. Uh so uh looking at strategy-wise, it's hard to decide which firm has an edge in the market. So uh we tend to look at uh something simpler. Uh for example, uh, you want a high-quality team of people uh who are able to work together cooperatively. Um, because just take the extreme example, you have um one GP firm and then a firm with a couple of GPs. Yeah, that one GP may be a superstar, but he's just one person. Right. Uh and uh trying to make venture capital investment uh is like trying to drink from the fire hose. Yeah, he has to digest so much information in the market, right? All by himself, and he has to look for the right entrepreneurs and all that. It's just uh unbelievable amount of work. So even if he's a superstar, uh it's tough for one person to do so much work. Whereas uh three three individuals coming together to form a firm, uh they may not individually be as stellar as this one one man GP, but uh yeah, three guys working together. If they are working together cooperatively, probably they can cover a lot more ground and help help out each other to cover find more entrepreneurs, uh, evaluate more ideas, and also brainstorm better.

SPEAKER_01 16:15

Right.

SPEAKER_00 16:16

So uh that's what typically LPs like to work for firms where you have multiple GPs who can work together cooperatively. Then the job of the LP becomes complicated. Three guys working together. Uh how is their dynamics among themselves? Uh and yeah, we have LPs have encountered so many partnerships that didn't last because people didn't agree to work together in certain ways. Yeah, because they are all human, they have different uh temperaments. I think there's a bulk of my due diligence, figuring out how they work cooperatively. At the same time, usually in the firm they also have other more junior people. Uh ideally, I would like to see uh these leaders leaders in the firm being open-minded people. Uh they can encourage the junior folks to uh surface ideas. They are not just executing the GP's ideas. Right. Uh then again, it's also uh the whole firm working together, there's a multiplier effect across the entire team.

SPEAKER_02 17:17

And from a global LP perspective, right? Let's say there's an institutional investor from the US or Europe, and they're trying to now access the Asian market. What are some of the challenges that you have seen they face if they want to start deploying directly into the Asian market?

SPEAKER_00 17:33

The LPs from the developed markets uh in America and in Europe, they come from developed markets where some strategists have done extremely well, namely buyout strategies. Uh so uh they many of them come to Asia and say that, oh, they don't want to invest in the venture capital industry. Right. Because in their home market, they found that uh it's hard for them to invest in venture capital industries because uh the top names are difficult for them to access. Right. So in their home markets, they have they've just invested predominantly into buyout funds. So they they fly into Asia and then I hear them saying, Oh, I only want to look at buyout funds, I don't want to look at growth capital funds, I don't want to look at venture capital funds. Uh first thing is uh they in the home markets they had never done much of that before. And then they also see that um performance difference in venture funds is huge. Right. Uh buyout funds are not that big. So it's also a very scary industry in terms of risk. So I can understand where they're coming from. Uh but Asia is a very different market compared to their home markets. So um sometimes uh I feel that they have to uh let go of their home biases and take Asia as it is and kind of create a new strategy to invest in Asia rather than just bring the strategy from Europe and America and apply it to Asia uh without any adjustments. Right. Yeah. Then in that case, they potentially they can harvest more of the returns from Asia.

SPEAKER_02 19:09

Right. Right. And and how have you seen the Asian ecosystem evolve from let's say early stage to mid-stage to buyouts? Because private markets have been nascent uh ecosystems in Asia. Can you take us through each of the large countries and talk about where they are in their cycle of development of private markets?

SPEAKER_00 19:32

That will be a very long answer. Um let's take one emerging market and one development market, like example. So so emerging market says let's take China, the largest economy uh in Asia. China's uh private equity industry really uh started first, I think, more with the venture capital industry. Uh so people really took notice of China um because uh some venture-backed companies like Alibaba uh and Baidu went public. Right. Um that was in early when was that? Uh early 2000. Right. Uh and then everybody woke up. Oh wow, there's this group of venture-backed companies that can grow to such large scale and profitability. Right. And they still were growing extremely fast after IPO.

SPEAKER_01 20:30

Right.

SPEAKER_00 20:30

So that woke everybody up, and all the foreign investors came into China and started investing uh into venture capital. And at the same time, uh some of these growth capital funds also started uh raising capital, and uh they produced very strong returns. So venture capital and growth capital both uh grew very quickly in China into a full-blown industry with many, many GPs over time. Um but there are still very few control investments in China. Uh one thing is that uh there were not many promoters who are willing to sell control to their companies, and second thing is uh there's a lack of um availability of debt in China. So uh due to these two elements, there are very few control transactions in China. So not much buyout funds to invest in. And then the other example will be from a developed country like Japan. And Japan was very different. Uh Japan's uh private industry was predominantly a buyout industry. Uh is because there are a lot of all this uh first on the high large end, there are all these Japanese corporations uh that had access, um they have divisions where they are non core to the company going forward. Right. So they want to uh carve them out. Right. And so those Carve-outs were sold to many of the large buyout funds. And on the small end, there are all these small privately owned businesses where the founders needed to get an exit because his next generation is not interested in becoming the successor. And those naturally became targets to be sold to biofunds. So the bio industry had always been very vibrant in Japan. And then more recently, I would say in the last 10 years, then the Japan venture capital industry started to take off. And that success, very much similar to what happened to China with Alibaba and Baidu, changed people's perception of venture capital in Japan. Young promising engineers realized that, oh, if he can do that, I can try too. So that drew more talent into the industry. And now we are seeing a nascent venture capital industry in Japan starting to grow. Probably you'll be on a parallel track to what happened to China in the past.

SPEAKER_02 23:20

Right, yeah, right. And where is India from your perspective in that trajectory?

SPEAKER_00 23:26

India will be more similar to China. India, you have always had uh some of this growth capital funds uh for the longest time. Right. India had a false start with venture capital in during the dot com boom. Right. We saw some false starts like that over Asia, including Japan. A lot of dot comms were created, and then they all uh went bankrupt after.com passed. So India had a few venture funds that were created during the dot com boom, and then uh they all had difficulties raising successor funds. Uh the exception was uh we all know Chris Capital, which changed from a venture fund into a growth capital, very successful growth capital fund today. So they managed to pivot and survive like a venture back startup. So uh the problem with venture in India was uh LPs were quite enthusiastic, surprisingly. Uh uh, including Axiom. We had been investing in India venture capital since our fund one, which was a vintage 2006 fund. Right. Yeah. And uh on hindsight, it was quite a quite a very courageous move because all these LPs were investing uh when they couldn't see all these venture-backed startups going public uh in India.

SPEAKER_02 24:46

Whereas in China, there were exits at that point in time?

SPEAKER_00 24:49

Uh in China uh they they could see companies like Alibaba and Baidu. Right. They were of such scale and profitability that those companies could go public in the US. Right. So they could see the exit. Right. So when you're investing, you can see what's the endpoint. Whereas LPs investing in India venture in the early days uh in 06. They they were investing with blind faith that eventually an Alibaba of India will emerge and go public in NASDAQ. But they have not seen an example like that. Right. So it was a that's why I say it was a very courageous move on the part of the overseas LPs to bet that India will also create a similar uh ecosystem like China. And and then on hindsight, we we now know uh those vintage years, many of the VCs had difficulty producing exits just because uh it's the bar for going public on NASDAQ is so high. Right. It it was still difficult for the Indian startups to arrive at that point. So uh there were very few companies that made it. Um MakeMytry was one rare exception to the rule, but uh it was a rare exception.

SPEAKER_01 25:57

Right.

SPEAKER_00 25:58

Uh and then of course we all on high side we all know uh the game changed in 2021. Right. When uh all these venture-backed companies were able to go public domestically.

SPEAKER_02 26:08

Right.

unknown 26:09

Yeah.

SPEAKER_02 26:09

Right. And and you know, uh it looks like the exit ecosystem is so crucial, right, for you to invest in Asia. Can you can you uh take us through what's your perspective on the exit ecosystem as of today in 2025 across each of your major markets in Asia?

SPEAKER_00 26:27

Um so the Chinese startups or or growth capital back companies, uh they they have two major routes nowadays. Typically, uh it's either in the domestic soil exchange or to Hong Kong.

SPEAKER_01 26:43

Right.

SPEAKER_00 26:43

Yeah. Uh then Korean companies uh have been experiencing some difficulties in the last few years. Uh the Korean stock market had not been doing very well from 21 onwards. And uh companies were still going public, but they were going public at very low valuations. So the VCs were not going to get a strong return uh from those IPOs. So VCs have been holding back on uh getting exits. Right. So um, but now that we are seeing light at the end of the tunnel because the uh Japan, uh the Korean stock exchange uh index has gone up significantly over the last few quarters. Right. So maybe we'll see IPOs happening again in Korea. Uh so um so if they couldn't get public, go public. So the VCs were getting exits from MAs, selling their companies to strategic buyers. That's how they got their exits. Uh Japan has a very vibrant domestic IPO market. So um uh they have no problem listing their companies. So that's relatively easy. And then now we see the same thing in India. Right. So domestic IPO is now a viable exit channel.

SPEAKER_02 27:55

Right.

SPEAKER_00 27:55

So things are looking good.

unknown 27:56

Right.

SPEAKER_02 27:57

And what about the secondary market? How do you view the evolution of secondary markets in Asia?

SPEAKER_00 28:03

Oh secondary market has become more of uh exit, viable exit channel uh for investors. Uh I think there were a lot of um biases against secondary exit. Uh I think it's just inherent bias against something new. Uh it felt like um not it felt like a poor second choice compared to an IPO or an MA. But uh over time, I think uh the when you've seen successful exits, um ZP is able to exit their portfolio and give some distributions to LPs, LPs are happy. And then uh and the people who bought into the secondary also made some good returns. So both parties are but are happy. Right. And that gives people confidence that this secondary market is a possible viable option for investors to get liquidity from an illiquid asset class. Right. So I think it's uh very good development in general.

SPEAKER_02 29:03

So Chris, you have been investing in Asia over the last 15, 16 years at Axiom. Uh would be curious to understand: are there any views you held, let's say 15, 16 years ago, which you have had to change or challenge through the evolution of the markets?

SPEAKER_00 29:18

Um yes, definitely. Um so we spoke about um dot-com boom and buzz in the US. Uh when I joined Axiom, I saw the same boom and buzz uh with say India venture capital. During the financial crisis, many companies uh didn't make it. Right. Uh at the same time, uh some of these India growth capital funds had raised a lot of capital suddenly. Uh and then they uh they found it difficult to get uh returns back to their investors. Many of the companies didn't deliver the kind of returns that the GPs were looking for. So the whole industry went through a significant downturn, both growth capital and venture capital. And many firms had difficulty raising capital. So I think the conventional wisdom that foreign investors had was India private equity is a difficult market. Uh let's not touch it. Yeah, that was a conventional wisdom for a long time, post-financial crisis. And um Axiom was no different. We also suffered some uh losses from our early investments into India, financial capital and private equity. And so uh we we were very cautious with uh investing in India. Uh everything in India was looked through with a with a comb through with fine comb. Took extra care. Uh but we never gave up on the geography. Right. Uh we felt that uh we could see that the potential is huge, and we know what was the problem. One problem was too much capital went into India uh in the good years.

SPEAKER_01 31:02

Right.

SPEAKER_00 31:03

Uh and now that problem has gone away. In fact, uh too little capital was coming into India. So uh a problem became an advantage. Uh the second thing was the issue with exit. Yeah, eventually uh bad companies couldn't go public because the scale was not big enough for the US. So that problem remained. Uh but we uh persevered. We thought that we still should pick some managers in India to continue our presence. So we made very small, what we call Toho commitments into some uh fund managers, both on the growth capital and venture capital side. Right because we thought that even without an IPO, some of these companies that the best companies will still be acquired. Right. And we were seeing MAs happening. Uh, we think that that would be enough to generate enough returns for our fund investments. Right. That was how we continue engaged being engaged in India. Right. And then uh obviously after 2021, uh the problem with exits went away. Right. So we think that the the open share in India today is much better than 10 years ago. So our minds about India definitely went through a sea change. Right.

SPEAKER_02 32:19

Right. And what about the GPs in India? What has been your experience about the GP quality and their thesis? Uh, how has it panned out over the last 15-16 years?

SPEAKER_00 32:30

Um GPs have also made the same kind of observations that we have about the industry. So many of them have drawn lessons from the difficult years and structured uh their funds uh appropriately. Uh, for example, they will raise funds that are of uh reasonable size versus uh the opportunity set they are targeting so that they are no longer uh trying to push capital to companies uh when when the companies do need it. And the other good thing that happened post-2021 was uh uh interest rates have have gone up worldwide. Uh cost of capital is now higher. So um capital is uh more precious and difficult to raise. Um and companies are no longer as a result, companies are no longer growing at all costs without regards to uh the bottom line. Right. So all those changes uh are good uh uh in terms of delivering uh long-term returns to investors. Right. Yeah. So I see a very positive development.

SPEAKER_02 33:40

Right. Yeah. And if I can ask your advice for Indian GPs, uh what are some of the aspects that Indian GPs don't fully understand about the LP perspective that you would like them to understand better?

SPEAKER_00 33:52

People who become uh GPs in the private equity industry, they are the among the smartest people of the generation. They understand what the investors want. Right. I believe every single one of them understands it. Uh it's just that um for some reason for some reason some GPs choose uh not to deliver what the LPs want because there's uh misalignment of interest. So uh we try to invest in GPs where there's a better alignment of interest between the GP's interest and the LP's interest, and then the GPs will deliver what the LPs want.

SPEAKER_02 34:34

Right, right. I'm curious, with the rise of mega funds globally, do you think that we have reached a stage where the mega funds do have the institutional misalignment between LPs and GPs?

SPEAKER_00 34:49

I think it's um many LPs know that um it's difficult for a big fund to deliver the outlier returns. Yeah, the because the underlying companies that they they back, they only go public with a certain amount of market cap. Then you divide the market cap by the ownership and the returns uh in terms of dollars going back to the fund. You can do the math. The big fund just find it harder, uh, irrespective of the quality of the GP. Uh so uh but some LPs invest um because they you know in venture capital and yet they are afraid that they uh they will invest in a fund that underperforms. Uh some of these higher quality big funds, uh, the chance that they underperform significantly is very low. So uh some LPs choose to go down this route. They want to invest in venture capital and yet they don't want a big downward surprise. Right. So they choose to go this route. Whereas other LPs choose to go with the higher risk, higher return strategy. Invest in a few smaller managers, but construct a portfolio that has a high probability of producing a high return.

SPEAKER_02 36:02

Right. Yeah. Right. And what about the argument that the outcomes are also increasing in size every decade? Is that an argument for larger fund size? Or do you think that smaller funds will still produce a better return?

SPEAKER_00 36:16

Um yes, this argument that always uh floats around. Uh but if you just look at the say the venture capital industry in the US, the most mature uh and leading industry in venture capital, uh, some of these premier GPs uh are still raising smallish funds uh from 200 to 400 million dollars. Right. And these are names that have been around for more than two decades. Right. Right. Uh so they are very smart people. They know that the the math uh works better for them if they raise a smallish fund and deliver consistently and maintain a high uh bar. And and those funds are always oversubscribed, yeah. PLPs are always clamoring to get in and most people can't get in. Um so if the leading venture capital market in the US is like that, why should the why should Asia be any different? The scale of companies uh developed in Asia are much smaller than in the US. So arguably uh if it's 200 to 400 in the Silicon Valley, US uh in Asia the funds should be smaller.

SPEAKER_02 37:29

Right. Right. Got it. And going back to the due diligence uh question, are there any other points that you like to diligence when you're looking at GPs?

SPEAKER_00 37:40

Um whether we make a strong return or not uh from a fund investment uh is dependent on factors that we can predict and and due diligence on and factors that are just bats. So uh I s we we try to do all the due diligence we can on factors that we can observe through due diligence, like due diligence on a team, their dynamics, how they work together, uh finding out about their strategies, things that things that we can observe and document on an investment memo. Uh but there are other factors that due diligence alone will not uh uncover. And those are the unknowns that we are betting on. So one of the unknowns will be the external macro environment over the cycle, this 10, 15 year cycle of this venture fund. Uh it could it could uh change to the upside. For example, the GP may be focused uh on just SAS investment.

SPEAKER_01 38:48

Right.

SPEAKER_00 38:48

And if SaaS investment goes on an up cycle in the next 10 years, this GP will be a top desk performer. And that is a factor that the GP cannot control. It's just an external environment factor. And and as an LP, if I choose to back this GP, I'm also betting that the GP is correct, that this sector will be on the upswing in the next 10 years. So did I make that bet correctly or not? Uh is uh yeah. So that's one thing that nobody can control. But you just consciously decide, identify what bet you're making, and then decide that this is the driver of return, and you are consciously making a bet. Then there are other um factors like uh like the exit market. Nobody could have predicted. Uh most people would not be able to predict that the IPO would see such a huge upswing in 2021 in India. Right. Uh so that's another external factor that couldn't be predicted in advance. Uh but if it happens, then you benefit. So we we when we make a commitment to a VC fund, say, in a certain country, we identify some of these unknown bets uh that we're making, unknown factors that we're betting on. And then we try, we construct a portfolio of VC funds all across Asia to make sure that all these unknown factors are not fully correlated. Then we have a very robust portfolio. Whenever some of these factors swing to the upside, we will have an outlier return. And then it will not happen in every single fund that we bet on. Uh so hopefully for the other funds, uh, if all these external factors don't go in their favor, but at least uh we are backing on very high-quality people, uh, they will give us a reasonable return, but not an outlier return. Right. Yeah. On the whole, the whole portfolio will do okay.

SPEAKER_02 40:40

Right. Yeah. Right. And Chris, are there any factors that matter a lot, but LPs don't really give much importance to? Have you come across any such factors?

SPEAKER_00 40:49

I think it's a uh there's a bias. Um LPs uh come in two groups generally. Some LPs they will they will only invest in managers with proven chart record. Uh if you're not raising a fund for, don't talk to me. Yeah. So maybe familiar. Yeah, I mean uh that's that's just uh their strategy. They have this bias. Uh they don't want to invest in uh what people call the emerging managers. Yeah. Uh and uh so that's their own strategy. And uh our own experience had been very different. Uh we we invest in both uh of these managers with very established track records, we call them established managers, but we also in our portfolio have a group of emerging managers. Right um, we found that they are very complementary. Um, uh every LP would like to invest in a manager with a proven track record and uh have some confidence that they can sustain the performance going forward. Then they feel that we feel that we are taking very little risk and it will get good returns. Who doesn't want that? It's a rational thing to do. Uh but uh some of these established managers over time, um uh things happen. Um teams uh may not see eye to eye, uh, their strategy or sector may no longer be so relevant. So past track record doesn't uh sustain itself going forward. Uh and then the industry they're focused in may go through certain headwinds. Again, uh the future is different. Uh so uh we have to be very alert uh uh whether uh to continue to support an established manager, or unfortunately, sometimes we may have to uh not re-out in the assets manager's next fund and then use that capital to back the next set of emerging managers. And we looked at our track record and we found that we had some very, very good outlier performance for some of our emerging managers. Right. So uh we don't rule out uh either category of managers. We have them both.

SPEAKER_03 42:57

Right.

SPEAKER_02 42:58

Right. And are there any factors that LPs stress upon a lot, but you have found that doesn't really correlate to performance?

SPEAKER_00 43:05

Uh this is one of the most commonly asked questions, secretly among LPs. Of course they don't ask the GP because it will be impolite. LPs will always ask each other and say, oh, this manager has delivered such strong performance in the past, but now they are raising a $1 billion fund. Will they continue to deliver? They are always gossiping among each each of uh among ourselves, and then we all uh we all uh we all shake our head and we say, oh that's a very tough question. I don't know. But they are such an established brand. All the entrepreneurs say uh they are they look up to this VC firm and they would love this VC firm to back them. There'll be great valid validation for the startup. Uh so obviously they have very good deal flow, but at one billion, can they still return 3x of the fund? And we all scratch our head. So Then LPs draw different conclusions. Yeah, so that is a very difficult call to make. Whether it's a VC fund or a bio fund or growth capital at different sizes, all the LPs eventually ask this question. How long before things break? Right. Yeah. So I feel that uh sometimes if you you realize you cannot answer that question, why don't you choose not to answer that question and look for an answer somewhere else?

SPEAKER_02 44:32

Right, right. So, Chris, in your experience, what advice do Indian GPs need to hear from a global LP perspective?

SPEAKER_00 44:40

LPs are at the end of the day, we are all uh investing for financial returns. So uh GPs have to uh uh balance the the two major metrics, right? The T VPI and the DPI. Uh ideally the VC fund should have an increasing T VPI over time, and then DPI will, the curve for DPI will continue to rise. Uh it will be lagged, but it will continue to rise over time. So you've got to keep these two metrics uh at the back of your mind all the time.

SPEAKER_01 45:15

Right.

SPEAKER_00 45:16

Um I mean in the 10 years ago uh when capital was free, uh we s we always saw uh this divergence. Uh TVBI kept going up, but DPI continues to become flat, lay flat. Um and sometimes it's quite painful because uh there will be some GPs who have a company uh that was doing very well. Uh they kept raising up rounds, and the GP had opportunity to sell down some of their stick in the secondary market. Because 10 years ago, IPO was difficult, right? But they could always sell uh in the secondary market, the stick to in the secondary market and harvest some returns. Um but some GPs uh didn't take advantage of that opportunity uh because they believe so strongly in the underlying companies and held on to the companies. So, and then um, as we know, um venture-backed companies are uh operating in a very competitive market and they are very fragile, small companies, uh there will be hiccups, and then that valuation of that company will will plummet because um some bad uh things happen, and the GP after that uh lost that opportunity to deliver returns to LPs. Right. And then then they they they face difficulty raising the successor fund. Right. Yeah. So uh the that's what LPs always tell GPs if you have a chance to take some gains off the table, uh you don't have to exit the entire position. You take some gains out and uh give some distributions back to the LP so that the LPs know that oh uh this company is real, people are really valuing this company so highly. Uh and then they also get some capital back. So uh that balance will be very helpful to build trust with the LP and make the raising of the successor fund a lot easier.

SPEAKER_02 47:18

And it's okay if they leave money on the table in the initial partial sales.

SPEAKER_00 47:24

After yeah, the LPs will not blame you uh for leaving money on the table, but they will be ver they they will be very angry if you didn't take advantage of the exit opportunity and then subsequently uh they feel they felt that they lost money because the company's valuation came down because they ran into some hiccups. Right. Then they will really be very angry with the GP. Right. Yeah. So take some uh take a balanced path. You don't have to take all the money off the table, but take some. It's a it's a safer way to operate a long-term franchise.

SPEAKER_02 47:58

Right. Yeah. Right. Yeah. And in this global competition for capital, what should an Indian GP bring to the table to win capital for their funds?

SPEAKER_00 48:09

Uh it's all about uh differentiation. Um well GPs uh are very innovative, they always have some differentiated strategy that they pitch to the LPs. So that's one thing uh to stand out from the crowd. Um the second thing will be um a right size fund for your strategy. Um the third thing will be give the LPs a good deal uh financially, economically. Uh I don't have to elaborate on that. The GPs are always but they know how to give the LPs a good deal. Just cut them a good deal and yeah, uh LPs will be sold in you to your fundraise.

SPEAKER_02 48:52

So so in your journey as an investor, has there been any particular investment or any event that was a turning point for your investment philosophy?

SPEAKER_00 49:02

I think some decisions have helped our performance a lot. Uh going where other LPs are running away. Uh it's a little bit like uh what Warren Buffett says, right? Uh be greedy when others are afraid. Right. Yeah. So there were a few funds where uh one fund uh they had a breakup of the two key men uh from fund one. So the remaining key men uh was raising his fund two alone with some new partners. And so many of the fund one LPs uh did not re-up. So the fund two fundraise was very, very difficult. Uh we did our analysis of the deal attribution for fund one. Uh we found that uh the better deals were attributed to the partner that was raising fund two. So we decided to back him in fund two. Uh we were 50 million out of the $160 million fund, almost one-third of the fund. Uh and then fortunately, uh that GP really delivered and produced a very good return for us in fund two. So one thing, that was one example where we went against the green weed. The second example was GP was this was a GP that had already raised um four funds. Very spectacular funds, one, two, and three. And fund four was uh uh very big fund. Uh and then uh they found that uh difficult to deploy the big fund. Um they deployed it into some two large deals uh that didn't do well. So when they came back to raise fund five, um many of the LPs uh couldn't go back to the IC to do a re-up decision. Although they I think most of them would conclude that this GP was a very stellar team of GP. Um but because they were disappointed in the last fund, they couldn't re-up. Again, we we went back and we looked at the tri record of GP. We felt that uh they they just made some mistakes by investing in those large transactions, which was out of their sweet spot. So we we supported them in raising the next fund uh and we gave them again like 50 million out of a 200 million dollar fund. We were one quarter of the commitment.

SPEAKER_01 51:21

Oh wow.

SPEAKER_00 51:22

Uh and they didn't disappoint us, delivered on uh deals in their sweet spot. Right. And again, produced a spectacular return. So um ignoring what other LPs are doing, uh if we think that what they're doing is is not right in the situation, in these two cases, we felt that the general LP community was not right. General community is generally very smart. So be very careful if you're going against the crowd. But in these two cases, we felt that the crowd was not really correct. So we went against them, and then we uh on hindsight we we proved to be correct in those two instances. So uh we follow that that uh preaching. Uh be greedy when others are fearful.

SPEAKER_01 52:09

Right.

SPEAKER_00 52:10

Uh but better make sure you're right.

SPEAKER_02 52:15

That's very important. As you look to 2026, what are some of the key trends that you're watching from a geopolitical perspective in Asia?

SPEAKER_00 52:26

Uh the biggest change in recent memory, obviously, is uh the changes that happened to China. It went into an economic downturn post-2021. Right. Uh and also uh the government uh was very hostile towards all these privately owned businesses. Right. Um and uh so it became very difficult to make investments in China. Uh but now the government has turned around, it's realized that it needs the privately owned companies to supercharge the economy again. So now they are becoming very friendly to the private companies. So we are assessing this change in the government's uh attitude and policies and seeing what is the right time uh to start investing again more in China. Um that's one big uh variable to watch. Um the others, the other markets will be uh the other variable will be India and Japan. Both stock markets have performed spectacularly in the last few years. Right. Uh and GPs have harvested uh their investments uh through IPOs. Uh that's been a very positive development. So uh then capital has a lot of capital has flooded into the Japanese buyout industry. Right. Uh then then uh what Warren Buffett will be telling you is when other people are greedy, you may be have to be afraid. So so now we are watching that. Is it time to be afraid? Uh is it time to slow down? Uh that's another variable they're watching.

SPEAKER_01 54:07

Right.

SPEAKER_00 54:07

Yeah. And then with India, uh this IPO window has been open for so long. And then the obvious question is will it slow down? When will we slow down? Uh so uh those are the questions we are asking ourselves.

SPEAKER_02 54:22

Right, right. But Asia is a huge place with it's just so diverse, so deep. So can you give me maybe a few examples of how your local expertise has helped you navigate this market versus just the global LP who's flying in, flying out, and building a small portfolio? Can you bring out the the value proposition that you offer?

SPEAKER_00 54:43

Uh I think it's just a lot of uh legwork. Um meeting as many of the GPs as possible.

SPEAKER_01 54:53

Right.

SPEAKER_00 54:53

Uh both the established GPs and also the emerging managers, uh getting a uh very good sense of what is the best uh risk return uh that we can get from the market. Uh and then within each market, uh our focus is really very much on finding country-focused managers. Uh we find that uh in that uh with that strategy we can pick the best team suited for each strategy and which country. Uh and then as we can create a portfolio and get diversified. Um I I don't know how some of these other uh foreign LPs can uh replicate the amount of homework that needs to be done. It's just a lot of analysis and then collecting uh performance numbers for all the various funds. You just have to talk to each GP. There's no shortcut, you just have to talk to them and ask them what's how's that performance. And then you construct this database of GP's performance. Then you can you can assess whether they are doing well or not. Yeah. So uh we just have to do the homework.

SPEAKER_02 56:06

Right. Yeah. Much easier to just uh partner with you guys, right? For for a bit of a best one solution. Great. So, Chris, we cannot have a conversation without the topic of AI. So I would love to get your perspective. Having started your investment career doing the dot-com boom and bust, what's your take on what's happening with AI?

SPEAKER_00 56:30

I should ask you, you are the expert. I'm just taking in first-hand information and reproducing it here. Uh if AI is as disruptive as people say, it is some people say that it is even more disruptive than the advent of the internet. Then we will see the impact of AI uh across industries over the next decade or so. Um at this point in time, uh we we can already see a lot of doubts appearing in the media that there could be overinvestment in AI in the US. Right. Uh and then some people are also saying, oh, all these LMs in the US, despite them spending so much money, they are only incrementally better than much cheaper models produced by the Chinese. Right. So what's the point? Right there. Uh so it's natural for dogs to appear, uh, and people have learned their lessons from the Dokon Boom and Pass that they shouldn't get too excited when a new wave of technology hits the market. Uh, if the wave of technology is so disruptive. You have time, you should wait for the first wave of euphorio to die down, then you go in uh and invest at a cheaper valuation. So uh we are now watching this wave uh to see uh whether we should uh have more exposure to AI. For example, we could we could pick uh AI focus DC fund to invest into. Um but is this the right time? Um we're asking that question. We already have exposure to AI through our generalist uh manager. Each of them will have one or two companies that it's an AI uh company. So um we I think we can observe the industry carefully uh and then uh make our decision.

SPEAKER_02 58:27

Right. What is underappreciated today, which is which is gonna seem very obvious, let's say five to ten years from now.

SPEAKER_00 58:34

Oh, it will be uh say, continuing with the example of India, it'll be the returns from all this India uh-based uh growth or VC funds. Right. The returns will be good. And then it'll become obvious. Right. And as per normal in the in the LP community, everybody will be coming to India and flooded with capital, and then the game will reset itself after a few years.

SPEAKER_02 59:03

So in your investment career, Chris, what has been some of the most memorable meetings you have had?

SPEAKER_00 59:08

Oh, this happened many years ago when I was I was speaking to uh Indian startup. The founders were talking to me about uh how they created this idea for their startup. So I was I was very very amazed how these these founders come up with all these smart ideas to create a new business model that would uh completely change the industry. So how can how can they be so far-sighted? And when I talked to these founders, then I realized uh the answer. They told me, oh, before we started this startup, uh we identified five problem areas. And then we brainstormed and tried to come up with solutions for all five problems. And then we assessed our solution for each of the problems and evaluated which solution solved the problem uh in the best way. Then they pick the best of the five uh to to go with their startup. Right. Then I thought, whoa, oh, that's how they do it. It's it's not magic. They actually have a very systematic way of figuring out uh how to solve a problem and then figuring, trying to figure out whether the solution was complete or not. Right. And and then it was only much later uh that I learned that uh this methodology was quite prevalent in the whole startup ecosystem. People do trials and trial and errors to figure out uh solutions to problems. Yeah. So that was quite insightful to me.

SPEAKER_01 1:00:39

Right.

SPEAKER_02 1:00:39

Yeah. Uh what's in your list of anti-portfolio? Are there any big misses that you have had in your career?

SPEAKER_00 1:00:45

Oh, every investor will have big misses uh that they regret. There were funds that we passed on uh that produced spectacular returns. And then we would do a review uh to see what was wrong with our assessment and try to learn from those lessons. Um for example, there was one fund uh where um the the GP said that he would continue to do his angel investment on the side. And when the company is mature enough for a Series A, uh his VC fund would get the opportunity to invest in the Series A round. So we passed on that fund because we felt that it was a clear conflict of interest. But the G we asked the GP, how can you do this? This is a clear conflict of interest. But the GP said, Oh, but it's a privilege for you to be able to invest in the series A round of my seed portfolio. Um so we we walked away from that uh opportunity. And on hindsight, it yeah, it was the wrong financial decision. That fund performed spectacularly. Right. But uh it is just not the right investment for us. Right.

SPEAKER_02 1:02:08

Yeah, right. So, Chris, in this diverse and complex ecosystem, which is Asia, how do you keep up with what's happening? Are there any routines, habits? Uh how do you keep up?

SPEAKER_00 1:02:19

I remember speaking to Ashish Dawan, uh founder of Chris Capital. He told me that uh when he wakes up in the morning uh over breakfast, he'll read through five newspapers at one go to get a graph of what's happening uh to the economy on that day. Right. So I kind of followed what he taught me. Yeah. So we try to ingest as much information as possible. So uh like most people I'll be reading uh uh the news, uh reading um tech uh blogs, uh listening to podcasts. Uh I think we've we've discussed about the acquired podcast, I think. Right. It's very, very uh educational. Right. Uh trying to get updated on the latest developments across the world in the industry. So uh yeah, keeping up to the latest news is quite important for our job.

SPEAKER_02 1:03:17

Right. And do you uh when you read these five, six newspapers or news channels, are they from different countries? And like do you need to have diverse inputs as well? Let's say from the Chinese perspective or the Japanese perspective or the Indian or US perspectives, because there could be some differences or nuances.

SPEAKER_00 1:03:38

Uh yes, we we we read news from each of the countries. Right. Uh in fact, in each of their languages. Right. So we have a team uh of people who can digest this news from different media. Because sometimes the media, the Western media may not catch up to the latest news uh coming out from China. Because it could be that it would be the Chinese media that will be the first to get the news out.

SPEAKER_01 1:04:02

Right.

SPEAKER_00 1:04:02

Uh so uh fortunately we have constructed a team of people who are uh fluent in the various Asian languages. Right. So we try to keep up to date as far as possible. Right. Uh it's a team effort.

SPEAKER_02 1:04:14

Right. Right. So last question as we wrap up. Um so on your visits to India, are there any memories that you have created in India?

SPEAKER_00 1:04:23

Well, India is an amazing country that has come a long way over the past 10-15 years. Uh I always remember my first visit to the Taj Maha. Uh quite uh mind-blowing experience to see such a building existing. It seems to be out of nowhere. Yeah. So yeah, I admire uh all the history that India has. And I'm very happy to continue to be able to engage in this economy to see India through its next lake of development. Very excited about that. Awesome.

SPEAKER_02 1:05:01

And thank you for your time, Chris. It was uh pleasure speaking with you, and we hope to see you more often in India. Thank you. Looking forward to it.

unknown 1:05:09

Thank you.