BEYOND UNICORN: Private Investors' Knowledge Base
Targeted contents created with private investors in mind, providing you with thought frameworks to assess value and actionable strategies around topical investment themes
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[Founder Talk] How Blockchain unlocks value in data with Bruce Pon from Ocean Protocol
08/05/2020
[Founder Talk] How Blockchain unlocks value in data with Bruce Pon from Ocean Protocol
Today’s guest is Bruce Pon, CEO of BigchainDB and founder of Ocean Protocol. We began our conversation by probing into the value of data as an asset, what are the problems preventing the value of data being unlocked and how Ocean is solving that problem by building a protocol for data sharing, how it envisions global adoption through community building and industry partnerships. We discussed about the Ocean token – its usage, value creation and learnings from its IEO and ICO. Finally, we imagined a future where Ocean Protocol becomes the de facto protocol for access control and an Ocean DAO driven entirely by its contributors. A personal disclaimer before we begin – I am a holder of Ocean Token since March 2019. Key highlights from our conversation Data is worth at least as much as land Data is the new asset that people are going to be able to monetize, securitize, use as collateral. The hypothesis is that data is worth at least as much as land which is estimated to be worth $7trillion by an economist. This belief is further reinforced by the fact that the top 10 most valuable companies in the world today are mostly internet platforms, information platforms. Blockchain is the middle layer between data provider and data buyer The key problem with centralised data marketplaces is that they need to have custody of your data which results in the need for trust – data providers need to trust that the data marketplaces can manage your data well, keep it secure and provide you with a full audit trail. This often limits data sharing. What blockchain can do is to act as a trusted middle layer – the custodian for data, providing the data providers the full control of their data. The Ocean Protocol is fundamentally an access control system. Currently, there aren't any other protocols that look at data sharing as an access control problem. Ocean is the access control layer. In five years, what I want is Ocean being seen as the protocol that everybody follows to use for access control. The usage and value accrual of Ocean Token At the very core, any crypto token can be used as a means of exchange. In the case of Ocean token, it is the means of exchange within Ocean Protocol. So that's the base level. Second thing. And this is since the inception of the proof of authority network, you can use Ocean tokens to kickstart smart contracts on our proof of authority network. So right there was utility of this kind of a native token for a unique network. Moving into the future, we're going to have some other exciting kind of uses of the Ocean token. Number one is we're going to kickstart the network rewards. This is 51% of the total supply that we've talked about from the very beginning. That is kind of a discount token model that allows value to come back into the ecosystem if people are using the protocol. And then there's another use case where we have for the Ocean token, which is governance. That's a little preview of what we're going to be releasing later on this year. In the blockchain space, you can't separate speculation from utility from kind of global adoption. I think it all plays together. I see speculation very, very optimistically. It is viewed as this interplay between builders, speculators and the existing kind of traditional world where we are trying to disrupt. Content at a glance with time-code (01.36) Bruce’s background story (03.18) BigchainDB and Ocean Protocol explained (05.57) Data as an asset is worth at least as much as land (07.38) Core problems in data that Ocean Protocol is solving (17.56) How Ocean Protocol is designed to overcome trust, privacy and security of data (20.30) Uses cases and industry partnerships of Ocean Protocol (24.59) Importance of community for decentralised projects like Ocean Protocol (27.30) The usage and value accrual of Ocean Token (33.03) Learning from Ocean’s failed IEO (36.47) The value of speculation within Crypto (39.38) The future of Ocean Protocol imagined Episode linksBigchainDB: Ocean Protocol: Ocean’s blog post on IEO: ChainLink:
/episode/index/show/beyondunicorn/id/15486251
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[Investor Talk] EdTech investing in China with Veronica Zhou from Blue Elephant Capital
07/15/2020
[Investor Talk] EdTech investing in China with Veronica Zhou from Blue Elephant Capital
Today’s guest is Veronica Zhou, partner of Blue Elephant Capital, the first pure play education technology focused early stage investment fund in China. We began our conversation by segmenting the Chinese education market into 3 broad segments, namely to consumer (2C), to school (2S) and to business (2B). We then delved deeper into the complex sales system in the “to school” segment; how Covid-19 created the paradigm shift in online education. And lastly, we discussed Blue Elephant Capital’s investment approach and the key investment theses in the next 5 years. Key highlights from our conversation Chinese education market is divided into 3 broad segments 1) To Consumer (2C): to families and students 2) To school (2S): to schools, education bureaus, to government’s budget 3) To Business (2B): this includes 600,000 small and medium sized afterschool shops; about 20 large scale education companies such as TAL or New Oriental Education spending continues to rise across China Families in the first-tier cities (e.g. Beijing, Shanghai, Shenzhen) in China spend on average 20 to 30% of their disposable income on their kids' education. This trend is observed to be growing over the last few years, and is also developing in the second-tier cities such as the provincial capitals and other more affluent cities in China. It is observed that in a certain city, once over 40% of students go to after school classes, a flipping point will be reached resulting in FOMO - suddenly everyone wants to go to the after-school classes and every parent feels obligated to send their kids there. 2S is the largest segment with government spending on public education expected to riseThe government spending on public education system in China is about RMB 5 trillion - just above 4% of GDP for China. In more advanced economies like Northern Europe, this ratio is about 8% of GDP. So, it is believed that the Chinese government spending on the public education system will continue to grow. Covid-19 led an 85% increase in online education but this is believed to be temporaryThe first wave of online education start-ups came into existence around 2013. By 2019, data shows that about 15% of the consumer market is acceptive to online education. Covid-19 led an 85% hike in the online education market. But it is believed to be temporary as the majority of the education will still be conducted in physical campus and the majority of the school system will go back to its old track. Key growth trends identified are 1) education of kids before 3 years old 2) after kindergarten market: OMO (online merges offline) 3) Screenless education for kids before 6 years old 4) Online education for vocational training 5) digitalisation of physical campus 6) The use of new media like TikTok for education purpose Content at a glance with time-code (01.20) Veronica’s background story and a brief introduction on Blue Elephant Capital (02.39) Overview of Chinese education market: how it segments to 2C, 2S and 2B; key trends within each segment (09.13) 2S: what areas of private investments are relevant for the 2S segments (11.25) The government’s procurement and purchasing decisions within 2S (16.25) Chinese online education before and after Covid-19 (26.06) Blue Elephant Capital’s investment approach (32.07) Key growth trends in EdTech in the next 3-5 years (38.06) The unicorn discussion Episode linksBlue Elephant Capital:
/episode/index/show/beyondunicorn/id/15214004
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[Founder Talk] What it takes to win the social commerce race with David Ng from Pollen
06/16/2020
[Founder Talk] What it takes to win the social commerce race with David Ng from Pollen
Today’s guest is David Ng, co-founder and CEO of Pollen, a community sales-as-a-service platform empowering brands to turn their fans into resellers. We began our conversation by diving into Pollen’s business model – understanding the challenges and opportunities of a B2B model versus a B2C model, dissecting the key value proposition and the key stakeholders’ relationships of social commerce, highlighting the difference between social commerce and multi-level marketing. Lastly, we discussed the competitive landscape of social commerce and how Pollen positions itself among the competitors. Key highlights from our conversation Direct to consumer brands and social commerce go hand in hand A lot of famous direct to consumer brands became popular due to social media so what social commerce does for D2C brands now is to enable them to go one step further from engaging their community through contents to turning them into resellers for the brands. Key difference between multi-level marketing and social commerce Multi-level marketing is focused on the recruitment of other agents where the bulk of the income comes from instead of selling for the brand while social commerce focuses on selling for the brand by attracting people who can build personal relationships with the buyers. The key value proposition for social commerce is centred around the hypothesis that “I am more likely to buy it from someone I trust as opposed to buy it from someone whom I don't know or by seeing a brand’s advertisement”. There are three key stakeholders at the heart of social commerce – the brand or supplier, the resellers and end consumers. Casual sellers make up the bulk of the reseller network 75% of the community piloted at Pollen is made up of casual sellers who are potential buyers too while the remaining 25% of the community are hardcore sellers who see social commerce as a way a main income generating engine. Non-commodity type products are more suitable for social commerce such as fashion, beauty, food, wellness, lifestyle because purchasing decisions for such products depend on a multitude of factors beyond pure functionality and price alone. Content at a glance with time-code (01.26) David’s background story and the journey to founding Pollen (03.22) Snapshot of Pollen’s business model (05.09) Direct to consumer brands and social commerce go hand in hand (07.43) Difference between social commerce and multilevel marketing (11.46) Casual sellers vs hardcore sellers (13.36) The B2C element of social commerce (16.04) What types of products work best for social commerce (20.05) B2B vs B2C social commerce business models (32.20) Unicorn discussion: the fine balance between profitability and valuation Episode linksPollen: Jumper AI:
/episode/index/show/beyondunicorn/id/14844182
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[Expert Talk] The business of fashion and retail with Stefaan Le Clair from Berenike Global Fashion Management (Part 2 of 2)
06/02/2020
[Expert Talk] The business of fashion and retail with Stefaan Le Clair from Berenike Global Fashion Management (Part 2 of 2)
This episode is part two of our industry talk on fashion and retail. And it follows on from our discussion in the previous episode released two weeks ago. In this episode, we looked at the rise of Direct to Consumer brands, and how technology contributed to this trend; the truth surrounding online and offline retail, the challenges faced by department store and then circling back to considerations of franchising and licensing which were first introduced in the last episode. Finally, we conclude our discussion by zooming out to a more general discussion on overall industry trends. Our expert guest is Stefaan Le Clair, the Managing Director of Berenike Global Fashion Management. Stefaan’s past industry experiences include being the VP of Retail Europe at Espirit Group, the CEO of denim brand Lee Cooper, the General Manager of Hudson’s Bay Benelux which is also the parent company of Saks Fifth Avenue, the CEO of Galerie INNO which is a department store chain in Belgium. Key highlights from our conversation Direct-to-consumer brands: do-it-all Vs excel-at-allDirect to consumer brands have the ability to communicate directly to end consumers instead via third parties thus it is easier to maintain distinct brand entity. However, when it comes to distribution channels, it is rare to see brands who do-it-all become a specialist in all the channels. So, brands have to strike a fine balance between do-it-all but not excel at all aspects and outsource certain elements to more experienced partners. Online and offline are doomed to be married forever The cliché discussion of “is offline going to die in favour of online?” or “is online going to die because of lack of profitability?” is unlikely to yield useful conclusions. What is more important is the wishes of consumers which depend very much on the type of product and the emphasis on convenience. Certain products such as mid-level premium luxury brands and lingerie work better in offline settings with the involvement of salesperson while for certain product categories, online offer the opportunity of wider product assortment which is difficult to achieve offline. So, it is important for brands and retails to be present in an omni-channel environment with a blend of online and offline channels. The key to the future of department store is social Department store is a complex business with very huge surfaces and wide selection of product categories. It has a negative reputation today because it has never changed. The future of department store rests on its ability to recreate the social element of being a gathering place for people, working place, eating place or even a sleeping place – a place where people come to experience something, to have an “event” feeling at certain moments. Successful examples of ILLUM and Selfridges are highlighted. Licensing and franchising remain a viable business model It is important to recognise that it is difficult to excel in all aspects of the business. It can be beneficial to find a partner with complementary skillsets. This is especially true for geographical expansion where local network and expertise are crucial. As a brand owner, one needs to ensure that you have a good contract in place to guard and police your brand DNA. How technology helps fashion and retail companies The first major role technology plays in advancing fashion and retail companies is on consumer data and insights. The second role it plays is in helping businesses to become more agile and flexible so to respond to ever changing consumer demands. These two roles are most critical when evaluation the usefulness of a technology to fashion and retail brands. Top 3 sub-segments with high growth potentials are highlightedTravel retail is the fastest growing sub-segment before Covid-19; however, its development post Covid-19 remains unclear. Sustainability related sub-segment remains popular due to the rising environmental concerns worldwide. And hospitality is going through disruptive changes driven by the search of unique experiences. Should we be worried of unprofitable retail unicorns? The drive to provide consumers with a 360-degree experience can stand in the way of profitability in the short-term. However, in the long term, the combination of the right leadership and the right vision together with technology can help to fight a profitable battle just like what we observed in the case of Amazon. Content at a glance with time-code (01.34) The rise of Direct to Consumer brands (05.02) Online vs offline retailing channels: convenience factor, type of products (15.13) Are department stores dead? What changes do they need to implement to survive in the future? (22.39) Licensing and franchising as a business model to grow (28.28) Technology trends or applications in fashion and retail (33.13) High growth sub-segments within fashion and retail are highlighted - travel and sustainability (36.55) Unicorn discussion: is it reasonable to valuate retail unicorns as tech unicorns? Episode linksBerenike Global Fashion Management: ILLUM:
/episode/index/show/beyondunicorn/id/14665013
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[Expert Talk] The business of fashion and retail with Stefaan Le Clair from Berenike Global Fashion Management (Part 1 of 2)
05/20/2020
[Expert Talk] The business of fashion and retail with Stefaan Le Clair from Berenike Global Fashion Management (Part 1 of 2)
This episode kicks off a mini series of industry specific expert talks. The objective of industry talks is to help investors to structure their thought process when evaluating companies operating in these industries. It also helps entrepreneurs who are looking to start a company in these industries. Today we begin with fashion and retail industry. And our expert guest is Stefaan Le Clair, the Managing Director of Berenike Global Fashion Management. Stefaan’s past industry experiences include being the VP of Retail Europe at Espirit Group, the CEO of denim brand Lee Cooper, the General Manager of Hudson’s Bay Benelux which is also the parent company of Saks Fifth Avenue, the CEO of Galerie INNO which is a department store chain in Belgium. Our discussion is divided into two episodes. In this first episode, we begin by working through the different stages of the value chain in fashion and retail. Starting with product development, looking at how brand positioning influences design and manufacturing arrangements in a business; and how supply chain efficiency became the new norm, so shifting value differentiation to other elements. We then went on to discuss Sales & Marketing considerations, such as revenue mix between wholesale Vs retail and the importance of being present in multiple channels. Key highlights from our conversation The cost of a product today is influenced by factors beyond the direct cost of production In today’s world, the actual cost of a product is no longer the key determinant of the price of a product. The cost is often influenced by the pricing power of downstream sales and distribution channels and how a product enters such channels (e.g. the number of middlemen and their commissions). Increasingly, consumer demand and price sensitivity also play a big role in determining the cost. So, we often have to turn the box round and calculate margins and costs backwards. Efficient supply chain is no longer sufficient to drive and sustain value Supply chain efficiency is an important value creator in the past. But by being more efficient and better controlling the cost are no longer sufficient in driving and maintaining value for today’s brands. What are more important for value creation are the speed of bringing products to market and the process that followed. Greater emphasis placed on consumer feedback in product creation In the past, products were created by product managers within the company. And today there is a greater emphasis on customer centricity with an increasing trend of product co-creation using consumer insights captured through data. Achieve growth by widening assortment is a better strategy as compared to creating sub-brandsWidening product assortment under one umbrella brand is a strategy that will deliver more value than splitting one brand up in multiple sub-brands as that will dilute the core DNA. It is better to focus on your core customer and surround them with a 360-degree product assortment. It is important to adopt a multi distribution channel approach We have seen traditional wholesale business venturing into retail to seek growth and manage risk. At the same time, vertically integrated retail brands are selling via wholesale channels too in an attempt to further broaden its customer base. Content at a glance with time-code (02.06) Stefaan’s personal background story (04.21) Compare and contrast different business arrangements of product development (09.18) How supply chain efficiency is no longer a key value creator today (12.03) Can luxury brands still create value through unique designs? (18.31) How to balance the need to stay true to a brand’s core and respond to ever changing consumer demand? (25.26) The future of fashion business is a conglomerate structure with multiple brands under one company (30.34) How value has been shifted away from supply chain to later stages such as sales & marketing (32.52) What does consumer centricity mean? (35.26) Wholesale Vs Retail distribution channels (43.45) How franchising and licensing can help brands succeed in areas that are outside of their core strength Episode linksBerenike Global Fashion Management: Galeria INNO:
/episode/index/show/beyondunicorn/id/14491283
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[Investor Talk] The truth about angel investing with Sam Gibb from Endeavour Ventures
05/06/2020
[Investor Talk] The truth about angel investing with Sam Gibb from Endeavour Ventures
Today’s guest is Sam Gibb, founding partner of Singapore-based early stage VC fund Endeavour Ventures. We began our conversation with Sam’s personal investing experience as an active angel - how he got started, his view and recommendation on deal sourcing and network building. We then went on to discuss the five things that he looks for in a start-up, the reality of financial return and motivation of angel investing. And finally, on his recent transition from angel to VC and what are his key investment focuses for 2020. Key highlights from our conversation Getting involved with angel networks is a good way to get started in terms of building relevant networks and gaining investing related knowledge. However, deals listed on the angel networks maybe those that have been passed on by more experienced investors, so one has to be aware of the potential selection biases in these deals. For investors based in Singapore, BANSEA and AngelCentral are highlighted among other angle networks. Being nice to people, being interesting and being direct when dealing with entrepreneurs help to create and build networks. One of the worst habits that investors have is just ghosting – try avoiding that. In order to do exceptionally well, one has to be contrarian right because if it's a consensus good idea, then it's going to be well exploited and already priced into the valuation. Investing successfully over the long run needs a very disciplined approach; some of the good disciplines highlighted include maintaining a due diligence checklist and writing an investment memo to document reasons for making a particular investment. It is important to determine what one’s motivation is with angel investing; if financial returns are your key objective, you need to be realistic that investing your cash in equity may generate higher returns based on historical VC fund returns over the last 10 years; also you will need to do at least 20 investments to have a 89% chance of returning your original investment so portfolio construction is an important consideration. Key investment opportunities for 2020: developer tools that aid collaboration in remote work settings; security token in the blockchain space and cybersecurity in general Content at a glance with time-code (01.17) Sam’s journey into angel investing (02.55) Channels for deal sourcing (04.19) What are the considerations with getting involved in angel networks? (06.50) Selection bias in deals listed on angel networks (10.00) BANSEA and AngelCentral are highlighted (10.56) How to build and maintain networks (15.30) The due diligence process and investment criteria (21.08) How the process of investing has changed over the last 6.5 years (23.30) How to overcome personal bias (24.40) The importance of being contrarian right (26.39) Discipline and long-term investment success (29.26) It is difficult to succeed financially as an angel investor (33.35) Transitioning from angel to VC (35.13) Investment opportunities in 2020 – Digital transformation in Southeast Asia (37.58) Unicorn discussion – potentially a good signal for legitimacy Episode links Endeavour Ventures: AngelCentral : BANSEA :
/episode/index/show/beyondunicorn/id/14286968
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[Expert Talk] Achieve long-term investment success through asset allocation with Freddy Lim from StashAway
04/22/2020
[Expert Talk] Achieve long-term investment success through asset allocation with Freddy Lim from StashAway
Today’s guest is Freddy Lim, Chief Investment Officer and Co-founder of StashAway - an online investment management company headquartered in Singapore. We began with a market update focusing on the thought process investors can use to analyse current market conditions and the key reasons behind the decoupling of financial markets from the real economy. We then shifted our discussion to understand StashAway’s proprietary investment strategy, ERAA - namely the Economic Regime-based Asset Allocation and how ERAA can be applied to understand post-crisis recovery. Top 5 Takeaways Focus on aggregate numbers to make sense of what's happening in the market A useful way to think about the combined economic impact of lost output due to Covid-19 and aggressive government stimulus is to look at how A compared to B in aggregate numbers. It is because the aggregate stock market and the aggregate multi-diversified portfolio only focus on the aggregate loss of output versus aggregate stimulus. Money multiplier effect created through fractional banking explains the decoupling of financial markets from the real economy A key reason behind the observed decoupling is the introduction of fractional banking which made "money multiplying" possible. When one dollar is deposited into the banking system, the bank is only required to keep a fraction of the dollar and can lend out the remaining, creating a multiplier effect in the real economy. Asset allocation is the key determinant of differential portfolio returns The majority of mid-to-long term return or loss is driven by the economic environment so the act of deciding how to allocate assets into a particular sector or industry is responsible for between 80% and 96% of a portfolio’s return profile. The remaining 10–20% of excess return (i.e. alpha) can be attributed to an investor’s superior ability to pick winners and losers but this is very tough to do successfully over a long period of time. The importance of staying on course For investors who have clearly defined their investing objectives and designed long-term investment plans, it is important to stick to these plans and not to make changes based on opportunistic movements in the market. Staying invested is very key for long-term success Markets are very dynamic and very hard to be predicted accurately. All investors want to buy low and sell high but many end up buying high due to FOMO or selling low due to the fight-or- flight response. Dollar-cost averaging is a great strategy to smooth things out during periods of high market volatility and help you stay invested in the game. Staying invested is very key for your long-term success. Ultimately you got to do everything you can to not get KO’d by the market. Content at a glance with time-code (01:27): Freddy’s professional investing background and what led him to co-found StashAway (03:15): Focus on aggregate numbers to make sense of what’s happening in the market (07:20): The decoupling of financial markets from the real economy explained (14:06): Why didn’t we see the much-anticipated inflation happening during the recovery phase post 2008 financial crisis? (15:46): StashAway’s proprietary investment strategy, ERAA — Economic Regime-based Asset Allocation explained (19:54): Do the causes underlying each economic regime matter in asset allocation decisions? (23:00): Asset allocation is the key driver of differential asset returns (25:50): What does StashAway’s asset universe look like? (36:52): Has StashAway’s investment strategy changed due to the crisis? What are the in-built mechanisms to respond to crisis situations? (41:59): Answers to the most asked questions on StashAway 1) do I switch my portfolio from a low risk to the highest risk portfolio to take advantage of the market draw down? 2) should I invest more, accelerate my investing plan now? (49:21): The unicorn discussion — StashAway’s decacorn potential Episode Links StashAway: StashAway’s Asset Allocation Framework:
/episode/index/show/beyondunicorn/id/14092025
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[Investor Talk] Crypto as a new asset class with Paul Veradittakit from Pantera Capital
04/08/2020
[Investor Talk] Crypto as a new asset class with Paul Veradittakit from Pantera Capital
Today’s guest is Paul, Partner at Pantera Capital – one of the earliest institutional Blockchain investment firms. Paul began by sharing his personal journey from learning about Blockchain to eventually joining Pantera Capital to drive its VC funds. We then went on to discuss its investment thesis and how it evolved from the first fund to third fund now, and then broadened our discussion to evaluate popular industry narratives namely cryptocurrency will become a new asset class and Bitcoin’s role as a safe haven asset. And lastly, we explored how blockchain will impact the VC industry. Pls note that this episode was recorded before the March 12th market crash across cryptocurrencies. For listeners who are interested to read more about what happened and the impact of Covid-19 on crypto, I have shortlisted some articles, do refer to the episode links for more information. Key Takeaways Fiat to crypto on-ramps are very key for people to get access to cryptocurrencies; so, exchanges and wallets that can provide fiat to crypto abilities remain as Pantera’s key investment focus Liquidity and scalability remain as the key challenges to be solved before large scale decentralised use cases can emerge; for now, speculation remains as the key usage for crypto Besides having institutional grade infrastructures in place, further development in derivatives and regulatory clarity will be needed before institutions invest directly into crypto or token as an asset class; currently their exposure to the industry is via indirect investments into private equity funds It is still early to determine the investment success of cryptocurrencies as a new asset class; but the chances of diversified crypto investment going to zero in value are low while the chances of it generating exorbitant returns are present; so it is about limiting one’s exposure to hedge the downside risk with a potential to benefit from its upside Episode links Pantera Capital What happened on March 12th Crypto in this crisis: Pantera Blockchain Letter March 2020
/episode/index/show/beyondunicorn/id/13884560
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[Expert Talk] Investing through crisis: Covid-19 Macro market update with Tian Yang from Variant Perception
03/25/2020
[Expert Talk] Investing through crisis: Covid-19 Macro market update with Tian Yang from Variant Perception
Today’s guest is Tian Yang, Head of Research at Variant Perception – an independent research company on financial markets. Against the backdrop of global financial market sell-off triggered by Covid-19, we analysed the market reactions by segmenting genuine causes of concern vs panic reaction; we discussed lessons learnt from historical black swan events and how these lessons can be applied to the current situation; and how government policies can work together to avoid recessionary pressures created by Covid-19 and lastly, what should private investors do to seize opportunities in these uncertain times. Key Takeaways COVID-19 is currently been interpreted as a one-off black swan event similarly to 9/11 and Gulf Wars; a helpful framework to think about panic-led market crash is an analogy to what happens in a typical bank run Coming into 2020, underlying leading indicators are quite resilient; they had been declining through most of 2019 and began bottoming out and turning up before Coronavirus hit the markets What is needed to shift the market sentiment and avoid sustained recessionary pressures is a combination of fiscal, monetary and aggressive healthcare policy; all three at once The book "Why Stock Markets Crash" by Didier Sornette is mentioned to illustrate the framework used to determine new market equilibrium after a large shock: the new equilibrium usually takes 1-2 months to happen where daily market volatility reduces from 4-5% to 1-2% During the recovery phase, differentiated impact by sectors is expected with manufacturing, industrial set to rebound the most, exhibiting a V shape recovery; consumer sector is expected to exhibit slower path to recovery as 1) coming into the crisis, credit availability was already not great 2) non-discretionary costs like rent, medical expenses can actually go up For private investors, it is advised to start identifying interesting investment opportunities but wait to see 1) the virus status level off and 2) the market daily volatility turned down to 1-2% which presents a better entry point As the old saying in the market goes: it's usually better to buy one day late than to buy one day early Episode links Variant Perception: “Why Stock Markets Crash” by Didier Sornette:
/episode/index/show/beyondunicorn/id/13690349
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[Investor Talk] Decode AI investing with Kelly Chen from DCVC
03/11/2020
[Investor Talk] Decode AI investing with Kelly Chen from DCVC
Today’s guest is Kelly Chen, partner at DCVC – one of the earliest VC funds to focus on deep tech investments. We began our conversation with basic definitions, the concept of autonomy, and then went on to discuss commercially viable applications, value creation considerations and thought process when evaluating AI investment opportunities. And lastly touching on broader topics such as the ethical aspect of AI and what lies ahead in the next five years. Key Takeaways Key terms defined: artificial intelligence (AI) is about how to make computers intelligent; machine learning is a subset of AI which essentially are algorithms that make predictions; deep learning is a subset of machine learning where more complex neuro enable more complex problems to be solved Autonomous AI is already seen in applications which have low stakes such as vacuum cleaning robots as compared to autonomous driving vehicles where failing can lead to fatal consequences Misconceptions in AI highlighted AI in itself is valuable for a specific application à AI in itself is not valuable, it's the problem case that one is solving gives AI value Algorithm in itself is very important à algorithms nowadays are very commoditized, it's the data and the labels that are the most important Biases in dataset are almost unavoidable in a lot of different types of AI applications; but what is more important is to understand how the entrepreneur thinks about remediating these issues Biggest AI applications in the future are probably in the manufacturing and retail space as there is a lot of repetitive labour with super high turnover in the sector where AI robotics can replace these human tasks in an economical way. Episode links DCVC: Kelly Chen:
/episode/index/show/beyondunicorn/id/13479827
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[Expert Talk] How to outperform benchmark indices with Stephen Yiu from Blue Whale Capital
02/26/2020
[Expert Talk] How to outperform benchmark indices with Stephen Yiu from Blue Whale Capital
Today’s guest is Stephen Yiu, Chief Investment Officer of Blue Whale Capital. Stephen has over 20 years of experience investing in public equity. His fund has delivered consistent outperformance since inception two and half years ago. We began our conversation with Stephen’s investment approach, such as reasons for running a concentrated, high conviction portfolio, what underlies his buying and selling decisions, valuation metrics he uses. And then delved deeper into his current holdings, what are the key underlying investment themes and how these themes will play out in 2020 and beyond. Pls note that there is discussion on the past performance of Blue Whale Capital in this episode and Past performance is not a guide to the future. Risk of loss. Key Takeaways Increasingly efficient market narrows the comparative informational advantage enjoyed by professional fund managers and thus making it harder for active funds to outperform benchmark indices Stephen adopts a bottom-up investment approach using in-house fundamental research; he runs a concentrated, high conviction portfolio of 25-35 stocks Guideline for buying decision: 1) companies with a strong competitive position - typically the market leader in their respective sector 2) good management team 3) companies that are exposed to structural growth drivers 4) ability to generate high return on invested capital 5) company's earnings profile has little to do with macro uncertainties Guideline for selling decision: 1) when there’s any risk of disruption to their business model fundamentally 2) when valuation is no longer attractive Key valuation metrics used is free cash flow yield; currently the market is trading about 7% free cash flow yield five years from today; based on fundamental analysis, investor can then decide if it is justified to pay a premium or discount relative to the markets Key investment themes and companies highlighted 1) Digital transformation: Adobe and Paypal 2) Medical tech – non-invasive procedures: Boston Scientific 2) Luxury brands: LVMH Episode links Blue Whale Capital: Hargreaves Lansdown: Blog post on how efficient market is affected active fund management: Blue Whale top 10 holdings:
/episode/index/show/beyondunicorn/id/13289081
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[Investor Talk] Blockchain investing and 2020 key developments with John Ng from Signum Capital
02/12/2020
[Investor Talk] Blockchain investing and 2020 key developments with John Ng from Signum Capital
Today I am joined by John Ng – Managing Partner of Signum capital, a Singapore based investment fund focused exclusively in the blockchain space. We began our discussion on the value and specific use cases of blockchain technology, how it disrupts the traditional financial world; then moving onto investment considerations such as the decision to invest in token or equity, how Signum performs its due diligence process; and lastly looking into key future developments including the expected price movement following Bitcoin’s halving in May 2020. Key Takeaways 2020 will be the year of consolidation; companies that haven’t made enough progress on its product and have burnt through their runway will die. Companies that have survived the last 3 -4 years will really take on shape and form in 2020. Equity is the primary form of fundraising among blockchain companies nowadays; and there are two types of companies fundraising in the market – 1) companies which have achieved their growth targets and need more cash to obtain faster growth 2) companies which ran out of money and the only thing that is left to sell is its equity. In anticipation of bitcoin halving in May 2020, price correction is believed to happen, with prices of Bitcoin surging up later in the stage. But this halving would not be the same as the past few times. Signum Capital’s portfolio companies highlighted in the interview include Konkrete () and Lightnet () Tweetables “2020 will be the year when we see companies that have survived again, for the last three years, four years, that they really take on shape and form and to produce really strong results” @john_ng_p “There'll be a correction…overall, I do see prices of Bitcoin surging up later in the stage” @john_ng_p “So many unicorns have died last year. I think we should find another animal” @john_ng_p Episode links Signum Capital: Koncrete: Lightnet: Lightnet launch:
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[Investor Talk] ESG Investing with Christopher Aw from Pandan Ventures
01/29/2020
[Investor Talk] ESG Investing with Christopher Aw from Pandan Ventures
Today’s guest is Christopher Aw – Managing Partner of Pandan VC, an early stage VC fund acting as a launchpad for technology companies entering into Southeast Asia. We began our conversation by defining what ESG is; how it is used by companies as a guideline to mitigate potentials risks; And then moving onto trends and ideas around active ESG strategy; the difficulty and reality of practising such an active strategy. And also adding the perspective of early stage ventures in our discussion. Key Takeaways ESG is predominantly used as a way to mitigate risks in the public sector and by large corporations There is an increasing trend towards active ESG strategies with numerous technologies maturing and creating more investible options; however, certain aspects of ESG such as social (e.g. gender equality) remain challenging when it comes to active investment strategy Plant-based proteins and other alternative proteins (some produced from insects) contribute positively to the environment as they use far less carbon to produce a certain amount of protein as compared to meat The clean meats sector is probably the one receiving the most public attention due to the hugely successful IPO of Beyond Meat which saw its price rose 789% at one point Other investible ESG concepts and themes mentioned: carbon capture technology, biomass waste-to-energy, aquaculture, alternative proteins made from insects, microfinance loans, indoor and precision farming, Gene-editing tools CRISPR and TALEN Episode links Carbon capture technology explained: Biomass explained: Beyond Meat post-IPO price surge: Impossible Foods launching plant-based pork at tech conference CES (Jan 2020) Gene-editing tools CRISPR and TALEN: Pandan VC: English Transcript:
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[Founder Talk] Asia's next Insurtech Unicorn with Roseline Koo from CXA
01/15/2020
[Founder Talk] Asia's next Insurtech Unicorn with Roseline Koo from CXA
Today’s guest is Rosaline Koo – founder and CEO of CXA group, Asia’s leading Insurtech start-up running a Software-As-A Service health and wellness platform. We began our conversation with Rosaline’s personal story, how an accidental journey that provided her with the knowledge and network to launch and grow CXA, we examined how CXA disrupts the traditional insurance industry, its revenue streams, current and future value drivers and lastly, looking forward to its unicorn aspiration, profitability and exit plan. Key Takeaways Traditional insurance industry is laden with inefficiencies created by the layer of middlemen including brokers (usually 15% commission), agents (first-year premium as commission), third party administrators (TPAs) which charge clinics 15 to 35% of the medical bill CXA cuts away the middlemen and establishes direct-to-consumer channels connecting health and wellness providers to end consumers via their workplaces Through its platform, CXA offers employees the choice and option to extract value from the “free money” (i.e. voluntary contribution provided by employers as part of employee benefits) which goes back to the company if it remains unspent by the end of each policy year CXA’s key value propositions: 15 to 25% saving on employers’ healthcare cost; digitalised health and wellness ecosystem connecting all value chain players CXA is on path to achieve profitability by 2020 assuming no additional allocation to growth capital and attain its unicorn status within 3 years Tweetables “I feel like I've had a very accidental journey. There was no intention. So, it's just... maybe it's like Forrest Gump. Things just kind of happened.” @RozChowKoo “If your legacy is a channel that makes most of your money, anything that threatens them will threaten your whole firm because they will walk.” @RozChowKoo “Essentially, we are a marketplace that's a closed network with free money that if you don't spend it by the end of the policy year, it goes back to the company” @RozChowKoo Episode links CXA Group: Roseline Koo: English transcript:
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