Darwinian VC Evolution: Strategy Changes Due to Low Southeast Asia Fund Performance 0.4X vs. USA, India & China - E436

Adriel Yong, Head of Investments at Ascend Network, and Jeremy Au assessed Southeast Asia's low VC fund performance (median 0.4X returns vs. USA (1X) and India (1.3x). They discussed VCs shifting towards more realistic and localized investment strategies, while also taking into account growing geopolitical USA vs. China tensions with their resulting trade and economic impacts on countries like Singapore, Indonesia and Vietnam. They explored a range of strategies: shift towards earlier-stage investments, private debt, exploring less saturated/ underpriced markets like Malaysia, increased focus on consumer categories, "rightsizing" towards smaller fund sizes, pushing for complex yet needed secondary transactions, instituting more disciplined investment practices and managing capital better.

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(00:01:57) Jeremy Au:

Hey Adriel!

(00:01:58) Adriel Yong:

Great to be on the 8am breakfast show again with you Jeremy.

(00:02:02) Jeremy Au:

I know, right? Always nice to kind of like hang out and chit chat. So it looks like our last episode that we recorded two, three months ago was quite popular. A lot of listeners sent in feedback saying that they enjoyed themselves.

One person actually laughed about how brutal our take was on the region. And I'm like it wasn't brutal, but I think that's how she kind of described it. How about you, what are your thoughts about, people telling you about the episode?

(00:02:22) Adriel Yong:

Yeah, I think that episode definitely struck a nerve with a lot of, I've had many follow-up conversations on similar bearish notes. I mean, I was just in Vietnam for Tech in Asia last week and have had similar conversations with both some of the local and regional investors, on how they feel about the market. And some of them are actively thinking about, okay, how do you adapt fund strategy, investment strategy, according to the realities of this market. I think we've also seen some people do interesting investments over the last six to twelve months that I think are worth unpacking to some extent.

(00:02:56) Jeremy Au: And I think that what's interesting is that I don't feel like we were being bearish. I think it was just being realistic. One man's realist is another person's bearer, I guess. So I didn't feel like we had any like negative intention. I mean, also we are investing, and still investing in Southeast Asia. It's just that I think we have to invest in what's in front of us, not really this amazing, magazine cover, rah rah. And I think when we released that episode, I wouldn't even say that we were early in describing it.

Like all that conversation was already happening over poker or dinner or an investment committee. It's just that I think it didn't really break out into the broader public, I don't know what's the word, tech landscape awareness, right? And so, I think my reflection on that is that I was surprised by how many people felt like it was being totally set fresh. Whereas to me it was like, I felt like we had been talking about this for already six months. So I guess there is a time lag. Obviously, information takes time to transmit. And also maybe there's also some opacity in the ecosystem as well.

(00:03:53) Adriel Yong:

Yup, totally. Maybe we should jump right in and, talk about the extension to that episode. So, we recognize there are certain down arrows for the ecosystem and certain harsh realities we all need to confront. So, what's next, right? I think there's a Tech in Asia report that generated some internal conversation. Talk through some of those.

(00:04:11) Jeremy Au:

I have it on the phone here. Flash out. So I felt Terence the Editor in Chief of Tech in Asia. He wrote this letter and he took, took a screenshot which was being re shared across the VCs, which kind of confirmed what we were saying, but maybe more quantitatively. So basically it was saying that the median distribution of payment capital for VC and growth funds. This is a nice way of saying, how much money did VCs actually make for people who invested in those VC funds? And so it was saying that for the fund age of eight to ten years, so the vintage was about 2013 to 2015. The US distributed 1x, Europe distributed 0.7 India returned 1.3x, China returned 0.6x, and Southeast Asia returned 0.4x. So it is nice we're saying that if you put a dollar into Indian VC fund in eight years, you really got it. $1.30 back and maybe there's another few more years, two years, maybe the funds get extended, maybe the five more years, but it's more upside. You already made money, right? Whereas US is probably widely considered to be best in class. This is obviously the average. So when I look at this report this was pulling from the Bain report. Obviously this is the average with distribution. So I think that if we probably look at the first quartile then this probably gets sharpened even more.

(00:05:57) Adriel Yong:

Yeah, so I guess there's a few ways to unpack it. I think obviously in Banjab, you will talk about how vintage is very important. And you, in that Tech in Asia chart, you see that I guess across the two vintages, the earlier vintage perform much better. And I guess 10 years ago, that was probably when your Carousel, Shopback, Grab, Gojek, Tokopedia, and all that was started. And then, some of those returns have been realized over time with some of the global growth funds coming in and buying positions out or people trading out secondaries pre-IPO an even selling post-IPO. Whereas, I think the later vintage probably still has some time to mature, but I think they have also bumped into a speed bump with the, last two years of macroeconomic environment being not as bullish because of interest rates.

Obviously, there's also the geopolitical tensions between US, China. And then within each local Southeast Asian country, there is also certain political and economic downturns, right? I mean, Vietnam for instance, is going through a rough patch in both its political ecosystem with the changing of guards, but also I think from a real estate perspective. It's also suffering quite a fair bit, which is critical for Vietnamese people who have actually a lot of their wealth tied up in real estate.

So then you knock on effects in decreased consumption spending and you don't just hear it from the people who are selling software, edutech, but you also hear it from the people selling consumer, F&B, etc, that people's consumption spending have easily dropped like 20, 30 percent over that last one year. So added bearishness, but I guess we're on the bright spots, right?

I guess some people joke that okay, Southeast Asia is not good. So let's run off to India, Australia, New Zealand, which is what some of our friends have started doing exploring new markets. What are your thoughts on that actually?

(00:07:40) Jeremy Au:

Yeah, I mean, that brings back the point, which is that the chart that we just mentioned is the past vintage, right? So 2013, 2015. So I think what people are saying is today is different. Today's vintage of companies being invested in has upside. So I think let's discuss that, which is where's the optimism?

First of all, is if you're a pessimist or at least, again, not pessimist, but if you're looking at it based on historical data, I think, like you said, there are actually many Southeast Asians, especially in Singapore, who are covering geographies outside Singapore. So I think those with exposure to India, for example, they're spending a lot of time in India. And I think for them, one of the street is that the generally more positive and more bullish on, the India market for all the mentions that we mentioned earlier. I think we also see a lot of, I'll say generally Singapore-based or even US-educated. I think there's some overlap there but a lot of those investors are covering, like you said, Australia, New Zealand, but also the US, Europe. They're servicing or based in Singapore and they have coverage, maybe 10, 20% of the Southeast Asia market in case something that's interesting happening, but they're off hunting deals outside Southeast Asia. I think that's one what adaption people are having. I think the other adaption is people are moving earlier upstream. So they don't believe that in series A or series B, or at least it tends to get completed away pretty fast. So they're trying to go more into I want to say angel, but maybe angel and pre-seed, seed rounds seems to be some level of strategy that people are looking at.

(00:09:03) Adriel Yong:

Yeah, no, I think that's an interesting trend, which is what happens when all the capital starts going more upstream. And it doesn't leave that much capital at your series A and beyond, how do founders adapt and that's sort of like a change in fundraising climate. Since historically your series A was probably the most well-capitalized in the region, right? But there's always that pre-seed, seed gap, or even your series B onwards gap.

(00:09:27) Jeremy Au:

Yeah, I think that what we'll see is that a lot of the larger funds in Southeast Asia already downsized for better or for worse. So if they previously raised very large funds during the zero interest rate policy era, I think that we will see that they will raise smaller funds and I think it will be framed up positively as more disciplined, structured, right size investments for the region. I think the bearish and negative way of looking at it is like, they didn't and weren't able to raise as large a fund as they could, or as they did from the LPs, which would be a mixture of both, right? I think general partners have a good sense about where the wind is blowing. And so they're not gonna go raise out a much larger fund, if they don't think they can do it. And then LPs are not going to put money into a fund that's too large. So I think it's a two-way discussion. So I don't think it's either of those things, but it's more of okay, the new reality has come to perspective. Therefore, I think the next generation of VCs will be smaller than what they were historically.

And I think if we do see funds emerge, we're starting to see them emerge already in the, I'll say, angel round, pre-seed, seed round, I think we still see fund formation happening. And I'll say that corollary to that is a lot of them also are thinking on more of a secondary approach, right? I think people looked at some of the success of the interest rate policy, which was I think there were very few people who were like, they invested early and then they sold at one of the crazy Series A, Series B rounds that was brought in by perhaps somebody who was outside Southeast Asia, probably American. And then they seconded it out and then they made the money that way. So that feels more people seem to be replicating that strategy. But of course the problem is everybody does that strategy. Then. Who's going to buy at the other end of the stick right?

(00:10:57) Adriel Yong:

Yeah. Definitely. I think there have been, I guess call it success cases of people making money making money. Those crazy markets or even in companies that have eventually, that's because they took secondaries off the table during one of the crazy rounds where there was massively strong investor interest, both within the region and outside of the region.

And I guess that's interesting because then it raises even more questions about what sort of companies can you actually do a secondary transaction down the road, which is I guess a question for investors to answer, especially if they want to pursue this secondary strategy. And, then there's also another question, which is how do you even make that secondary transaction more seamless, because today there's still a lot of like manual back and forth. It's probably could even be more complex than signing a safe or, even converting into an SHA, SSA. So I think there's some of those process, infrastructural issues to be solved as we see the rise of more and more secondary transactions in Southeast Asia.

(00:11:54) Jeremy Au:

And basically some people can play it, but not everybody can play it, especially if you are a lead VC. I think secondary still is a pretty strong signal that you don't believe in a company. So it's difficult in general for a lead VC to do that. So we're seeing all the proliferation of party rounds, a lot of small funds banding together. That's one other approach.

I think other strategies come to mind, I would say one is private debt. The one for private debt would be, yeah, if I can't make returns on equity because I don't believe so, but, or there's a ban of companies, can we do some kind of private capital, venture debt, or the other way is equity, but with a more of a debt like structure. So depending on your flavor of it but the key thing is having some level of interest rate and some sort of ability to pull out the capital earlier has been also one of the things we see. So I think we see a lot of funds start to bring in private debt funds.

(00:12:41) Adriel Yong:

Yeah. I think the venture debt ecosystem has been growing, right? You have people like, in Genesis, a bound capital lending, even in a downturn during this market, And I guess it makes a lot of sense for them to do that because, at the end of the day, like as companies start to cut back on equity fundraising, they try to pursue more debt options in the intermediate in the time between rounds, but also I think people have also started to do more like SME private credit lending. So I think Shuyin from Beacon Fund is actively exploring that space and looking for impact lending companies that could take some private credit. And it satisfies both the impact angle, but also a returns angle for the fund.

(00:13:20) Jeremy Au:

Yeah. And I think that I feel has more room to run, I would say, because I think there are a lot of companies that are being run differently and I think if you believe that it takes more than 10 years to get to a hundred billion dollars of revenue, then it sounds like you have to do debt, to have that, and so I think there's a lot of companies that are like that, especially as you step outside Singapore and you look more like say Vietnam, Thailand, Philippines, there's a lot of companies that you can imagine becoming a hundred million dollars of revenue, but maybe over 20 or 30 years. So I think you see your venture capital funds are still operating primarily in Singapore and Indonesia today, I would say, with a small touch in Vietnam. And then I think you see a lot more like the private debt folks are starting to explore Indonesia, Vietnam, Malaysia, Philippines to some extent, Thailand to some extent, because also like they can't take on too much risk and they're worried about repayments, right? If they can't get the repayments in, then it doesn't work out.

(00:14:11) Adriel Yong:

I mean, let's zoom in to Malaysia. I think a lot more people have been flocking there recently and the Malaysian government seems to be making a very strong concerted effort in growing the startup ecosystem, bring in venture funds. Personally, I've had pretty good interactions with MDAC and the Mathcap team. How about you? What, what are your thoughts on, the Malaysian ecosystem, especially since you have Malaysian heritage as well, right? Is this a time to go all in on Malaysia? Is that the new frontier in Southeast Asia?

(00:14:36) Jeremy Au:

When you say Malaysian heritage, it makes me laugh because I feel like every Singaporean has Malaysian heritage, right? So I don't think I'm very different from everybody else in Singapore. But I think what's funny is every Singaporean has been walking around Malaysia now. It's I have Malaysian grandparents and I'm like, guys. Because everybody is suddenly because it's hard to say you have you have Thai heritage or Filipino heritage, but everybody's been walking around like that. I would say that definitely I think Dmitri at Cento Ventures wrote that report about a year ago saying that Malaysia was underexposed as a market and felt like there was a lot of good returns because I think, and I think this is similar to what Shiyan has talked about, right? I think that, your ability to generate returns is a function of demand and supply of capital. If there's a lot of supply of capital, then the price goes quite low. And then people can't get returns because there's too much supply of capital. So there's a lot of supply of capital for Singapore because a lot of the money flew into Singapore and then they're based there and they start learning and they start looking at Singapore companies first. Also, Singapore is a high GDP per capita country, right? So obviously there's a stronger demand for capital as well because there's some good founders and deep tech needs a lot of capital.

But you know, I can't absorb all of it. And I think a lot of the capital went to Indonesia, which is a different thing, which is large market, low GDP per capita, more nascent technology ecosystem. But I think the, the downstream effect of that was that prices became very high effectively, or the cost of capital is very low, depending on how you look at it. Again, are you the founder or the VC? But what that meant was that it's very hard to make money if you're overpaid because you're fighting against everybody else. And then, the returns are not so strong. Whereas, I think Malaysia, kind of like, had a dynamic where a lot of capital kind of like, they were looking at Singapore and Indonesia, but they weren't looking at Malaysia because they were bearish on Malaysia, but it turns out that Malaysia has a pretty strong set of, founders, right? So obviously we see that there's like Grab, came from Malaysia initially. We have Kasm, which is based in Malaysia. So there's actually a whole bunch of unicorns that have come out of Malaysia, because historically it has education links with the US and UK, right? And then two, it's a decent size, larger size market in Singapore. So then three, the GDP per capita is in the second tier, right? So Singapore is number one at around 80 to 90,000 GDP per capita. Malaysia and Thailand is around the middle, which is around 15 to 20,000 GDP per capita. And then you have your Vietnam, Indonesia, Philippines which is closer to 6 to 9,000. So it felt like Malaysia is like suddenly has been discovered as the Goldilocks of not too hot, not too small, not too cold, not too large, so it's somewhere that I wouldn't say sweet spot, but you know, it's just spitting out some entrepreneurs who need capital, but that capital hasn't been saturated yet.

So I think now a lot of people are like suddenly covering Malaysia. So for myself, I've always enjoyed covering, for example, Singapore, Malaysia, Philippines because I think it made sense. That's one. Two, of course, is that everybody speaks English, so it makes it a little bit easier for me to cover those markets. And it does feel like the Indonesians have really covered the Indonesians market pretty well, right? They have all that information. And the Vietnamese are also covering the Vietnamese market pretty well as well. So to some extent, I feel if you're based in Singapore as a VC, I think Singapore, Malaysia, Philippines is an easy circuit to get to, to cover based on English and also the ecosystem permeability.

(00:17:35) Adriel Yong:

I think that classification of the different Southeast Asian markets by GDP per capita is interesting because what we have seen historically is that a lot of capital flows into Singapore, which is of tier one GDP per capita. And then, Indonesia, Vietnam, which is, I guess, maybe tier three, but very few people have actively deployed in your tier two GDP per capita countries like Malaysia, Thailand, I guess maybe Open Space is one of them. And they've been very active about being early in those markets.

(00:18:03) Jeremy Au:

You can also add Brunei, I guess.

(00:18:05) Adriel Yong:

Yeah. But I guess Brunei is a whole other topic of discussion altogether, right? Like really rich but, you know, where is it from a state of development perspective in its ecosystem. Actually, I just met someone from Bruna. in Vietnam actually. He was a former founder and then now an investor all the way in Vietnam. Oh, are you very excited about the Vietnamese market as a Brunei person? He's I moved here for love and actually I've had a lot of interesting discoveries of top tier tech talent or entrepreneurial talent that moved from good places to interesting places and vice versa because of love and I think that's a very underrated factor for startup ecosystem development.

(00:18:43) Jeremy Au:

I mean, I don't know about ecosystem development, but that's what my mom told me, right? It's who you marry is probably going to determine where you live. So I think definitely see quite a lot of American and China couples, and then they choose Singapore as a place that's relatively neutral for both parties. We also see a lot of people who are maybe like, European American, but he married somebody from Southeast Asia. So Singapore is also a pretty good place to move to, to do both. And of course, I think we started to see some of the classic folks moving to Thailand or to Bali, I guess, from, Eastern Europe and Russia. So yeah, interesting times.

(00:19:15) Adriel Yong:

I guess. So I think we have explored that market dynamic piece. I think another interesting trend that we are starting to see in Southeast Asia is that VCs are starting to invest more in like consumer brands, right? And I mean, these are not like consumer focused VCs, but you know, your sector agnostic funds, which maybe have historically been investing in a lot more software are now doing a lot more consumer brands, more F&B even, which has not really been considered venture backable or to be able to achieve venture scale returns. Why do you think that's happening now at this point in the market?

(00:19:49) Jeremy Au:

We also don't know whether it's true in 10 years, right? . Just because everybody's investing in it now doesn't mean that it's successful in 10 years, right? I mean, I think we looked at, about five years ago brand aggregator brands was like a no-brainer investment from many folks. And then there were so many other kind of themes happened. So Warung Tech was a big one where it was about helping suppliers and the distribution chain for FMCG goods.

I think the thesis around consumer, and I say this again with knowledge that I might be horribly wrong in 10 years, but I'm just saying the thesis as it stands today is that, we talk about those three bands of GDP per capita. And so if you are at the highest band, you already have all of your consumer brands, you're already buying from the US or American brands. You already have your consumer spend pocketed. And if you have 90, 000 GDP per capita, then obviously you're very interested in wealth tech, right? Because you have a lot of disposable income. You have a lot of savings, you want to invest it in a stock market. I think WealthTech has been having the argument again between Tier 2 and Tier 3 because, the problem for Tier 3 is just they don't have a lot of disposable income to actually invest on the stock market as a retail investor, but maybe like your Tier 2 has the ability to do so to some extent, debatable, right?

So I think the argument, the converse of that is that instead of saving every dollar of growth at the Tier 3 probably goes into consumption. So I think the argument is if your GDP per capita is 6,000, 7,000, 8,000, most of these governments at this band have been promising like around 5 to 6 percent GDP per growth. So that means that your economy would double across 15 years. So what that means is if you are your economy is about 7, 000 GDP per capita, Then if it doubles, then it goes to about 14, 000 GDP per capita in 15 years. So across those 15 years, are you going to spend that in the stock market? The argument now today would be like, maybe not because you'd rather spend it on, and you kind of talked about it, right? Which is, I'd rather spend, buy it in either housing, education, or consumption. Housing because people want a shelter, they don't want to be renting, people have a strong ownership mindset. So they want to buy land, buy housing, education, because I have kids, I still have kids. I want them to have a better life than me. And then lastly, is consumption, right? So it'd be like entertainment to all kinds of things, right? So I think that's the, the way I think people think about consumption is. Yeah, people are going to party more.

(00:21:56) Adriel Yong:

Hmm. Interesting. And from a venture scale return perspective, how do you think about that?

(00:22:01) Jeremy Au:

That's the problem, right? Theoretically it makes sense, right? I mean, if you believe that in 15 years, people are going to double the spend on that, let's say category, the question of what it is, right? And then you're in a market like Indonesia, which is almost 300 million people, then you're basically saying okay, everybody is making this amount of money. What category is everybody now going to spend 1, 000 on? Then you're like, okay, I can make the math work. 100, 000 people. So 1/3 of the population is now a consumer of this new thing, which is a thousand dollars.

And that comes out to maybe about a hundred dollars a month. So maybe it's what, a laptop? I know, I'm just giving you an example, right? A thousand dollars could be a, a laptop or tablet. You can see everybody wants to buy a laptop. Probably of course I think people are more likely to say like they're probably gonna buy a nicer phone actually rather than a laptop, right? So smartphones is a hot category. So we're seeing a lot of these like smartphone retail startups that are trying to make some promise around helping people access smartphones. So I mean, I think there's a debate right? I think there's like consumer brands like food, heritage brands. We talked about it, right? It's if we could buy Bangawan Solo in Singapore, I would totally love to buy an old Bangawan Solo. Like some heritage brand, he has that batik pattern. It's got like consumption pattern. It's got gifting. I mean, it goes back to what we talked about. It's like TWG tea, baka coffee. So both of these now belong to OSIM group, which is the group that makes massage chairs. And so people are like, Oh, people really like that super luxe Royal style. People find it tacky in the U. S. Oh, it's so much marble and gold, kind of style.

It's like the Versailles French style, that they have Baroque and then it turns out if you had this GDP per capita, like that is definitely what the next band looks like in terms of luxury. So I think, I guess the crux of consumer is it's probably luxury to the most of the current mass consumer today, but you believe will become the mass premium in 15 years, right?

(00:23:44) Adriel Yong:

And I guess from a market perspective, a lot of people feel that Indonesia, Philippines are highly consumer driven markets. And that probably makes sense to make some consumer bets compared to maybe say Vietnam or Malaysia. Do you agree with that sort of like classification?

(00:24:00) Jeremy Au:

I mean, I think people often have that debate, which is like in general, there are cultural differences in society about whether you want to save more or you want to consume more. And then the corollary to that is, do you want to save more or consume more? But the other one is, do you borrow more? And I think we've definitely heard that from startup founders articulating that as part of that pitch. So some people may say something like, but you want to do. a wealth tech in Vietnam because Vietnamese people really want to invest more in housing or the stock. I wouldn't say stock market a lot, but in housing, therefore we help them get fractional ownership or some equivalent of it. So I think definitely, I think you hear that a lot in the pitches. I do think it's a factor, but I just don't know how much it is a factor compared to GDP per capita and the growth rate of the economy, right?

So I just think that if your GDP per capita is 90, 000 in Singapore and the government forces you to save 30% of your income, then of course there's a lot of capital available to save and therefore invest in housing or the stock market. Whereas ,obviously if your GDP per capita is like 5, 000. then how much money can they actually put to work? Even if they have a propensity to save. So I would say that GDP per capita and the growth rate of countries probably a much higher factor, I would say, than compared to some cultural attitude.

If you think about OECD, if you really think about it, maybe you look at Japan versus America. I guess most people look at that as two ends of the scale, right? And maybe China's also somewhere in there as well. So China, Japan are much more likely to save and then American households. But of course, again, Japan is much more similar to America. I would say. China is obviously, I think people forget that it's still like an order of magnitude lower GDP per capita compared to the US as well. I mean, who doesn't like free money to spend, right? So people like to borrow. So I think it's also, to some extent, maybe even more government driven really than cultural driven.

It feels you really asked me about it, I don't feel like the American way of life is very debt driven. If you look at it, historically, like a hundred years ago, America didn't use that much debt. Even 50 years ago, they really didn't use that much debt. If you think about it, it's only in the past 50 years. So I think it's a mixture of like policy and lending opportunity. But of course, I think debt is always amazing, right? Cause debt makes you feel like you save more. It makes you feel like you can get to spend more and of course you have to pay back eventually, but that's in the future.

(00:26:08) Adriel Yong:

Yeah. And someone shared with me this before. They were giving out revolving credit lines to SMEs and the SME customer base has been good from a monthly repayments perspective, but then when they had to downsize their overall credit facility and consequently downsize the individual credit facilities to the SMEs, Suddenly, a lot of these guys weren't able to pay back. So I think there is some understated, over leverage in certain parts of the economy.

(00:26:35) Jeremy Au:

Yeah. I mean, that's pretty much true of, you can imagine almost every lending facility, right? Even countries have that issue where, can you imagine how many countries can pay back the principal? Japan and U. have have huge amount of debt versus GDP ratio.

(00:26:48) Adriel Yong:

Yeah.

(00:26:48) Jeremy Au:

And I don't think they could pay back the principal easily anyway, either. But of course, I mean, that's a dream of everything. It's can you pay back that coupon over the next 50 to a 100 years. So you know, you make a lot of money off the interest rates. So I think that's one of the ways people are doing it is like trying to do more lending.

I think we're describing an interlink, right? I think one is, VC approach is doing more lending and then the second aspect, of course, is doing more consumer. And of course, one interlink is that there's this aspect of consumer finance, which is a function of like debt vehicles cascading through the system, which gets deployed in more debt towards consumers. So there is some interlinkage, but I would say that these are two different response strategies from a VC or investor perspective.

I think the last adaption strategy I have is it's either build better or invest more strictly. I think they're two sides of the same coin, but not exactly the same, right? Building better is basically saying, founders, maybe because they listen to this podcast, fundraise a lot and they keep running into a brick wall, start to kind of like process and say okay, I can't raise money that easily anymore. So I think all the founders, and I mean this is old news but have been downsizing, doing layoffs, becoming much more efficient about capital, prioritizing their growth initiatives much more. So building better, but also being much more realistic about stuff that was obvious to some people. So we talked about it before, right? SaaS in Indonesia is difficult because the GDP per capita is low, so low. Therefore, it's easier for you to hire five people to take on that problem rather than install SaaS, for example. So I think you see a lot of SaaS founders being much more disciplined, I would say, about their market expansion as well. There's a bunch of doing better stuff.

And then I'll say the corollary to that is like investors investing more strictly. So it means that they are probably using more disqualification criteria. So if your strategy is bad, they probably disqualify you faster or earlier. And then if they do join a board, I think they're trying to be a lot more disciplined. So they're trying to be like, okay, let's focus more on growth profitably, or let's not do this market. So I think there's some Darwinian response where VCs who are not investing strictly are not being good board members or being a board member and coming in with investment thesis's wrong and therefore exploding the startups in a negative way, tend to get weeded out. And so you see, I think VC departures from the VC scene, and then, the other side, so you see founders who are either winding down because they couldn't execute in time. And then the founders that are left are just more disciplined as a remaining cohort.

(00:29:07) Adriel Yong:

Cool. I think we have covered a lot of ground talking through some of the Differences in vintages and also the differences in DPI across vintages and consequently how some of the investors across the region are responding to the market correction. We see, and we see people investing in consumer we see people exploring new frontier geographies like Australia, New Zealand, India. We see people doing more, interesting structuring of deals like lending, et cetera. Yeah, it's been really great doing this morning breakfast show with you, Jeremy.

(00:29:38) Jeremy Au:

Yeah, awesome. All right. Peace out.