Jeremy Au discussed the nuanced challenges faced by venture capitalists in assessing startups, emphasizing the importance of local expertise and first-principles thinking. For example, he shared how his understanding of Singaporean founders—gained through years of personal interactions—provided him with an edge over Silicon Valley VCs. He highlighted the risks of fraud in Southeast Asia, citing cases like Zilingo and comparing them to global examples such as Theranos and FTX, which underscore the need for robust due diligence. He explained how VCs use strategies like hiring fraud analysts or leveraging local networks to address these risks. Drawing parallels to the 19th-century whaling industry, Jeremy illustrated how power law dynamics dominate VC returns, with only about 6% of investments producing 60% of total returns, as seen in analysis from Horsley Bridge. This perspective frames VCs as high-performance scouts navigating a market where a single unicorn, like Grab or Gojek, can make or break a fund’s success.
(00:10) Jeremy Au: How do VCs have the expertise to judge? So I literally wrote a WhatsApp message and I said, I don't have an edge in understanding whether this works for the Philippines market. Now, I might have an edge compared to American VC, but I don't have an edge compared to a Filipino VC whether this works for the Philippines consumer market. So I think it's kind of like poker but there's a certain amount of information that you know, and you've got to be self aware of what's information that you don't know, and then your job is to find out what it is.
So if you have a gap, I think you have to acknowledge what you don't know, you don't know. You need to calculate your risk, and then you need to find that information. So, for example, I do believe that compared to an American, I'm a better judge of Singaporean founders. Even if you're Singaporean based in Silicon Valley, I don't think you can judge Singaporean startups, on average, as well as I am, because I'm here. I'm meeting them for coffee. I'm going for walks. I've seen them grow up over the past five years, ten years. I know their history. I remember I did a reference call on a founder, and then this person was like, yeah, this person's good, blah, blah, blah, but you know, in secondary school, this person dumped his girlfriend really bad. And I was like, okay, I mean, totally irrelevant from a due diligence perspective. But, you know, that's the kind of information I have, right? It's like in my head, I was like, now I'm meeting the founder, I'm like, oh man, you dumped your girlfriend real bad in secondary school. But, you know, that's the kind of due diligence you have to do, right? And I think that's what happens when you see , in South Asia, for example, we see a lot of fraud that's happening. And so a lot of American and international VCs perform badly because they were not able to catch that fraud because they were not aware of the market practice of that. So what they have done, for example, is they started hiring specialists, right? So for example, Vertex Ventures was hiring a fraud specialist. So a fraud analyst. So basically, you're saying, like, your job, JD, it's like, we want you to review our portfolio and every other company out there that comes in at DOIs, and we want you to check for fraud. So there's a form of, they're saying like, we don't have enough expertise to detect fraud unless we have a full time person looking for it.
The other side could be like, we don't understand healthcare, so we're going to look for a healthcare expert or PhD to give me a point of view. And so you, it's very quite common that you see a company, you like it, as you kind of do more work, you do due diligence, you're kind of vetting the deal, and then that's when you bring in those experts to have a perspective.
So, and it's, there's all kinds, like I said, there's fraud, there's country risk there's industry risk, there's founder risk. So there's all kinds of risks and so you will normally bring in people to come in. But I can tell you that the reason why also VC and somebody was asking about whether this is a sucker's game, there's a small blind, big blind, like, do people just earn management money for free?
But the thing is, if you have an edge over other people in the private markets, you are not obliged to share that information with the world. If the guy is conducting fraud, he's not gonna tell the whole world about it. And so if you are able to walk away from the deal when everybody else wants to do the deal, then you save yourself a lot of money, and you save a lot of embarrassment, and you save your money for firepower for a company that does deserve it, right?
And so one thing we have to remember that when it comes to fraud, for example, is that , by virtue of the power law, which is people are selected for the best companies, and by virtue that fraud increases performance, by definition, the best companies in the world at a startup level that are private assets that are not properly vetted, by definition, there's an over representation of fraud than in the general population because it's hard to vet, until they go public, so on and so forth. So we saw that for Theranos. We saw that for FTX. We saw that for Zilingo. Currently there are other companies that are currently struggling right now. I wouldn't call it fraud. There are other companies that are having missteps.
So for example, you see OpenSea, which is the NFT marketplace, used to be a billion dollar company. Now they have a giant haircut on the valuation. So you can imagine three years ago, NFTs was the hype, right? So everybody's whatever. Then, can you imagine you have a call to an expert and you're like, hey, are you an expert at NFTs?
And everyone's like, no, like, NFTs only emerged one year ago. All the experts on NFTs were like, you know, people, right? Because nobody was an expert at NFTs. So I think experts is one side of it, but I think a lot of people have to do something called like first principles thinking. It's like, can I see past the hype? And it's very, very hard to do, because when everybody's jumping on, I think we all remember when crypto was like a no brainer. And then now everybody's like, oh, you know, I was never a fan of crypto, but even so, people still have made money in crypto today.
If you put your money in the right projects and the right things. From a values investor perspective, you make money. I remember this guy, he was like, yeah, I make money on the suckers, right? So, he was a trader. He went in and he went out.
So he was trading on the waves, right? The question is VCs will bring in specialists or they have to do first principles thinking, and they have to do a lot of work. Because they are the frontier of knowledge, invention. And so there are some specialists, but the specialists can only bring you so far. Because you are the frontier of knowledge. The startups that are crazy today would be, for example there's a startup that's kind of saying like, AI women are women. So that's their slogan. So that they believe that in the future, all men will primarily date AI women instead of real women.
So it's a crazy thing, causing a lot of fights and everything. And then it's kind of depressing when you think about it, but you know, have you met a teenager, right? There's a bunch of startups there. You know, friend.com will send you the video. They're basically saying like, hey, you know, nobody wants to be lonely. We're gonna make AI your best friend. So we're disrupting friends. It's a crazy idea. It's a necklace that you walk around, but the guy walks around with a necklace, and then he talks to his best friend. for friend. com he paid like about millions of dollars for the domain name.
But, I mean, his perspective is that people don't want to be lonely, right? but the thing is this, there are VCs that have invested in this startup betting that this company can create an AI companion and that in the future, a hundred million people will wear an AI necklace around their neck And that'll be their best friend. Well, hello, are you gonna continue using BlackBerry?
You know, like, are you gonna use BBM for your BlackBerry text messages? Have you heard of WhatsApp? You know what I mean? Stop hanging out with loser, people who are slow and don't turn up on time, and, when you ask them and complain about problems, they're like, oh, let me talk about my problems instead, boo, I want somebody who's totally supportive me, you know what I mean, You know, like, why is my spouse angry at me, blah, blah, blah. you can complain about it to your AI friend will be 100 percent supportive of you all the time. Sounds amazing, right? For only 10 a month. Oh, wow! You know? That's what this bitch is saying, right? You know what I mean? so, friend.
com, you know, his belief is that everyone's gonna wear a necklace with an AI companion. Because, you know, my two year old is already saying, Hey, Google. A, B, C, right, play wheels on a bus. Maybe that'll be normal for Generation Alpha.
Maybe it's too early for his time. Maybe this will happen in 20 years or 30 years. So he may be wrong, but generally he is right. so there's a bunch of risks. It's like, is he too early? is this never gonna happen? That's the first risk, right? Technology risk, Then two is, is this the form factor, a necklace that is gonna happen?
We don't know, right? That's why he believes. And then thirdly, is he the right founder to do it? We don't know, but he's trying his best. He's on the New York Times and other articles. He's out promoting his thing. what I'm just trying to say here is, yes, it sounds really sad.
And I'm pretty sure everybody called them losers for a while. Like, if I walk in with an AI necklace, I'm sure everyone's going to be like, loser, right? and then my AI necklace will be like, Oh Jeremy, you're a winner, you know? For having me. Thank you for keeping me alive, you know? Fuck these guys, they don't understand.
They are old, elderly, geriatric. They are using Nokia phones. But you, you have me, friend.com. I mean, think about Star Wars. R2 D2, C 3PO, great, right? BB 8, the new cute version.
In every movie that we watch, the sci fi movie, the robot is a nice companion. If they're not murdering you, or sometimes they're your friend and they're trying to murder you, or they murder you and then actually they're kind of friendly, but, you know, there's some different versions, but actually culturally, we're quite ready for the concept of AI robotic companions.
I mean people are sad and lonely and many times in general, I mean it's human biology, right? Like which person around us is the saddest? I mean, I can say, like, yeah, I've been sad before, like, it's not gonna be a massive revelation, all right? And then, yeah, you know, it's like, you know, you feel hungry at 1 a. m. And you're like, you know what, fuck it, I want McDonald's. I hit a button, and McDonald's turns up, right? In 30 minutes! And then, instead of me going to sleep like a normal person, and not eating, 500 calories, but now I can get a double McSpicy, right? Yeah, at 1 a. m., the guy comes out, here's your double McSpicy and your French fries, and then I get it, I eat it, I'm gratified, right?
So now if I'm lonely at 1 a. m., and my wife is asleep or, you know, whatever it is, I'll be like, hey, I, you know, I feel lonely, right? And so there's definitely something called I call it lonelytech but, on demand companionship, on demand socialization, right?
I mean, that's why you have an escort industry that's out there. There's a companionship industry that's out there. There's a therapist, an executive coach industry out there. But all of this is a monetization and professionalization of a relationship. You don't have an uncle to give you good advice, so you get an executive coach right? So there's that you know you can call it structural or transaction or commoditization, depending on how you look at it. But definitely you see that happening for relationships. You see that for childcare, for example. Historically, childcare was done by parents, by your siblings, in a large group, in your kampung or whatever it is.
And now, that relationship is now commercial, right? You pay for a nanny or for a childcare worker. So those relationships have become transactions in that sense. Now, they're good and so forth, but you understand it's not the same, right? So, so what's to say that you being lonely, your best friend or whatever it is, why is it to say that it could not also become more professionalized as a result, right?
And so, you know, I think the Japanese have really created this. They're like the early adopters. So they call this I think Rokoshe but it means industries that prey on weak people. So, you know, in Japan, you know, obviously, they have a big culture, for example, of like, these parasocial personalities, right?
So like, your live streamers, your mukbangs, you know, eating a lot of food and live streams, your Twitch streamers, these are also not real relationships, right? They are not your real friends! They are on Twitch, you're on your phone, you're eating, and you're watching somebody on YouTube explain their fantastic eating recipe, and you're like, wow, this guy is so great and amazing!
But this person has no relationship with you. This person does not know who you are. So it's a parasocial relationship. You have a social relationship with a representation of a person. I feel like I know my favorite history blogger, or my Twitch streamer, or so forth, but he doesn't know me. So it's not a real social relationship.
So, AI is a more ethical version of it, maybe? Like, you know you're talking to AI, but at least you're not believing that this human person believes in you. Yeah, I mean, so I think that's an interesting piece where technologies that we think are ridiculous today, I suspect personally, I think that AI companions will become very, very common in the future.
I think for our generation, we like organic, natural, sugar free, wild reared humans to have that conversation with. But I can suspect that, hey, you know, you're an angsty teenager, you know? we're not going to go into the whole thing about, the biological social implications of the depression and its role in a society that has its institutions being deteriorated into a capitalist morass, you know. all the facts are coming out here. But I think the crux of it I was just saying here is Yes, I had a wonderful experience as an intern for Professor Howard Gardner. He created a concept of multiple intelligences. he said there's not just IQ, there's EQ, there's spatial intelligence, there's verbal intelligence. Great guy. And then he created called the Good Citizen Project. which is that he felt that society is becoming more nuclear.
There's less extended family. So you don't have uncles, you don't have cousins. You tend to be in schools where you are with people who are of the same age, right? And then your relationships are either flat or vertical with your teacher. You don't have a lot of diagonals, if you have a retreat of spiritual organizations from his perspective, whether it's a temple mosque or church, there's a retreat of all these, figures extended family and so forth, so his conversation was how should the state step up to provide civic education that was historically provided by parents and extended family or whatever it is, right?
So anyway, the crux of what I'm trying to say here is that technology both solves a need. But also creates that need, right? If that makes sense, so it's kind of like, you know, you look at Star Wars, you're like, yeah, I mean, there are robots everywhere, right?
They're all friendly, some are enemies, or whatever it is, but they're all over the place. In fact, I think what's most unrealistic is that, Humans are doing most of the decision making in Star Wars. Because I'm like, C3PO is like this supercomputer, like, wow, I'm so nice to you. You know, I'm like, why?
So but I think let's not digress too much in that. But I'm just saying like, we just have to be aware that things that are crazy can become the norm very, very quickly. someone was asking me recently whether it's competition.
(13:23) Jeremy Au: So normally VCs do if you look at this curve, Basically, this is a time graph, and it shows as the startup grows from left to right, and then on the y axis is the revenue, the amount of revenue that you're making. So it is not amount of the net burn, but it's the amount of revenue you're making. And generally, it's understood that at the start of this process, you know, you're not making any money, you figure out the idea, you have to pay yourself, or to get the technology up, and then you need to, you know, you're making negative money.
And after that, as you kind of like get there, you start making more and more money, right? So the company I saw today was making about a million, 1. 5 million off capital, but they were not near break even, so it's still in the valley of death in that sense. but as you see as it get larger and larger, you see CheckGPT, OpenAI, now is making a billion dollars of revenue.
So they're all, but they're not yet an IPO public company. They're still a late stage company, right? And they are trying to get strategic alliances. They've gotten a strategic alliance with Microsoft that, With Azure, because Azure was basically saying, I, no way in hell I want you to use AWS, Amazon server credits, I want to dat pine you to Microsoft system, I'm going to give you money in the form of Azure credits, Microsoft Cloud credits, but also eventually they use that to embed into PCs, right? So Microsoft embedded ChatGPT into all the PCs, right? In the Cortana, et cetera. And then now Apple has a new strategic alliance with Chet GPT, and now they're currently evaluating. The rumor mill is that Apple's thinking about making another billion dollar investment into OpenAI, right?
So this is the late stage. So you see here there's the value of dev, there's C capital, angels, friends, family, fools invest because you have to be, you know, very loving of this person to invest at this very risky stage. Or C capital will be a professionalized version. Then you have early stage capital, then you have VCs, your late stage VCs, and so forth.
The first rounds, maybe like pre C, series A, series B, series C, so for example when Ant Financial, which was founded by Jack Ma, was trying to be a, you know, in many ways a new bank competing with the Chinese banking system, right? And then right before the IPO, Jack Ma shared some helpful feedback for the Chinese banking system.
And as we know, what happened after that was that the IPO was pulled due to their requirement to new important Chinese banking laws that we're clearly not aware of for national security reasons, exactly. And at that point, our Singapore sovereign wealth funds had invested in this company at this stage as well, because we all thought IPO was gonna happen.
And then now they're finally years after regulatory restructuring and relearning a lot of stuff they have now been able to IPO but at a much lower price because the regulators decided that they should be split out, or there's certain regulations on different business units, right?
So I think one thing you can imagine is that, financial start out low, everybody thought it was going to be an IPO, and then it dropped off, right? but what I'm trying to say here is that VCs will tend to collaborate across stages, right?
So, for example, if you are an early investor in a company like a company called Rippling, it's a HR software, you did an early stage investment, Rippling is a company his first company was called Zenefits, which you may have heard, it's a benefits platform, Zenefits.
The guy left was legal, there's dispute, but all that went public recently. But I remember that when I was in Silicon Valley at the time, he was under a lot of fire from the media, so he had to resign from his first company, Zenefits. And then I remember I heard that Y Combinator had funded his second company, and he was working at Y Combinator, but there was no media.
Everyone was told, do not tell the media that he's being funded a second time by Y Combinator, right? And now Zenefits is dead effectively but Rippling, which is the better V2 revenge version of his company, I'll compete in a billion dollar company, not get a deal.
So YC is this early stage, but these late stage capital guys are happy to come in that capital. Does it make sense? So they normally collaborate across stages, and so they can say that every unicorn might be about three to five different. VCs get a lot of returns in general, I would say.
And then obviously within the rounds, there's some collaboration. So, you know, there are syndicates or coalitions that will form that are friendlier with each other. But in general, VCs will compete very fiercely within this stage because there's only one funding round at this point time.
So when the times were good, when interest rates were very low, everybody who was doing these late stage funds thought they could do it. A lot of private equity funds, public equity funds felt like they could do this stage. And so everybody was fighting in each other's lane because interest rates were very low. So everybody looked like a genius at that point time. But now that interest rates are high, everybody's scared, everybody's becoming more specialized.
Like what Shreya is saying. People are saying, actually, as an American, I don't understand Southeast Asia. So as somebody who's based in New York. It's easier for me to analyze this company when this company is a Series C company that has audited financials, a good board of directors, there's no more fraud left because everything's been due diligence by everything, and they are now expanding across multiple countries.
I'm more comfortable investing in a Series C company from New York, for example. I'm happy to let the seed deals that those VCs have to catch the fraud, et cetera, et cetera. I'm happy to let the Southeast Asians do that deal because they are more in touch with type of company, for example.
So I think maybe we'll hear a lot of words like pre C, series A, series B, series C So you may hear those words and you open that up. Now, this lingo, I'm just trying to give you a sense of it. But this lingo can be different and it can be mislabeled or whatever it is. But I'm just giving you a sense of what the common understanding is.
The amount raised is about 0. 1 to 1 million, right? The people who are putting money in normally would be friends and family, it could be an accelerator like Antler, it could be a university incubator, it could be a government grant, but these tend to be like helping you at an early stage, about a million dollars of capital.
And normally what happens is that Right now, at this point of time, you're working towards a minimum viable product or you barely have a minimum viable product. You might have a prototype, you may have a beta, customers.
But in general, you're making no money, most likely to making maybe a 100, 000 tops, right? So this is roughly the stage where people raise about up to a million dollars. Now, you're normally raising about one to three million dollars. This is probably your angels that you see, as well as your seed VCs.
So these would be more professional in that sense. Angels are basically high level individuals or accredited investors in general. So normally the kind of traction that you have is you already have early adopters, you can see the conversion rate, you understand what's going on, and you about 100, 000 to about a million dollars of revenue a year.
Then, for your Series A in, again, in Southeast Asia, probably you're raising about three to seven million dollars. So Mongsil Ventures will be an institutional VC that has raised several hundred million dollars from LPs and institutions. And so these companies are expected to have already demonstrated product market fit.
They are expected to have understanding of the expansion. They should be growing about 2 to 3x year on year, and they should have around about a million dollars of annual recurring revenue. And then series B is about 7 to 20 million. So let's say about 10 million check. You'll begin institutional VCs, and then again we're underwriting geographic and product expansion.
They should have a great management team. On average, about 5 million of annual revenue and 2 to 3x year on year. And then series C is about 20 mil. This would be a growth VCs and private equity. they should already be seen as a market leader in some of the geographies.
There should be rapid expansion. They should be able to increase the margins profitability over time. And then normally around at least 15 And the growth rate will slow down a little bit more, so maybe about 2x It would be a good target for it. So again, this is probably a little bit more indexed to Southeast Asia.
(20:43) Jeremy Au: I would say that if you look at America, like, you know, if you raise a million dollars seed, you know, people will look at you like, wow, you're such a loser. Like, you know, there's more capital in Silicon Valley, for example. Whereas if you go, for example, to Africa, then these numbers may be even smaller among the capital raised.
So I think the definitions do change. Over time. So for example, the word pre seed didn't exist 10 years ago. Now pre seed is the new seed. Because again, these definitions change over time so that's how we think about it.
Even in today's age, I think now the VC market is pretty dead and startups fundings are very slow.
And right now, I think some people will argue that there's still an oversupply of capital because from their perspective is that everybody, first of all, if you're an American LP you wanted to invest in China and you made a shitload of money in China, but you're no longer allowed to invest in China.
You don't want to invest in Europe because Europe. And then, and then, and, you get me? So, where are you gonna go? So, Southeast Asia, perhaps, right? And then, if you incorporate American capital, where are you gonna put it in? You're gonna put it in Singapore, which is Delaware, right? So, there's an, a lot of people that, and then, also, you have the Chinese capital, flow of capital founders, tech founders, or executive founders, or fund managers, or family officers, that come in Singapore, and they're also there.
So, there's actually a lot of oversupply of capital, in that sense, in the Singapore market. So, I think some people may argue that Singaporean founders are subsidized by the savings of other people around the world because they get a ton of capital. Like, if you come out and you have an idea, if you're a Singaporean, you tend to get more capital.
I think people also make the argument for Indonesia as well because Indonesia is a 300 million so people don't really look at, Southeast Asia, say, I want to invest in Singapore. They're just saying, I had to set up my fund in Singapore. But they set up shop in Singapore to invest in Indonesia, right? because they say 300 million people growing, you know, Prabowo has promised seven, eight percent, blah, blah, blah. So there's a certain piece people say, I want to be in Singapore to invest in Vietnam because, you know, China plus one, manufacturing, like what they say they're promising eight to nine percent year on year growth, you know, things like that, right?
But they're only about 100 million people, right? So I think there's some debates, about that. But I think many people will argue that there's an oversupply of venture capital for these markets. Whether it's true or not, it's hard to tell.
But I think it is true that, when we look at today's age, how many Southeast Asian IPOs have we seen in the past two years? I mean, like zero effectively, right? Whereas in America, you still see IPOs are happening already.
You know, they've come back on the market, etc. So, over the past three years, there was one unicorn that made it. so let's say there was one company that made it, right? You take a pic, and it's Grab, Gojek, Shopee. let's look five year period, right?
Over five years, let's just say Grab Gojek and Bukalapak were your three unicorns over the past five years. So, there's about one unicorn every two years, You know what I mean? So, let's do some basic intuitive math, right?
So, there's one unicorn, and normally, each unicorn will have about five stages. Funding before they become a unicorn on average, right? So that means only five funds could have made a home run investment. Does it make sense? so over two years, there's only one unicorn in that time frame.
So that means over two years only five VC funds could have made that investment. Does it make sense? So in other words, in Southeast Asia, if you go back in time 10 years ago when they made those investments, only five VC funds deserve to be around today that have gotten at least one home run in their portfolio.
You may even argue it's half of that, right? Maybe it'd be two and a half because it's five funds over two years, right? So it's like, you know, but anyway, but sorry, I think it's closer. You know what? I'll say it's fair because a VC fund is supposed to deploy capital across two years, the first two years of their life.
So yeah, so I'll say about only five VC funds have actually achieved any home run in their portfolio in Southeast Asia. There are way more than five VC funds today in Southeast Asia, right? I think there's at least a hundred plus. But that being said, we don't know. Hope springs eternal. Maybe in 10 years time, there'll be 10 IPOs happening every year from Southeast Asia, right?
So the hundred, you know, VC funds today would say like, you know what? We believe that in 10 years time, there'll be five IPOs every year. You know, we're all gonna make money, right? You know what I mean? So I think There's that little bit of a debate whether you say it's oversupply capital or not and of course even if it's oversupply capital, maybe as a VC you might say like, you know what, I think I'm lucky, I think I'm good, I think I'm smart, I'm smarter than everybody else.
You know, I can beat the odds, right? Marina Bay Sands is like, you know, I think I'm better than everybody else at blackjack or poker, right? You know, hope springs eternal. maybe one more thing to say is, I think from a returns profile, where you're trying to achieve 25 percent in IRR, which requires you to have one home run out of every 20 investments, I think there's an oversupply of capital versus that goal.
But I think from a governmental perspective, VC capital is a form of foreign direct investment. Every American's pension fund that goes into a Singaporean, fund, that gets deployed in Indonesia, for example, creates jobs for a Singaporean lawyer, a Singaporean accountant, a Singaporean fund manager or VC, an Indonesian entrepreneur your early executive team, there's technology transfer that's happening as you become more productive.
So from a government perspective, actually, you probably look at it as an undersupply of it. And so you look at the Philippines saying we are structurally bad at absorbing venture capital. Venture capital doesn't want to come to the Philippines because of some of our accounting laws.
We should try to reform it. I mean, they haven't agreed on it yet, obviously, but there are some things that make it structurally difficult for a VC to invest in the Philippines, so I think when you say it's undersupply or oversupply to some extent, it also depends on whose perspective.
Obviously, as a founder, there should be as much oversupply of capital, right? I want as much capital to come in, no matter how young or inexperienced I am. The more capital I get pound for pound, The better, right? So I think it depends on how you define it, yeah?
From a society perspective, when Uber and Grab and Gojek competing each other and we had so many free vouchers and how cheap Grabs and Gojeks were? It was amazing, you know? a net transfer of American, pension to, coupons, right?
everybody enjoy a cheap ride, everybody got an iPhone or Android phone, it literally jump started, Philippines telco, 3G networks, And GPS, right? Because all that capital in, right? So it depends on the definition of oversupply and undersupply, yeah.
What's an anchor LP is somebody normally will do at least 10 percent of your fund. if you happen to go clubbing in the past, you go to Zouk or any other nightclub, 7pm, 8pm, nobody's dancing cause, everybody's whatever.
But you know that at some point, everybody's going to start dancing by 11 p. m. So, you need that one weirdo to start dancing, right? at 7 p. m., he's just dancing by himself. after that, two people are like, ah, fuck it, let's join them. And then, suddenly, everybody joins in, and it's a lot of action happening, right? So normally VC funds make sure they have an anchor LP, that first person that puts in 10 percent to get the thing started. The anchor LP get some preferential terms as a result, they normally part of the LPAC, the LP Advisory Committee, the board of directors equivalent for the fund. they may have some other preferential information rights, things like that. So that's what I call an anchor LP.