WEBVTT - Bloomberg Businessweek Weekend - August 5, 2022 0:00:01.040 --> 0:00:05.400 This is Bloomberg Business Week inside from the reporters and 0:00:05.600 --> 0:00:09.200 editors who bring you America's most trusted business magazine, plus 0:00:09.240 --> 0:00:13.200 global business, finance and tech news as it happened. Bloomberg 0:00:13.240 --> 0:00:16.759 Business Week with Carol Messer and Bloomberg Quick Takes Tim 0:00:16.800 --> 0:00:21.480 Stinovik on Bloomberg Radio. Hi, everyone, Welcome to the weekend 0:00:21.560 --> 0:00:24.560 edition of Bloomberg Business Week. Carol Masser is off this 0:00:24.600 --> 0:00:28.120 week a big week in politics, from midterm primaries here 0:00:28.520 --> 0:00:32.440 to escalating tensions between the US and China. On Tuesday, 0:00:32.440 --> 0:00:35.839 how Speaker Nancy Pelosi became the highest ranking American official 0:00:36.159 --> 0:00:39.000 to visit Taiwan in twenty five years. We're gonna have 0:00:39.040 --> 0:00:41.960 more on that in just a moment. Also ahead on 0:00:42.000 --> 0:00:45.320 the program, stories from a special double issue of Bloomberg 0:00:45.320 --> 0:00:48.360 Business Week that document the war on women playing out 0:00:48.400 --> 0:00:52.000 across the nation. It's one that's reached new heights with 0:00:52.080 --> 0:00:55.280 the Supreme Courts reversal of rov Wade earlier this year. 0:00:55.640 --> 0:00:58.480 First up, though, we spotlight the woman who made headlines 0:00:58.520 --> 0:01:01.760 all week, the Speaker of the House, Snancy Pelosi, Bloomberg's 0:01:01.760 --> 0:01:04.800 Creedy goopd and I spoke with Bloomberg senior government reporter 0:01:04.840 --> 0:01:08.040 Ian Marlowe about her East Asian trip and White put 0:01:08.080 --> 0:01:13.720 Beijing on edge. She's a particularly strong China hawk who uh, 0:01:14.080 --> 0:01:17.000 you know, has been defying China on a lot of 0:01:17.000 --> 0:01:21.319 these things, on human rights, on on trade issues, on 0:01:21.400 --> 0:01:24.679 other things for for for most of her career. I mean, 0:01:24.720 --> 0:01:27.640 if you look back, um to just after the Tienamen 0:01:27.680 --> 0:01:31.479 Square crackdown, in her and a couple of other senators 0:01:31.600 --> 0:01:36.200 unfurled a little banner in Tanneman Square, uh, you know, 0:01:36.240 --> 0:01:39.440 commemorating those who died something you know that that seems 0:01:39.520 --> 0:01:44.319 unthinkable now but shows you just how far she's willing 0:01:44.400 --> 0:01:47.520 to go in terms of you know, sticking up for 0:01:47.920 --> 0:01:51.280 you know, you know, her her values and other things, um, 0:01:51.440 --> 0:01:54.680 at the risk of at that point personal safety, but 0:01:54.720 --> 0:01:58.720 also um on this trip geopolitical ramifications. I mean, she 0:01:58.800 --> 0:02:01.200 was willing to go through with this. Um. You know, 0:02:01.280 --> 0:02:04.520 we can talk about whether she was ever going to 0:02:04.600 --> 0:02:07.640 realistically be able to back down after the trip was announced, 0:02:07.720 --> 0:02:09.519 but you know, she was willing to go through this 0:02:09.639 --> 0:02:12.959 even though there were obviously huge consequences. And I think 0:02:13.200 --> 0:02:15.720 you know, a visit to Taiwan at any given point 0:02:15.720 --> 0:02:18.720 in time, for for China is very sensitive. Um. They 0:02:18.800 --> 0:02:21.800 protest you know, regularly when these types of delegations go. 0:02:22.200 --> 0:02:26.400 But it's just the the senior nous of her going 0:02:26.800 --> 0:02:29.079 um is just you know, a little bit too much 0:02:29.120 --> 0:02:31.280 for for for China to bear right now, especially given 0:02:31.320 --> 0:02:34.359 the sensitive domestic dynamics in China. Well, I think what's 0:02:34.360 --> 0:02:35.800 what's so interesting about the time of year is it's 0:02:35.840 --> 0:02:37.760 happening at the same time as you have two massive 0:02:38.080 --> 0:02:40.280 bills I believe passed through through Congress. You have a 0:02:40.280 --> 0:02:42.640 fifty two billion dollar Chips Act over five years, and 0:02:42.639 --> 0:02:44.480 then on top of that, you have this order from 0:02:44.480 --> 0:02:46.960 the Commerce Department I believe too for a lot of 0:02:47.000 --> 0:02:50.120 these names like Intel and Video to actually not that 0:02:50.160 --> 0:02:53.240 dis incentivizes them to increase their fab production over in 0:02:53.280 --> 0:02:56.040 Taiwan and China. Yeah, it's not it's not just about 0:02:56.120 --> 0:02:59.400 human rights, it's not just about ideology. It's about you know, 0:02:59.520 --> 0:03:03.919 strategu ega economic competition between the two. And she's been 0:03:04.040 --> 0:03:07.840 part of a very you know, generally bipartisan push to 0:03:08.240 --> 0:03:11.280 sort of decouple from China and to push the US 0:03:11.280 --> 0:03:14.200 sort of manufacturing industry, especially in high tech, towards a 0:03:14.200 --> 0:03:17.240 more competitive edge with China. You know, after a few 0:03:17.240 --> 0:03:20.920 decades where China really has benefited from you know, relatively 0:03:20.960 --> 0:03:25.560 stable and friendly uh international economic order. If this really 0:03:25.680 --> 0:03:27.919 was a goal of the administration, why not put even 0:03:28.000 --> 0:03:31.360 more money towards it, you know, with any manufacturing countries 0:03:31.400 --> 0:03:32.800 want to bring it home, they want to bring it 0:03:32.840 --> 0:03:35.640 close to, you know, to their other industrial base. But 0:03:35.800 --> 0:03:39.320 America is not the only place that is, uh, you know, 0:03:39.320 --> 0:03:42.520 putting these types of bills in place, dedicating billions of 0:03:42.560 --> 0:03:45.320 dollars to you know, funding those types of companies. And 0:03:45.360 --> 0:03:48.920 I think the brute reality here is that this technology, 0:03:48.960 --> 0:03:52.720 this manufacturing capacity is not in America right now, and 0:03:52.760 --> 0:03:55.080 it won't be for for many years to come. And 0:03:55.360 --> 0:03:58.440 that's both structural and it's also a matter of policy 0:03:58.760 --> 0:04:01.160 with America sort of being to this compared to you know, 0:04:01.320 --> 0:04:04.160 whether it's places like Taiwan or South Korea or China itself. 0:04:04.280 --> 0:04:07.440 That was Bloomberg Senior government reporter Ian Marlowe. We turned 0:04:07.440 --> 0:04:09.760 now to our next Yes, my Bloomberg quick take colleagues, 0:04:09.800 --> 0:04:12.600 Scarlet Fou. She worked in Hong Kong for eight years 0:04:12.640 --> 0:04:15.080 and has a personal connection to Taiwan. I used to 0:04:15.120 --> 0:04:17.800 visit Taiwan regularly. I would go every other summer because 0:04:17.880 --> 0:04:21.640 my grandparents lived there. My parents grew up in Taiwan. 0:04:21.680 --> 0:04:24.080 They were born in China, but they fled to Taiwan 0:04:24.120 --> 0:04:26.800 with the Nationalist government, grew up in Taiwan, and we 0:04:26.839 --> 0:04:30.240 would go back and visit family regularly. So I've really 0:04:30.320 --> 0:04:33.640 was able to see Taiwan evolved and developed from a 0:04:33.720 --> 0:04:36.800 society that lived under martial law to a society that 0:04:36.920 --> 0:04:39.480 was holding free elections. So what's so important about it? 0:04:39.680 --> 0:04:42.720 Why do we care about this particular location? In real estate? 0:04:42.800 --> 0:04:44.960 Is location, location, location, And that's kind of the case 0:04:45.000 --> 0:04:47.760 here because Taiwan is about a hundred miles off of 0:04:47.880 --> 0:04:50.320 china South eastern coast. If you were to look at 0:04:50.320 --> 0:04:52.240 it on a map, it is the biggest land mass 0:04:52.240 --> 0:04:56.159 between Japan and the Philippines. So it's in this crucial position, 0:04:56.600 --> 0:04:59.520 and so the US and every other country in the 0:04:59.520 --> 0:05:04.000 Asi Asia Pacific region seize Taiwan as crucial to containing 0:05:04.080 --> 0:05:09.280 China and its military ambitions and economic ambitions. That's just strategically. 0:05:09.440 --> 0:05:11.520 Then you've got, of course, the economics. The world is 0:05:11.560 --> 0:05:15.480 completely dependent on Taiwan semiconductors. The island is responsible for 0:05:15.520 --> 0:05:18.640 about nine of the world's most advanced chips. These are 0:05:18.680 --> 0:05:22.000 the chips that power your smartphone, your car, the AI 0:05:22.080 --> 0:05:24.279 and your smartphone, the AI in your car, so it 0:05:24.360 --> 0:05:26.200 makes the world go around. Right now, talk to us 0:05:26.200 --> 0:05:29.880 a little bit about China's relationship with Taiwan and where 0:05:29.880 --> 0:05:32.600 it stands right now. It's really really complicated, is the 0:05:32.640 --> 0:05:36.039 short answer. It's it's really actually quite convoluted as well, 0:05:36.120 --> 0:05:39.560 because if you go back to recent history, Japan had 0:05:39.560 --> 0:05:42.599 to give up Taiwan to China after losing World War Two. 0:05:42.640 --> 0:05:44.640 But there was a civil war in China, so the 0:05:44.760 --> 0:05:48.040 Nationalist government that was in China was defeated by the 0:05:48.080 --> 0:05:51.040 Communist Party. They fled the mainland and set up shop 0:05:51.160 --> 0:05:53.920 in Taiwan. They were supported by the US government, which 0:05:53.960 --> 0:05:58.200 recognized the Nationalist Party as the rightful government but temporarily 0:05:58.200 --> 0:06:01.680 displaced government of China, and everything switched when the US 0:06:01.760 --> 0:06:04.400 decided to change sides and recognize the Communist government in 0:06:04.440 --> 0:06:08.240 Beijing instead. In doing so, it recognized that Beijing is 0:06:08.279 --> 0:06:11.080 the seat of government for China. There's only one China, 0:06:11.160 --> 0:06:13.400 and it is the government in Beijing. China has a 0:06:13.400 --> 0:06:16.560 one China policy. The US agrees with that, uh Taiwan 0:06:16.680 --> 0:06:19.080 is part of China. The US agrees with that, but 0:06:19.200 --> 0:06:22.760 at the same time, it hasn't really clarified what it 0:06:22.800 --> 0:06:25.680 would do if China were to take Taiwan. Taking Taiwan 0:06:25.760 --> 0:06:28.839 by force, taking Taiwan by welcoming it back not clear. 0:06:29.120 --> 0:06:32.160 There's a lot of intentional ambiguity when it comes to 0:06:32.279 --> 0:06:34.680 Taiwan and where it fits in with the One China 0:06:34.720 --> 0:06:36.920 policy when it comes to how the US is going 0:06:36.960 --> 0:06:40.000 to act on anything. Our thanks to Quick Take Scarlet 0:06:40.040 --> 0:06:42.560 Foo for her insight. With tensions between the world's pre 0:06:42.640 --> 0:06:46.080 eminent superpowers on the rise once again coming up next. 0:06:46.120 --> 0:06:48.880 Pelosi's visit to Taiwan is just one source of stress 0:06:48.920 --> 0:06:53.040 for China. Another is the multibillion dollar banking scandal embroiling 0:06:53.080 --> 0:06:56.480 the country's rural lending market. Will explain when we come back. 0:06:56.800 --> 0:07:09.159 You're listening to Bloomberg Business Week. This is Bloomberg. This 0:07:09.520 --> 0:07:13.200 is Bloomberg Business Week with Carol Messer and Bloomberg Quick 0:07:13.280 --> 0:07:19.120 Takes Tim Spinovik from Bloomberg Radio. Grassroots boycotts and epic 0:07:19.160 --> 0:07:22.920 banking scandal and over leveraged housing developers are stoking concerns 0:07:22.960 --> 0:07:25.040 that China may be on the verge of a Lehman 0:07:25.120 --> 0:07:27.680 Brothers moment. In a story you'll find in the finance 0:07:27.760 --> 0:07:30.440 section of the magazine this week, bankers at five local 0:07:30.520 --> 0:07:34.120 lenders are accused of stealing billions of dollars from depositors. 0:07:34.440 --> 0:07:37.440 Business Week Markets and Finance editor Pat mcneer is here 0:07:37.480 --> 0:07:40.520 to explain the crisis and confidence and the dynamics of 0:07:40.600 --> 0:07:43.720 China's rural lending system. It's actually very similar to I 0:07:43.760 --> 0:07:46.200 think things we might we might know of here, where 0:07:46.200 --> 0:07:50.400 you have these kind of networks of local banks, um 0:07:50.440 --> 0:07:53.600 that are are there to kind of you know, plow 0:07:53.920 --> 0:07:58.200 money into the countryside, uh and businesses that have kind 0:07:58.200 --> 0:08:02.200 of historically not had enough capital UM. Editing this story, 0:08:02.240 --> 0:08:04.840 I was really reminded of kind of analogs to the 0:08:04.920 --> 0:08:08.080 savings and loan business here in the United States a 0:08:08.120 --> 0:08:11.840 long time ago, very very similar kind of situation a 0:08:11.920 --> 0:08:14.200 lot of ways. And what some of these rural lenders 0:08:14.200 --> 0:08:17.640 were doing was they were offering people um higher rates 0:08:17.800 --> 0:08:23.400 to attract deposits. And some you know, alleged bad actors 0:08:23.440 --> 0:08:26.640 got involved in this. Uh. There was a company that 0:08:26.720 --> 0:08:29.520 had that was a major shareholder in five of these 0:08:29.600 --> 0:08:33.960 rural lenders. There was essentially a scam and then that 0:08:34.160 --> 0:08:37.360 created really a mass movement of depositors demanding their money back. 0:08:38.280 --> 0:08:40.560 Pat talked to us about the trust factor here, because 0:08:40.559 --> 0:08:44.200 if you need to rmate to make a lending system work, 0:08:44.320 --> 0:08:46.840 at the core of it as you need that trust factor. 0:08:47.600 --> 0:08:50.640 What is at stake here when it comes to whether 0:08:50.720 --> 0:08:53.720 or not this is a system that can get recovered. Yeah, 0:08:53.840 --> 0:08:55.720 I mean, I think like this is actually a broader 0:08:55.760 --> 0:08:58.240 issue in China generally. You know, this is one of 0:08:58.800 --> 0:09:01.400 a couple of stories that we've been monitoring. We've also 0:09:01.520 --> 0:09:06.640 been monitoring this boycott on mortgages. Now this's a there's 0:09:06.679 --> 0:09:10.280 a different situation, but it involves developers who've built houses 0:09:10.320 --> 0:09:12.960 that they're not delivering. Um. So you've had a lot 0:09:13.000 --> 0:09:15.840 of consumers who have in China who have really gotten 0:09:15.840 --> 0:09:18.280 a push for you know, give us your money and 0:09:18.320 --> 0:09:20.600 we will give you a higher rate by this apartment 0:09:20.640 --> 0:09:23.360 and you'll you'll, you'll you'll have you know, I will 0:09:23.360 --> 0:09:26.480 deliver this apartment. And they're finding that like these these 0:09:26.520 --> 0:09:30.360 promises are not being made good. On the difference in 0:09:30.480 --> 0:09:32.920 China and here is that then China also has a 0:09:33.000 --> 0:09:36.440 very powerful state that also has you know, large ownership 0:09:36.480 --> 0:09:40.160 shares in all of the big big state banks and 0:09:40.280 --> 0:09:44.360 can kind of come in and exert some control. But 0:09:44.679 --> 0:09:47.600 we're just seeing this this control fray. And so we're 0:09:47.600 --> 0:09:50.920 seeing you know, protests on the street and grassroot movements 0:09:50.960 --> 0:09:53.560 to kind of you know, resist these things when when 0:09:53.559 --> 0:09:57.800 they come along and really hurt ordinary Chinese consumers and households. 0:09:57.960 --> 0:10:01.000 Do those ordinary Chinese consumers and how solds you're referring 0:10:01.040 --> 0:10:03.880 to do do they have any power when they go 0:10:03.920 --> 0:10:07.120 to the streets. Well, I mean it looks like they 0:10:07.160 --> 0:10:10.200 exerted some recently. You know, there was there was a 0:10:10.320 --> 0:10:14.240 very large protest in Henan Province, um, and you know 0:10:14.400 --> 0:10:17.280 they were met with um. You know, there were kind 0:10:17.280 --> 0:10:21.080 of violent clashes with security forces. I understand a lot 0:10:21.120 --> 0:10:24.760 of them are sort of playing clothes, um and UM. 0:10:25.000 --> 0:10:27.880 It looked pretty bad. And now we're kind of seeing 0:10:27.920 --> 0:10:30.319 that here are the authorities. They're they're coming in. They're saying, 0:10:30.400 --> 0:10:32.080 you know, we're going to step in and we're gonna 0:10:32.080 --> 0:10:35.160 make depositors whole, and we're gonna crack down on this 0:10:35.320 --> 0:10:37.800 royal ending system that we had earlier kind of loosened 0:10:37.840 --> 0:10:40.480 up on in order to make capital more available. And 0:10:40.520 --> 0:10:42.719 this is that kind of sea sign that you know 0:10:43.080 --> 0:10:44.760 from here in New York as I edit these stories 0:10:44.760 --> 0:10:46.240 and I see them, that you really see out of 0:10:46.320 --> 0:10:49.760 China is this there's both this kind of tight control 0:10:49.880 --> 0:10:53.480 and then a kind of a freewheeling consumer finance sector 0:10:54.320 --> 0:10:56.520 and authorities are always kind of trying to find like 0:10:56.559 --> 0:10:59.079 the balancing point for this, and when it doesn't work, 0:11:00.080 --> 0:11:02.800 things happen on the streets that consumer finances actors so 0:11:02.800 --> 0:11:05.199 crucial here because I mean, didn't China have and correct 0:11:05.200 --> 0:11:08.600 me if I'm wrong, Pat, but didn't China have this 0:11:08.760 --> 0:11:13.720 massive kind of retail trading boom that it never quite 0:11:14.120 --> 0:11:15.439 recovered from them? I want to say. I want to 0:11:15.480 --> 0:11:17.320 say a lot of Chinese stocks are owned by the 0:11:17.400 --> 0:11:19.680 Chinese consumers. So to see it once again become a 0:11:19.720 --> 0:11:22.200 consumer lending story, I think it's pretty interesting when it 0:11:22.200 --> 0:11:25.440 comes to how developed Chinese markets are actually getting. Yeah, 0:11:25.480 --> 0:11:27.240 and you know, and we've also seen all these issues 0:11:27.280 --> 0:11:30.080 with like wealth management products that have been heavily sold 0:11:30.120 --> 0:11:32.720 and then you know, maybe turned out to be riskier 0:11:32.720 --> 0:11:35.160 than people thought. And then you know, you've seen China 0:11:35.240 --> 0:11:37.240 kind of trying to decide what it wants to do 0:11:37.559 --> 0:11:40.320 with these companies that these big tech companies that have 0:11:40.440 --> 0:11:43.640 I P O and um, you know, suddenly start to 0:11:43.760 --> 0:11:48.520 look like both you know, separate power centers as large 0:11:48.520 --> 0:11:51.320 companies can be, but also maybe are taking on new 0:11:51.360 --> 0:11:53.760 financial risks that the regulators are trying to get their 0:11:53.840 --> 0:11:55.800 their hands around. I mean, at one point, you know, 0:11:55.880 --> 0:11:58.920 there was an online lender through a phone app that 0:11:59.120 --> 0:12:01.040 you know I I think was like the largest money 0:12:01.040 --> 0:12:05.200 market fund in the world. Um and uh so you 0:12:05.200 --> 0:12:09.840 have this really kind of protean, dynamic consumer sector sometimes 0:12:09.880 --> 0:12:12.880 with a lot of envelopes being push combined with a 0:12:12.960 --> 0:12:18.199 state that both you know, really like wants to encourage investment, 0:12:18.280 --> 0:12:21.720 but also you know, has its eye on uh, you know, 0:12:22.000 --> 0:12:26.320 social control, and you know, and and and then you 0:12:26.360 --> 0:12:29.679 see things kind of you know, happen in terms of protests. Well, 0:12:29.679 --> 0:12:33.000 pat speaking of social control, the story that you edited 0:12:33.040 --> 0:12:35.000 in the current issue of the upcoming issue I should 0:12:35.000 --> 0:12:38.120 say a Bloomberg Business Week magazine, it ends with COVID zero. 0:12:38.400 --> 0:12:40.600 So we got to talk a little bit about what's 0:12:40.640 --> 0:12:42.760 going on with COVID zero and not necessarily an update, 0:12:42.800 --> 0:12:45.319 but the way that it's happening on the economy right now, 0:12:45.679 --> 0:12:48.320 not just from the perspective of economic growth or lack thereof, 0:12:48.440 --> 0:12:51.760 but from the perspective of politically, uh, and what it 0:12:51.800 --> 0:12:54.679 means for China's future in terms of leadership. Yeah, I mean, 0:12:54.679 --> 0:12:56.840 I'll be careful because I'm not an expert on what's 0:12:56.880 --> 0:12:59.439 happening with COVID zero in China. But I do think 0:12:59.480 --> 0:13:03.320 that there is the kind of overall overlay of you know, 0:13:03.440 --> 0:13:06.200 on top of all of this, you know, you have 0:13:06.400 --> 0:13:09.400 the fact that you know, China has been very strict 0:13:09.520 --> 0:13:11.760 in its COVID controls and that's creating a lot of 0:13:11.760 --> 0:13:16.360 social pressures and also you know, constraints constraints on business. 0:13:16.400 --> 0:13:17.640 I mean, is one of the people we talked to, 0:13:17.679 --> 0:13:20.120 it's like, all this stuff is another risk getting baked 0:13:20.120 --> 0:13:24.480 into a big risk cake in China. I mean that 0:13:24.520 --> 0:13:26.800 big risk cake is the exact I want to say 0:13:26.840 --> 0:13:30.000 disincentive for a lot of Western investors to hot back 0:13:30.000 --> 0:13:34.520 into China. The story isn't exactly supportive of of that, 0:13:34.679 --> 0:13:36.920 is it. No, you know, it's tricky though, I mean, 0:13:37.040 --> 0:13:39.560 it's it's hard to get a view from this in 0:13:39.640 --> 0:13:42.880 some ways from from outside. You know, we've seen you know, 0:13:42.960 --> 0:13:45.439 all of these problems with ever grand unfolding last year, 0:13:45.440 --> 0:13:46.600 and you look at it and you think like, well, 0:13:46.720 --> 0:13:49.600 is this China's Layman moment? And then things seem to 0:13:49.679 --> 0:13:54.080 kind of move a little bit uh slowly after things 0:13:54.160 --> 0:13:56.679 start to look bad, and then somehow these stories kind 0:13:56.679 --> 0:13:58.880 of keep coming back, so you sort of wonder is 0:13:58.920 --> 0:14:02.000 this going to be, you know, going to go very slowly? 0:14:02.040 --> 0:14:04.439 And then all of a sudden That was pat Rickneer, 0:14:04.600 --> 0:14:07.319 Business Week's Markets and Finance editor with a story from 0:14:07.320 --> 0:14:09.800 the magazine. You can find it online, on the terminal 0:14:09.840 --> 0:14:12.640 and on news stands now. Our thanks to Bloomberg's Creedy 0:14:12.640 --> 0:14:16.040 Gupta for joining us there as well. Still ahead on 0:14:16.080 --> 0:14:19.080 Bloomberg Business Week, we shift our focus back to domestic 0:14:19.160 --> 0:14:22.720 challenges in the world of finance, specifically in venture capital. 0:14:23.240 --> 0:14:26.480 Amy nu Yakis, the CEO of the venture firm ant Miss, 0:14:26.720 --> 0:14:35.840 joins us on the other side. This is Bloomberg broadcasting 0:14:35.920 --> 0:14:39.760 from the financial capital of the world, Bloomberg eleven Frio 0:14:39.800 --> 0:14:43.760 in New York to Washington, d C. Bloomberg to Boston, 0:14:43.840 --> 0:14:47.280 Bloomberg one oh six one to San Francisco, Bloomberg nine 0:14:47.360 --> 0:14:50.480 sixty to the country Sirius xm Chado one nine team 0:14:50.520 --> 0:14:53.720 and around the globe. The Bloomberg Business app and Bloomberg 0:14:53.800 --> 0:14:58.960 Radio dot com. This is Bloomberg Business Week. Bloomberg News 0:14:59.000 --> 0:15:01.440 reported back in June the adventure capital funding for the 0:15:01.480 --> 0:15:04.720 second quarter hit its lowest level since To help us 0:15:04.760 --> 0:15:07.520 make sense of the tough conditions and get insight into 0:15:07.520 --> 0:15:11.440 where women entrepreneurs are focusing their efforts, Bloomberg's Katie Grayfield 0:15:11.440 --> 0:15:14.000 and I spoke with Amy Noyakis, who's the co founder 0:15:14.000 --> 0:15:16.720 in CO c I O at the venture capital firm Anthemus. 0:15:17.360 --> 0:15:20.800 We've talked to her before about venture capital, of course, 0:15:20.880 --> 0:15:24.960 and also about supporting women in venture capital. Amy, It's 0:15:24.960 --> 0:15:27.600 good to have you with us. How are you. I'm good, 0:15:27.640 --> 0:15:30.440 I'm good. I'm tired. It's been a very crazy, busy summer. 0:15:30.640 --> 0:15:32.440 Well what do you mean by that? Well, you know, 0:15:32.520 --> 0:15:35.320 I think it's been an interesting time for venture capital. Um. 0:15:35.360 --> 0:15:37.080 You know, we've heard a lot about this sort of 0:15:37.160 --> 0:15:39.720 idea that might be a silent crash happening in DC, 0:15:40.080 --> 0:15:41.560 or that we're at the beginning of the end of 0:15:41.640 --> 0:15:44.920 VC as the market to dry it up. But you know, 0:15:45.000 --> 0:15:47.760 I'm telling you from my perspective, I'm not seeing it. Um. 0:15:47.880 --> 0:15:51.040 I mean, the current market environment has really put capital 0:15:51.120 --> 0:15:53.160 location decisions to the test, and I think people have 0:15:53.200 --> 0:15:55.200 made some big mistakes in the last couple of years. 0:15:55.400 --> 0:15:57.960 But the industry wide correction that we're seeing this year 0:15:58.000 --> 0:15:59.640 isn't a surprise to any of us who have been 0:15:59.680 --> 0:16:02.360 doing this for decades, nor is it affecting all companies 0:16:02.360 --> 0:16:04.760 are all investors in the same way. I think it's 0:16:04.760 --> 0:16:07.200 just simply a needed correction. Right. For the last ten 0:16:07.240 --> 0:16:11.240 plush years, we've seen unprecedented amounts of capital shifting into 0:16:11.320 --> 0:16:15.480 venture capital, particularly the tech sector, inspiring entrepreneurs and would 0:16:15.520 --> 0:16:19.200 be founders to build new digital companies that are challenging 0:16:19.200 --> 0:16:21.560 the old guard and most importantly or make a lot 0:16:21.600 --> 0:16:23.840 of sense. But in the majority of these cases, the 0:16:23.920 --> 0:16:26.560 markets and the employees and the consumers these companies have 0:16:26.720 --> 0:16:30.320 reaped a ton of benefits through this evolution. However, there 0:16:30.360 --> 0:16:33.320 are lots of founders and investors alike who have attempted 0:16:33.360 --> 0:16:35.680 to build companies that aren't solving real problems. They're not 0:16:35.720 --> 0:16:38.920 focusing on business fundamentals, and they're letting hubers get the 0:16:38.920 --> 0:16:41.520 best of them. Right. While the global funding has slowed, 0:16:41.720 --> 0:16:45.120 there are still plenty of great companies growing, expanding, and building. 0:16:45.160 --> 0:16:47.640 And there are still plenty of companies out there, and 0:16:47.680 --> 0:16:50.560 so I'm kind of feeling like the bigger issue is 0:16:50.680 --> 0:16:53.800 how many of these people that have kind of jumped 0:16:53.840 --> 0:16:57.280 into the game in the last inning are really throwing 0:16:57.320 --> 0:17:00.400 things off right, Like, DC is hard and it's supposed debate. 0:17:00.560 --> 0:17:03.280 It's why the returns are so high. There's huge upside 0:17:03.280 --> 0:17:05.520 for investors that are finding and back in great companies. 0:17:05.760 --> 0:17:07.520 But the problem is, I think over the last couple 0:17:07.560 --> 0:17:10.359 of years, it's looked too easy and that's attracted a 0:17:10.359 --> 0:17:12.679 lot of folks frankly don't belong in the game. And 0:17:12.720 --> 0:17:14.600 now that it's gotten a little harder again, you've got 0:17:14.600 --> 0:17:16.560 to look a little harder for the good ideas. You've 0:17:16.600 --> 0:17:19.280 got to be smarter about the way you value the companies. 0:17:19.760 --> 0:17:22.439 It's the dumb money that's disappeared, and it's taken a 0:17:22.480 --> 0:17:25.280 lot of promising companies with it. Give us some good ideas. 0:17:25.320 --> 0:17:28.800 Where are there still opportunities? Well, I listen on the 0:17:28.800 --> 0:17:31.520 investor side, I think there's a ton of opportunity in 0:17:31.560 --> 0:17:34.080 the early stage. Um, it's still very much a sweet spot. 0:17:34.320 --> 0:17:36.280 A lot of the market contraction that we've seen has 0:17:36.320 --> 0:17:39.160 been in the later stage. I'm personally biased because we're 0:17:39.280 --> 0:17:42.160 at antemestic fans of the of the early stage strategy. 0:17:42.480 --> 0:17:44.520 But I think that if you're a quality early stage 0:17:44.520 --> 0:17:46.720 investor and you're in it for the long haul, you'll 0:17:46.800 --> 0:17:50.199 navigate this correction incredibly well. Valuations are getting haircuts if 0:17:50.240 --> 0:17:53.199 they deserve. Dealfull In, competition for capital is sort of 0:17:53.200 --> 0:17:55.840 flowing a bit, and investors at the early stage, I think, 0:17:55.880 --> 0:17:58.200 are wealth positions. Got to focus on the fundamentals. You've 0:17:58.200 --> 0:18:00.680 got to stay from the away from the fluff. Hubrist. 0:18:00.760 --> 0:18:03.000 A great company is a great company, and there's always 0:18:03.040 --> 0:18:05.760 space for great companies. I'd say for the companies and 0:18:05.800 --> 0:18:08.520 the founders, they should probably take the advice that they 0:18:08.520 --> 0:18:11.200 should have heated years ago. Not all capital is the same. 0:18:11.480 --> 0:18:13.840 Pay attention to who's backing your company, and don't get 0:18:13.840 --> 0:18:16.480 swindled by a heavy valuation that you know you can't 0:18:16.480 --> 0:18:19.479 back up. I mean, we've seen so many examples of that. 0:18:19.560 --> 0:18:21.560 I don't want to say they were, you know, swindled, 0:18:21.560 --> 0:18:23.800 but we've seen a lot of down rounds, uh in 0:18:23.840 --> 0:18:27.760 the past few months. Amy, Yeah, and listen, that's not surprising, right, 0:18:27.760 --> 0:18:29.920 I Mean, the roll on the purpose of a good 0:18:30.040 --> 0:18:34.040 venture capital capital investor hasn't changed. It is our job 0:18:34.080 --> 0:18:36.600 and should be our jard to deploy capital responsibly and 0:18:36.680 --> 0:18:39.800 help grow portfolio companies. That doesn't mean that there's a 0:18:39.840 --> 0:18:41.840 one size fits all approach to how we do that. 0:18:41.880 --> 0:18:43.439 And I think the biggest issue for me is that 0:18:43.480 --> 0:18:46.360 so many of these players have jumped in eyes closed 0:18:46.640 --> 0:18:48.320 with little to no experience and how to build and 0:18:48.400 --> 0:18:50.760 support a quality company. And these are the folks that 0:18:50.800 --> 0:18:52.640 have caused a lot of the pain in the market. Um, 0:18:52.680 --> 0:18:54.359 you know, I think some of the strategy is driven 0:18:54.400 --> 0:18:56.600 by hubris, and I don't think it's appropriate to write 0:18:56.640 --> 0:18:58.720 the entire sector off just because a large number of 0:18:58.720 --> 0:19:01.040 folks decided to jump into the d send naked before 0:19:01.119 --> 0:19:03.080 checking if there was water in the pool. Right, Hey, 0:19:03.240 --> 0:19:06.040 I want to get an update on the female Innovator's 0:19:06.119 --> 0:19:09.720 Lab that you recently launched, And because when we talk 0:19:09.720 --> 0:19:12.440 about ventro capital, especially women in venture capital, we're talking 0:19:12.480 --> 0:19:15.320 like single digit percentage of venture capital goes to women 0:19:15.359 --> 0:19:18.200 each year. Yeah, it's still I'm you know, it's still 0:19:18.240 --> 0:19:20.280 an area that we spent a lot of our time 0:19:20.320 --> 0:19:21.800 on an anthemous and I think a big part of 0:19:21.840 --> 0:19:24.439 that is because it was how we were founded, right, 0:19:24.480 --> 0:19:26.879 you know, I'm a woman founder of a company, and 0:19:26.960 --> 0:19:29.520 not only am I investor, but I'm somebody who started 0:19:29.520 --> 0:19:31.800 a company from scratch and watched how hard it was 0:19:32.119 --> 0:19:34.560 and difficult it was to raise capital to grow my company, 0:19:34.600 --> 0:19:36.639 and there weren't a lot of supporters around UM. So 0:19:36.680 --> 0:19:39.439 when we looked across the entirety of the fintech sector, 0:19:39.800 --> 0:19:42.280 we wanted to make sure UM that we were playing 0:19:42.280 --> 0:19:44.639 a very solid roll in in sort of putting our 0:19:44.640 --> 0:19:46.520 money where our mouth is. And and so we've been 0:19:46.560 --> 0:19:49.480 backing women founders in Europe in the US for a 0:19:49.520 --> 0:19:51.719 couple of years now specifically and what we call the 0:19:51.720 --> 0:19:56.840 earliest venture studio stage, money and ideas coming together at 0:19:56.840 --> 0:19:59.560 the very beginning and helping these women build their company. 0:19:59.600 --> 0:20:02.960 And I think it's a really great opportunity not only 0:20:03.000 --> 0:20:05.919 to see some fantastic businesses and help women, you know, 0:20:05.960 --> 0:20:08.760 get a leg up and grow, but also you know, 0:20:08.840 --> 0:20:11.600 as as as we've sort of found it's making a 0:20:11.760 --> 0:20:14.639 huge difference. That was Amy no yarkis co founder and 0:20:14.720 --> 0:20:17.400 co c i O at the adventure capital firm Anthemus. 0:20:17.600 --> 0:20:20.320 You're listening to Bloomberg Business Week. Up next, we explore 0:20:20.359 --> 0:20:23.000 the latest salvos in America's war on women in the 0:20:23.040 --> 0:20:39.439 aftermath of Rovie Wade's reversal. This is Bloomberg. You're listening 0:20:39.480 --> 0:20:43.240 to Bloomberg business Week with Carol Messer and Bloomberg Quick 0:20:43.280 --> 0:20:48.080 Takes Tim Stinovik from Bloomberg Radio. The latest issue of 0:20:48.080 --> 0:20:50.919