WEBVTT - Gary Rieschel on China Tech (Radio)

0:00:00.160 --> 0:00:04.960
<v Speaker 1>Bloomberg's Juliette Sally joins us and she's got a special guest, right, Jules,

0:00:05.760 --> 0:00:08.119
<v Speaker 1>I do. Indeed, Dougett is getting very exciting here because,

0:00:08.119 --> 0:00:09.600
<v Speaker 1>as you say, we're about to kick off in about

0:00:09.640 --> 0:00:12.200
<v Speaker 1>ten minutes time, and we'll hear from our founder, Michael Bloomberg,

0:00:12.240 --> 0:00:15.320
<v Speaker 1>founder of Bloomberg LP and Bloomberg Philanthropies and three term

0:00:15.560 --> 0:00:17.320
<v Speaker 1>of New York City. But with me here in Singapore

0:00:17.400 --> 0:00:21.280
<v Speaker 1>right now is jimmy venture Partner's founding manager partner, Gary Rochelle. Gary,

0:00:21.320 --> 0:00:22.919
<v Speaker 1>great to have you with us. I mean, we've seen

0:00:23.160 --> 0:00:26.000
<v Speaker 1>Presidents Biden and she now meet for the first time

0:00:26.000 --> 0:00:29.520
<v Speaker 1>since President Biden became the leader of the United States

0:00:29.520 --> 0:00:31.360
<v Speaker 1>really trying to find an off ramp here in these

0:00:31.440 --> 0:00:34.080
<v Speaker 1>U S. China tensions. How are you seeing that all

0:00:34.120 --> 0:00:37.000
<v Speaker 1>play in to your business? Are you still seeing strong

0:00:37.360 --> 0:00:40.640
<v Speaker 1>I guess demand or is this really starting to impact business?

0:00:41.040 --> 0:00:43.080
<v Speaker 1>I think over the last several years, and by the way,

0:00:43.080 --> 0:00:45.000
<v Speaker 1>thank you very much for having me this morning, But

0:00:45.240 --> 0:00:48.680
<v Speaker 1>over the last several years, um, the entrepreneurial community, that

0:00:48.720 --> 0:00:51.280
<v Speaker 1>early stage of venture capol community in China has continued

0:00:51.320 --> 0:00:54.040
<v Speaker 1>to be quite active. Um again, I think that there's

0:00:54.080 --> 0:00:57.720
<v Speaker 1>a significant separation between you see in the geopolitical realm

0:00:57.880 --> 0:01:00.960
<v Speaker 1>and what's happening on the ground with real early stage

0:01:00.960 --> 0:01:04.120
<v Speaker 1>start up entrepreneurs, which is what chieving businesses. You could

0:01:04.160 --> 0:01:07.040
<v Speaker 1>almost feel, however, this morning, when people started getting together,

0:01:07.120 --> 0:01:11.600
<v Speaker 1>there was this this exhale of Okay, the US and

0:01:11.680 --> 0:01:13.760
<v Speaker 1>China are going to talk. And I think that the

0:01:13.760 --> 0:01:16.080
<v Speaker 1>world has been waiting to at least acknowledge or at

0:01:16.160 --> 0:01:19.200
<v Speaker 1>least understand whether or not they're going to talk. And

0:01:19.240 --> 0:01:21.560
<v Speaker 1>I think that that makes a significant difference, and you

0:01:21.640 --> 0:01:24.800
<v Speaker 1>can feel it really in the conversations with people this morning.

0:01:25.120 --> 0:01:28.640
<v Speaker 1>The entrepreneurs in China, however, the last several years, none

0:01:28.640 --> 0:01:31.280
<v Speaker 1>of them wake up in the morning deciding whether to

0:01:31.319 --> 0:01:34.360
<v Speaker 1>start a business based upon chijin p They are really

0:01:34.400 --> 0:01:38.240
<v Speaker 1>there to satisfy the growing and substantial need in the

0:01:38.319 --> 0:01:41.600
<v Speaker 1>Chinese market, and particularly the areas of technology and healthcare,

0:01:41.600 --> 0:01:44.720
<v Speaker 1>which the two areas achieving focuses on. So I could

0:01:44.760 --> 0:01:48.360
<v Speaker 1>say everyone's happy, everyone's has a chance to be slightly

0:01:48.440 --> 0:01:51.960
<v Speaker 1>less despondent today, But I don't think it really has

0:01:52.000 --> 0:01:57.360
<v Speaker 1>impacted how entrepreneurs think about their role in Chinese Chinese economy.

0:01:57.600 --> 0:02:00.200
<v Speaker 1>What about what we saw from the Party Congress. Then

0:02:00.280 --> 0:02:02.920
<v Speaker 1>did you see some changes in terms of whether or

0:02:02.920 --> 0:02:04.800
<v Speaker 1>not there's going to be more funding and have you

0:02:04.800 --> 0:02:06.720
<v Speaker 1>been seeing a drop off and funding at all? So

0:02:06.880 --> 0:02:09.120
<v Speaker 1>there is a drop off in funding, particularly in the

0:02:09.200 --> 0:02:11.959
<v Speaker 1>late stage crossover round so pre I p O rounds.

0:02:12.280 --> 0:02:14.200
<v Speaker 1>When there's no I p O then they can't have

0:02:14.280 --> 0:02:17.320
<v Speaker 1>a pre I p O financing. UM. I think that

0:02:17.400 --> 0:02:20.800
<v Speaker 1>in the early stage startups, the firms that are organized

0:02:20.840 --> 0:02:25.560
<v Speaker 1>to deploy capital against those real technology development UH cycles.

0:02:25.560 --> 0:02:28.720
<v Speaker 1>Our average holding period in achieving is eight plus years

0:02:28.760 --> 0:02:31.280
<v Speaker 1>in our portfolio for people that are in that world.

0:02:31.320 --> 0:02:33.560
<v Speaker 1>I still think there's robust capital and I still think

0:02:33.600 --> 0:02:36.520
<v Speaker 1>there's quite a bit of activity. But the big dollar,

0:02:36.639 --> 0:02:39.640
<v Speaker 1>the big headline dollar deals that Tiger Global, soft Bank

0:02:39.639 --> 0:02:43.720
<v Speaker 1>and others do, those have definitely UH either disappeared completely

0:02:43.800 --> 0:02:46.919
<v Speaker 1>or dramatically reduced. This year nine I p O is

0:02:46.960 --> 0:02:48.840
<v Speaker 1>for achieming this year and not not a bad year.

0:02:48.880 --> 0:02:51.119
<v Speaker 1>I think you called it decent when you're on Bloomberg

0:02:51.120 --> 0:02:54.400
<v Speaker 1>Television earlier, What have you been mainly investing in? What

0:02:54.440 --> 0:02:57.040
<v Speaker 1>are you looking to invest in? So what we made

0:02:57.120 --> 0:03:00.399
<v Speaker 1>we made a significant change about seven years ago and

0:03:00.480 --> 0:03:03.560
<v Speaker 1>we moved from having a significant waiting in the consumer

0:03:04.000 --> 0:03:07.960
<v Speaker 1>facing businesses to more core tech basis. So on the

0:03:07.960 --> 0:03:12.680
<v Speaker 1>tech side, UM, we have a robust UH semiconductor UH

0:03:12.960 --> 0:03:15.600
<v Speaker 1>set of investments, quite a bit of software as a service,

0:03:15.720 --> 0:03:20.120
<v Speaker 1>intelligent manufacturing AI. It's hard to really bucket AI because

0:03:20.160 --> 0:03:23.799
<v Speaker 1>AI really really is tied to applications. So those are

0:03:23.800 --> 0:03:27.200
<v Speaker 1>really the core areas for the GMIN tech practice. Healthcare

0:03:27.560 --> 0:03:32.520
<v Speaker 1>you see more and more investment in what i'd call

0:03:32.600 --> 0:03:36.800
<v Speaker 1>early stage pharma and again technology development around self therapy,

0:03:36.840 --> 0:03:40.560
<v Speaker 1>gene therapy UM, and then the service assiety in China.

0:03:40.680 --> 0:03:43.640
<v Speaker 1>China is still short four million doctors, it's still short

0:03:43.680 --> 0:03:46.840
<v Speaker 1>for seven million nurses. So you're thinking about adding eleven

0:03:46.840 --> 0:03:49.920
<v Speaker 1>million healthcare professionals just to kind of get to the

0:03:49.960 --> 0:03:54.160
<v Speaker 1>base of what's required to provide care. That's a big number. Okay,

0:03:54.240 --> 0:03:56.960
<v Speaker 1>So healthcare certainly and focus there, and as well, you've

0:03:56.960 --> 0:03:59.200
<v Speaker 1>been looking at the software infrastructure. I mean, we look

0:03:59.200 --> 0:04:02.280
<v Speaker 1>at the inflation picture, higher rates from the FED that

0:04:02.360 --> 0:04:05.080
<v Speaker 1>does often aid into TACH funding. As we've discussed in

0:04:05.200 --> 0:04:08.400
<v Speaker 1>terms of your funding levels that you're seeing, do you

0:04:08.520 --> 0:04:11.440
<v Speaker 1>see opportunity if we are going to see a global downturn,

0:04:11.520 --> 0:04:14.120
<v Speaker 1>is this the time when the entrepreneurial spirit really tries

0:04:14.200 --> 0:04:16.960
<v Speaker 1>to pick up talent that might be dropped elsewhere. I

0:04:17.000 --> 0:04:19.080
<v Speaker 1>think that that is correct. So some of the larger

0:04:19.120 --> 0:04:22.000
<v Speaker 1>firms now they're shedding quite a few employees UM in

0:04:22.040 --> 0:04:24.240
<v Speaker 1>the US. Haven't seen quite as much of that in

0:04:24.360 --> 0:04:27.000
<v Speaker 1>China yet, but but a substantial amount in the US

0:04:27.400 --> 0:04:29.880
<v Speaker 1>if I'm looking at it just from the perspective in China.

0:04:30.560 --> 0:04:33.839
<v Speaker 1>The market opportunity in China to kind of rehost the

0:04:34.000 --> 0:04:39.160
<v Speaker 1>entire economy on a century technology platform that has not changed,

0:04:39.560 --> 0:04:41.960
<v Speaker 1>and what's going to change is the rate at which

0:04:42.160 --> 0:04:45.480
<v Speaker 1>we move in that direction. So what we can't really

0:04:45.560 --> 0:04:48.760
<v Speaker 1>decide to, we can't really look at today or predict today,

0:04:49.480 --> 0:04:52.719
<v Speaker 1>is how rapidly will China develop all of its own

0:04:52.720 --> 0:04:56.880
<v Speaker 1>cloud services? How rapidly will right now? In advanced manufacturing

0:04:56.920 --> 0:05:00.480
<v Speaker 1>intelligent manufacturing, only seven percent of China's manufact actuation base

0:05:00.560 --> 0:05:02.359
<v Speaker 1>has moved to and tell what we'd call and consider

0:05:02.440 --> 0:05:06.640
<v Speaker 1>intelligent manufacturing, So there's still some very very long tails

0:05:06.720 --> 0:05:10.080
<v Speaker 1>in terms of reaching critical mass in those areas. That

0:05:10.320 --> 0:05:13.080
<v Speaker 1>is probably a little less certain today because you're not

0:05:13.080 --> 0:05:15.599
<v Speaker 1>sure what the following capital of the ability is going

0:05:15.680 --> 0:05:17.200
<v Speaker 1>to be. So We're gonna have to see how that

0:05:17.240 --> 0:05:19.840
<v Speaker 1>plays out. When do you see a full reopening of

0:05:19.880 --> 0:05:24.680
<v Speaker 1>the China economy, So it has to it won't occur

0:05:24.760 --> 0:05:30.000
<v Speaker 1>until there's a significant uh just elimination or ignore a

0:05:30.120 --> 0:05:33.440
<v Speaker 1>zero COVID policy, So that's probably in the third quarter

0:05:33.480 --> 0:05:36.159
<v Speaker 1>of next year. We want to talk as well about

0:05:36.200 --> 0:05:40.840
<v Speaker 1>your aunt steak. What evaluation have you assigned there? I'm sorry,

0:05:41.000 --> 0:05:43.839
<v Speaker 1>what's taking your aunt steak? Oh, we don't have an

0:05:43.839 --> 0:05:46.320
<v Speaker 1>ant steak. You don't have an cheaming. I wish I

0:05:46.360 --> 0:05:47.960
<v Speaker 1>had an ant stake, but I don't have an answer.

0:05:47.960 --> 0:05:50.160
<v Speaker 1>That is that is my about on on my radio

0:05:50.200 --> 0:05:51.880
<v Speaker 1>search there. And we thought you did in terms of

0:05:51.880 --> 0:05:55.520
<v Speaker 1>how you're evaluating your China allocation there, but what about

0:05:55.560 --> 0:05:58.640
<v Speaker 1>reevaluating exposure in any way there? So I think that

0:05:58.680 --> 0:06:03.000
<v Speaker 1>what you reevaluate is reevaluate again by sector. So you

0:06:03.040 --> 0:06:06.039
<v Speaker 1>look at is the consumer sector going to recover bounce

0:06:06.080 --> 0:06:09.600
<v Speaker 1>back quickly? Know? Anything where the government has sensitivity over

0:06:09.680 --> 0:06:12.719
<v Speaker 1>data ownership, that's not going to recover quickly. Um, So

0:06:12.839 --> 0:06:14.679
<v Speaker 1>what you do is you tend to look for areas

0:06:14.720 --> 0:06:18.919
<v Speaker 1>where okay, this is purely a commercial enterprise and you

0:06:19.040 --> 0:06:21.960
<v Speaker 1>have less and less government interference. Clearly, if the government's

0:06:21.960 --> 0:06:24.160
<v Speaker 1>putting their finger on the scale in a particular area,

0:06:24.320 --> 0:06:27.240
<v Speaker 1>that's scenario we would probably avoid. You mentioned earlier, a

0:06:27.279 --> 0:06:29.719
<v Speaker 1>big sigh of relief. How do you feel the world

0:06:29.760 --> 0:06:31.800
<v Speaker 1>has also just changed in the past year or so.

0:06:31.839 --> 0:06:33.880
<v Speaker 1>I'm not sure if you're at the Blimberg New Economy

0:06:33.880 --> 0:06:36.960
<v Speaker 1>Forum a year ago, but Singapore has certainly opened up

0:06:37.000 --> 0:06:38.560
<v Speaker 1>so much. I mean, you must be seeing a lot

0:06:38.560 --> 0:06:41.400
<v Speaker 1>more opportunity and ability to start to do business more

0:06:41.440 --> 0:06:44.680
<v Speaker 1>freely Singapore. I was here last year and Singapore is

0:06:45.560 --> 0:06:49.120
<v Speaker 1>a very very good microcosm of what's happening. So the

0:06:49.279 --> 0:06:52.520
<v Speaker 1>energy in Singapore is amazing. Clearly a great deal of

0:06:52.560 --> 0:06:55.560
<v Speaker 1>capital has flown into flown into the area. But you

0:06:55.600 --> 0:06:58.600
<v Speaker 1>almost seech Singapore taking on a global rule now as

0:06:58.640 --> 0:07:02.560
<v Speaker 1>the Geneva of Asia. So going back years when they

0:07:02.600 --> 0:07:06.719
<v Speaker 1>were global conflicts and wars, Geneva broken by the Swiss,

0:07:06.760 --> 0:07:11.160
<v Speaker 1>was still able to have different constituencies Nazis, Jews, etcetera,

0:07:11.160 --> 0:07:14.040
<v Speaker 1>get together and have conversations. You see Singapore now being

0:07:14.080 --> 0:07:17.480
<v Speaker 1>able to have North Asia, China, India, Southeast Asia, people

0:07:17.480 --> 0:07:20.440
<v Speaker 1>from your people from the United States. It really, it's really,

0:07:20.480 --> 0:07:24.040
<v Speaker 1>it's time and I think it has an extraordinary base

0:07:24.120 --> 0:07:26.520
<v Speaker 1>to work from today, the Geneva of Asia. I love it.

0:07:26.560 --> 0:07:28.600
<v Speaker 1>Thank you so much for your time. Teaming Adventure Partner's

0:07:28.600 --> 0:07:31.800
<v Speaker 1>founding managing partner Gary Michelle with me here at the

0:07:31.880 --> 0:07:35.360
<v Speaker 1>fifth annual Bloomberg New Economy Forum in Singapore