My guest today is Rachel Lau. Rachel is Managing Partner and Co-Founder of RHL Ventures. RHL Ventures is a Southeast Asian-based private investment firm that focuses on growth capital investments in the Southeast Asia region.
In this conversation, we discuss the VC scene in Malaysia and ASEAN, how the landscape has changed over the last two years, and the story behind RHL.
I hope you enjoy my conversation with Rachel Lau.
Show Notes:
[00:00:31] – [First question] – Rachel’s Background
[00:01:30] – The VC landscape within ASEAN
[00:06:44] – COVID’s effects on VC in ASEAN
[00:10:06] – Investing in the A and B stage
[00:13:27] – Aspects of VC that Rachel disagrees with
[00:15:40] – What should people know about Malaysian VC
[00:18:11] – Advice for graduates entering the VC scene?
[00:19:33] – Rachel’s investing style
[00:24:37] – Why start RHL Ventures?
[00:27:32] – RHL’s edge?
[00:29:07] – What Rachel wished she learned earlier
[00:31:22] – Most undervalued life experience?
[00:33:42] – Influential books?
[00:35:55] – Wrapping up and future plans
Connect with Rachel:
Mentioned/Recommended Content:
Listen to this episode on Apple Podcasts, Spotify, Stitcher, Castbox, Google Podcasts, or on your favourite podcast platform.
Transcript:
Kalani Scarrott (00:31): Alrighty, my guest today is Rachel Lau. Rachel is the Managing Partner and Co-Founder of RHL Ventures. RHL is a Southeast Asian-based private investment firm, that focuses on growth capital investments, in the Southeast Asia region. In today’s conversation, we cover the VC scene in Malaysia and ASEAN, how the landscape has changed over the last two years, and the story behind RHL. So, I hope you enjoy my conversation with Rachel Lau.
Rachel, I don’t think a intro story by me will do you justice. So before we get to the VC PE scene in Malaysia and RHL, for the listeners, could you just introduce yourself and give a bit of background intro?
Rachel Lau (01:09): Sure. Hi, my name’s Rachel. I run RHL Ventures with a couple of partners. We’re based in Malaysia. We essentially invest in Southeast Asia businesses, or high-growth businesses that’s looking to invest and innovate in this part of the world. Our main business is basically high-growth tech start-ups, but obviously we invest across the board in terms of sectors.
Kalani Scarrott (01:30): So could you talk a little about the VC landscape within ASEAN where you invest? So maybe the numbers, or is there any sort of descriptive ideas or statistics about what the market looks like?
Rachel Lau (01:38): Sure. There’s about 600 million people in Southeast Asia. The average age is 29 years old, so it’s a fairly young demographic. I think we’re probably middle-class, if not lower-middle-class, as an average in terms of the region. The idea for us investing in this part of the world, is obviously to capitalize on the high growth that we see. And also to be fair, we see quite a few younger people coming back from overseas, having a diverse background, you’re in tech or healthcare or finance, and wanting to come back and making their mark. And so, we invest in guys that do that, or guys who are just really looking to make a change in the world.
Kalani Scarrott (02:20): Yeah. So it’s almost a reverse brain-drain in a way.
Rachel Lau (02:22): Yes. Yes.
Kalani Scarrott (02:23): You mentioned age demographics. Does that reflect in maybe the types of companies you invest in?
Rachel Lau (02:28): I mean, across the board, we’ve got guys who are 27-year-old’s, and we’ve got guys who are 45, right? I think from a investment standpoint, we try to get a diverse mix of founders, a diverse mix of backgrounds. I think that’s the whole idea. I like diversity in the way that we looked at things. I think diversity, not conformity, is the way moving forward. And especially in this part of the world, where people say it’s Southeast Asia, but in reality is in Malaysia and Indonesia, you speak Bahasa, but they’re 75% similar, right? It’s not exactly British English and American English, it’s really different, but you can get away with understanding some of the things. And then there’s also the Vietnamese and the Thai’s and religion is different, currency is different, rules, laws, are different.
So I think from that standpoint, I don’t think there’s a conformity or a uniformity in the way to invest in Southeast Asia. So for us, we’re a little bit more diverse. So age is just a function of how good you are, or how experienced you are, and I think we’re a bit more open-minded when it comes to investing.
Kalani Scarrott (03:31): Yeah. So then how do you navigate those differences within the cultures? Is it having different people in your team with that diversity, or how do you manage it?
Rachel Lau (03:38): Both, right. So we’ve got people with their different backgrounds, either age, race, gender, but also I think another way that we circumvent this, is by getting local partners. So in Indonesia, we work with guys who are from Indonesia, either from our VC or corporate scene in Thailand. So I think from that standpoint, we’ve been pretty pragmatic about the fact that you’re not going to be everyone to everything, so let’s be a bit more open-minded on and who we work with.
So there’s a lot of partnerships, right? So one of our funds, for example, is a partnership with a Korean Fund, and it’s supported by the Korean and Malaysian government. I think it was coincidental that happened, but essentially, I think for us understanding or lending some lenses of developed markets, and bringing them back to emerging markets, was quite helpful for us.
Kalani Scarrott (04:28): Yeah. Fair enough. And is there any trends that you’re seeing among the companies that you’ve backed recently, anything notable or interesting that stands out to you?
Rachel Lau (04:36): We’ve seen thematically people are getting healthier, so people care about health. I think COVID was thing, but also at the same time, I think it’s maybe the younger generation. So we’re a bit more health cautious than our parents. So no fast food, no sugary drinks, we go to the gym a little bit more, we want to look good. And I’m not sure if it’s social media influences or what it is, but I think people care about their health a lot more. So I think the trend is towards healthier food, healthier lifestyles, and just people wanting to be better. And so I think that’s probably the biggest trend we’ve seen.
So a lot of investments that we’ve made in the last one year or so, has been into health and food. The food thematic came up from the fact that, when we saw COVID-19 hit, food security, supply chain disruptions, hampered food delivery to a lot of either poor population or as a whole, it was just a breakdown. So one thing that we wanted to do in RHL, was essentially invest in companies that could solve that problem, and also providing better nutrients, healthier, to people across the board. And so that’s something that we’re still looking at, and I think that was something where we will probably be investing in a lot more going forward.
Kalani Scarrott (05:45): Yeah. No, it’s an interesting space, because it certainly is more of a lifestyle and a status type thing now isn’t it?
Rachel Lau (05:49): Yes. Correct. Correct. I mean, and it’s interesting. Well, it’s interesting and it’s sad, because eating a salad’s more expensive than eating meat now, right? And again, it used to be when you were younger, it was the other way around. Fast food was a luxury, and now fast food is seen as a [inaudible 00:06:04], right, and the quick and easy meal is no longer good. So it’s getting to be an interesting trend, but I think it’s for the better. I think obesity is a great issue, especially in Malaysia. Apparently, and don’t quote me on this, I’m not a hundred percent sure, I think 60% of Malaysian’s are overweight and I think 25 is obese. But I’m not a hundred percent sure about that. But I know it was a pretty high number. And I think it’s a function of sugary drinks. It’s a function of the fact that the food has lots of salt and fats and everything else. So I think from that standpoint, we’re being pretty cautious about investing in this part. And again, I think promoting a healthier lifestyle’s probably good for everybody.
Kalani Scarrott (06:44): No, I totally agree. And you mentioned COVID before, has your investing style changed over the last two years? How much has the scene changed over that period?
Rachel Lau (06:52): Yes, in a sense that with pre-COVID, we used to zoom in and out quite often, of a country. And due diligence was very much, I see you, I need to go to your factory, I need to touch your products. Now, I think a lot of it is online. I mean actually, and maybe I’d say, in the last three months or so, I think travels have picked back up. So to be fair, we’ve traveled, but not to the same extent of what we used to. And so the way we’ve done diligence have been a little bit different, in a sense that to be fair, now we rely a lot more on documents. And we’ve invested a lot more in online stuff and digital stuff as before, to previously. I think that COVID has accelerated digitalization if anything else.
And so we’ve done a lot more digitalization companies and having true operating leverage, right? Previously people say, Hey we’re a digital company, and it’s really not pivotal. Now it flows to your numbers pretty quickly, whether you can sell it online. And then you realize it’s really the delivery method, it’s how you engage consumers online. Again, we’re on our phones all the time. I go everywhere with my phone these days. And so if you’re able to capture that market share, that really helps out early.
Kalani Scarrott (08:04): And I’ve heard you mention as well in another podcast, about the speed of deals, like the deal process quickening up, how has that changed things? Is it a blessing or a curse?
Rachel Lau (08:12): I’d say it’s a curse, because I can do more work more quickly. And to be fair, I don’t think this will last very long, because I think honestly, with less time we don’t get as much diligence done. So there’s a lot more leap of faith in a good way and a bad way. But I think ideally you want to make sure that you do diligence. I think we went from two months to one and a half months, so it’s not like [inaudible 00:08:37] faster. But to be fair, the rounds are also getting shorter, the funding in between gaps are getting a little bit shorter. So to be fair, I do understand why due diligence is getting shorter and compacting a little bit more, right.
But I think for us, it’s been helpful because now we’re on our 35th deal, right. And so by sure function of mental exercise, we get to move a lot faster.You kind of know what you need to do, you know what the document’s in place. And so it’s a lot quicker. So I think it’s a bit of both. But yes, the deals are much faster. They’re much larger. It’s a testament to the region as well. Previously what happened, what was a seed deal at 5 million valuation, is now really 20. So you can see the valuation uplift, but also at the same time with more money in the system and more liquidity, you’re able to hire better people. You’re able to invest in better infrastructure. So I think it’s a good thing as a whole for the region.
Kalani Scarrott (09:34): Yeah. Is there more demand for VC jobs and stuff? Is it a bit cooler now?
Rachel Lau (09:41): Definitely strong demand. There’s a lot of people who care about VC tech, it’s sexy. It used to be, I went to start my own business, it’s not cool. Now it’s all the rage, I’m a start-up founder. I think one boy told me, Hey, I went to meet my girlfriend’s parents and they didn’t say, Hey, you’re a bum, and you don’t do work, right. So it’s quite nice to hear that, it was quite comforting to understand or to see that younger people wanted to take that risk. So far, I think it’s a good thing, and we’ll see how it goes.
Kalani Scarrott (10:06): Yeah. Cool. So I love the idea that you start fairly young with the companies you invest in, often in the A to B stage, but maybe the more interesting is the period after that. So they’ve got some money, they’re getting going, what do you want to see during that initial period?
Rachel Lau (10:18): Well, there’s a couple of things, right. Ideally, I want to see growth, but not at the expense of margins. I think maybe five years ago, the Uber guys were saying, Hey, we’ll put in a dollar and as long as we make back a dollar, it made sense, right? The reality of it is, you put in a dollar, you should maybe be making back $10. And I think that’s what a real company is. So I think sustainability of margins, margin growth is pretty important. I think we shouldn’t be burning money for burning money’s sake, and we shouldn’t be growing it for growings sake for it. I think you have to have quality growth.
The way we’ve spoken to our founders is, grow, but not at the expense of everything else, but also don’t be so prudent at the expense of growth. I think there’s a fine line between everything, and the way we’re looking at it, is just balance. Balance of growth, balance of spending, and being a bit more pragmatic and realistic at the same time, of where the situation is. And again, this was a funny combination, right, during COVID-19, we had a company who refused to spend. And I was trying to not choke him, because again, quite funny because they said, You’re the most prudent person, why are you asking him to spend? And I said, This is the only time where you’ll have every eyeball on your computer or your mobile. So if there’s any time to spend on marketing, this is the right time. And don’t put it on billboards, put it on online ads, right.
He was really hesitant for the first six months, and then he said, You know what, I’ll go and I’ll do it and see how this goes. And again, the first six months we struggled as a business. The next six months when he did that, every dollar that he put in, he got the $10 back. So the reality of it also, so you got to be also smart with the times, right, nobody could get out. And so if there’s any time to spend, your ROI was probably the highest during the COVID-19 time if you were a digital company.
Kalani Scarrott (12:05): Yeah. No, I totally agree. I’m kicking myself I didn’t start the podcast earlier. It’s all people been doing. Maybe to the opposite side of that, what don’t you want to see? Is it someone just blowing money on marketing, hiring willy-nilly?
Rachel Lau (12:15): Well I think people have been, again, it’s the same thing, right, if I spend a dollar and I’m getting 80 cents back, this is not a good investment. Or if you’re breaking even at all, it’s not a good investment. But at the same time, I would like to see better execution. People talk about fundraising and ability to fundraise. Oh, now it’s a hundred million dollars, it used to be 10. Two months later it’s a billion dollars. Is this real growth? Is this possible? I’ve got my skepticism on it. And so I’m not trying to put some of these guys down, but if you’re raising money every three months, who’s doing the work. And again, it’s one of those things, I mean, it’s a fine balance, right.
I think you should raise a round it and I have no issues with your evaluation uplifts. But I also think that it should be proven and not just again, raising money for raising money’s sake, right. Because if we’re all throwing money down the drain, and this is real money, especially when it comes to sovereign funds or pension funds, where you’re in custodian of a lot of people’s money. I would to see better use of the money or more, what’s the best word to say this, being a bit more careful with how money’s been deployed. So probably that more than anything else.
Kalani Scarrott (13:27): Yeah. No, fair enough. And maybe to zoom out on venture investing in general, are there any traditional rules or aspects of it, that you fundamentally disagree with?
Rachel Lau (13:34): Yes. So I disagree with us investing on a GMV level, right? Because the reality of it is, you could sell a billion dollars worth of products. If you’re only making 1% of it, that’s not a lot of money. So striking evaluation on GMV doesn’t matter very much to me. So I think what it is, is ,revenues and how good the quality of revenues are it’s something pretty important to me. I think the VC community has also moderated in terms of its type, right, just because you sell a billion dollars or your 10 billion dollars, it doesn’t mean you’re going to be a great company. It just means you can sell, but are you profitable as a business. But then I think at the flip side, you got to think about if you’re able to sell that thing, maybe it’s not the money that you’re supposed to make, it’s about what data you capture.
So if I know a person, the frequency of the purchase, for example, the average purchase order, I know where they live, whether they’re female, I know what else to push, I think then that’s ability to capitalize on the data. But if not, then I think the way that we traditionally invested as a VC, which is, Hey let’s sell the big numbers. Let’s go down to the details and see what the big number’s telling you. What is it’s margin? What is it for a profit or loss making business, and getting what’s the quality of your data that comes out.
So I think that is probably fundamentally how I see, because I came from a very traditional finance value investing background, and so I find that going into the VC side, you kind of learn a lot of things. But at the same time, the value guys getting quite ironically don’t make as much money as the growth guys, right. So I think just being pragmatic on both investing methods is probably the best thing to do at this point.
Kalani Scarrott (15:30): Yeah. No, I’d love to hear. I’m a bit of value guy myself, but same thing, value guys get a bit attached to margins or maybe the assets backing. So it’s cool seeing the balance. It’s like you’ve mentioned before, it’s all about balance.
Rachel Lau (15:39): Correct. Yes.
Kalani Scarrott (15:40): And maybe for an investor who’s looking at the VC PEs in Malaysia, what do you think they should know if they would enter that market, or is there anything you wish more people knew about the scene?
Rachel Lau (15:51): Malaysia’s an interesting place, right? Everybody comes to Southeast Asia and goes into Indonesia, because hey there’s 300 million people, this is the biggest growth. And then they go to Vietnam, because it’s the second largest market. And then it’s Thailand or Philippines, and that’s the third or fourth largest market, right? And so I think from that standpoint, people forget about Malaysia, in a sense that we’re quite a scalable country, despite what the political headlines are. And again, I joke for a small country, really good at making big headlines. But essentially when you look at it, Malaysia is 32 million people, so it’s a good size, a test bit for a lot of the companies. And then if you think about it, it’s also relatively higher-income country, compared to Indonesia, Thailand, Philippines, Vietnam. So yes, it might not have such a big population as Indonesia, but I’m pretty sure we make 10 times more than the Indonesians on average, we’re talking about average though, right?
People say a large market’s good, but I think when you look at the US, you’re looking at China, they’ve also got some sort of an income that goes with it. And I think people forget that. So Malaysia’s a good place to invest in. I mean, I’ll be honest, the last two years we’ve seen a lot more about Malaysia than I’ve ever had, because to be fair, this is the first time I was put-stay, stay-put here, right? So you learn a lot more about the country. And the other thing that’s interesting is, there’s quite a bit of diversity in terms of talent. We got pretty good hardware engineering businesses in Malaysia. So to be fair, our technical skills are pretty strong. Our software skills are not as good, but converting hardware engineer to a software engineer, is probably a bit better than converting me as a business major into a engineering degree holder, right?
So I think from that standpoint, I think technical skills are pretty strong. So from that standpoint, I think it’s an interesting place to look at. It gets looked over pretty much by most investors. And then you realize if you calm risk and inflation and cost of doing business, and difficulty of doing business, Malaysia’s not that bad a place to start as a testing bit for a lot of these start-ups.
Kalani Scarrott (18:05): Yeah, nah severely underrated and even it’s a small piece of the puzzle, but the English aspects for foreigners coming in.
Rachel Lau (18:10): Yes. Correct.
Kalani Scarrott (18:11): In terms of maybe for young professionals looking to get into the private equity VC scene, what advice would you have for them? So what should they need to know, and maybe what should they avoid?
Rachel Lau (18:19): I tell this to a lot of the guys trying to come in, right. I think be curious. Learn, I don’t like people asking a lot of questions so I won’t lie, because I think you should learn first, and then ask the questions that are meaningful, right? Because you don’t want to be asking actually and very stupid questions, not to be mean or anything. But I think it also shows that you’ve done your homework, and I think that’s probably the most important thing. Do your homework learn, learn about the scene, be interested and curious about things. And I think that’s probably it. And so if you’re there and you’re learning, people want to have a good conversation with you. Because I don’t want to be just telling you what to do anyway, right, I want to have a conversation.
You’ve got a different lens, If you’re 22 years old, and you’re coming out from school, there’s a lot of things I can learn from you too. And so it’s kind of nice to have that conversation, as opposed to you asking me a bunch of questions and I’m like, Oh, I’ve got to give you a bunch of questions, it’s not a Q and A. So I kind of like the fact that it’s an interactive conversation with the younger guys. And I think those are the guys that probably do their best, because they’re genuinely curious as a person, and I kind of like that.
Kalani Scarrott (19:33): Yeah. That’s fair enough. And with your journey with investing, what got you excited? Was it curiosity? How’d you get involved in, how was your investing style developed?
Rachel Lau (19:33): So I was a business major and a law major. To be fair, I wasn’t as curious in finance previously. So I just to like to know things, right. And I think as a kid, I just asked a lot of questions, but I also read a lot. And so it was quite funny. So I read a lot, and I think it was probably the only job you could get paid for asking questions, and people don’t get angry with you, which is kind of nice. So I remember as a 22-year-old, my first job and I had an Australian boss, and he says. Why are you trying to learn everything yourself? And I said, Well, I don’t know. Shouldn’t I learn and be a little bit better before I ask you any questions? He says, Yeah. But you’re not going to get everything from a book. So as long as you know your basics and you got a little bit more understanding than you should, go and ask the questions.
And it was true enough, the quality of questions that I was asking, was a bit better than a person who knew absolutely nothing about it. Because then again, you’re spending a bit more time in the subject matter as opposed to having a point blank. And so I just got in and I think I wasn’t that interested in investing, I was just curious about businesses. How they work, why they work, who was behind it, what can you do better? And then along the way, when you see multiple businesses, you realize, Hey there’s some similarities, right? So when we talk about margins and growth and everything else, actually the finance bit of it, it was very similar.
What you needed to do was actually learn about different businesses and different business models. So is it a consumer business? Is it business to business business? Is it healthcare? Is it finance? Is it tech? And so again if you understand, all you need to do is learn about businesses, and you’ve got your fundamental as an investor, basically pretty much everything is the same, right. Because essentially what’s the revenue drivers? What widgets are you selling? And that’s it.
Kalani Scarrott (21:18): No, and that’s awesome and it’s good foundation, and the more you learn, the more dots you can connect as well.
Rachel Lau (21:22): Correct.
Kalani Scarrott (21:23): Yeah.
Rachel Lau (21:23): Yes.
Kalani Scarrott (21:24): And you made a good point as well. It’s not just how much you read, but it’s also a people job as well. You got to manage and ask-
Rachel Lau (21:28): Correct. Yes.
Kalani Scarrott (21:28): So do you have a favorite side, dealing with people, dealing with the numbers?
Rachel Lau (21:33): I like dealing with the numbers, so I think that’s my preference. I think numbers don’t lie, people do. So it’s interesting to see, right? You say, Hey, this is a really good business. And I’m like, Dude, your margins are 2%. It’s not great business. I mean, essentially or it’s really good business and it’s really high growth. And I’m like, Dude, you’ve grown 5% in two years. It’s not a great business. Or you’re telling me everybody wants this product, and I’m like, Nobody wants a product if you can’t sell anything. And so I think the numbers don’t lie and I kind of like that. Obviously there’s a softer skills part, right, where you negotiate a deal, you understand the psyche behind someone raising capital, why they’re building the business, are they passionate about it?
People say, Hey, we’re going to be a unicorn. I want to build a unicorn. And I said, it doesn’t really matter. And then they’re like, why not? And I’m like, Well you could be a $500 million business and be extremely rich versus a guy who owns a billion dollar business and own 2%, right. And so again it’s quite interesting from that standpoint, that people are so fixated with money, right. And so I think for us, when we invest, it’s the motivation behind the founders. Are you true to what you say? Are you a good person at heart? Are you trying to save the world, right? Obviously these are brownie points that you kind of … and none of the guys who say Hey I’m here to make money because I’m going to disrupt and i think this market share and market that market share.
And you realize because your intentions aren’t that pure, it’s not that easy, because you’re not as passionate as making money, right, and maybe your job should be making money, not building a business. So again, it’s quite interesting from that standpoint. So we’ve invested in a lot of guys that are very passionate in their subject matter. If it’s a food company, for example, like to which markets to where we’ve invested it. If you’re very passionate about healthy food, about gratitude and giving back to society, and I think that’s pretty helpful.
When we’ve invested in Naluri, for example, it’s a mental health and he really cares about, especially during COVID-19, we need to make sure that all peers are sane and everybody gets the help or they need. Because it’s hard, right. you’re isolated, everybody’s at home, you don’t see these guys, it’s a superficial video conference, and maybe everybody’s struggling behind doors. And so i kind of like the fact that they stay true to what their vision and mission is. And so we like backing those guys.
Kalani Scarrott (23:56): Yeah. I love your value focus, but also same thing, how do you balance the stories and the narratives that often drive businesses? Is it something that they’re passionate about? How do you maybe wait or discount that?
Rachel Lau (24:06): I said numbers don’t lie, so it’s easier, right, if they tell me, Hey we’re doing all this, and again, their investments are not into, for example, healthier foods. So, for example, you could move your markets and you’re selling chips or popcorn and chips, and they’re not staying true to what they’re saying, right. So I think it’s pretty easy to tell when look at the balance sheet or the profit and loss statements. If you’re selling low carb energy bars, zero fat, you’re true to what you say. So that’s probably how I would approach it.
Kalani Scarrott (24:37): Yeah. Fair enough. And to move on to RHL, why start it? What’s the origin story? Walk me through it.
Rachel Lau (24:45): So I’ve been friends with Hamzah for 20 years. So we were childhood friends, a little bit more than that now, actually. And basically he’s had interesting background, right. So his family was civil service for four generations, and so he wanted to come back to Malaysia. I never had a huge hold back to Malaysia or Southeast Asia, because I was pretty happy where I was. I was in the US, and I was in Hong Kong, Australia prior to that. And I kind of liked the lifestyle of overseas, but he wanted to come back.
And again, we talked about it, it was an interesting opportunity to capitalize some of the growth. I didn’t really know what I wanted to do, but I knew I was good at investing. So I said, Hey ya know and I really like investing. And also at the same time, we saw a lot of guys that were passionate about building business. So we said, Hey we could just pretty much come back and do the same. And that was basically it. So he came back 2016. I came back 2017, to start RHL. I mean he went back to his family business for a little while, and then decided that it’s not for him. So I came back to start the business with him and ever since then I’ve been here.
Kalani Scarrott (25:45): Yeah. That’s cool. And how do you think maybe your experiences abroad help you in what you do today maybe?
Rachel Lau (25:50): I think at the very least, Hong Kong and New York, both do quite well as an investor, right. It’s the largest capital markets in the world. We go really deep down into margins, sustainability of margins, earning, price to earnings, price to sales, ROIs, IRRs. So I think and having that strong foundation of finance or fundamentals of it, has been helpful in terms of investing. So again, people say, Hey I’m going to put money here, I’m putting it there. I’m like, What? It’s not really putting money to work, right, it’s really investing. And investing is the same as selling, it’s a skill. Its like podcasting, it’s a skill, right? Not everybody can do this well. I think if you’ve worked overseas for a really long time, there’s a lot of good things overseas.
So you bring that technical skills back to this part of the world, you put it together with enough curiosity. It’s a really good recipe to do well for a VC. And again if you’re ballsy in this part of the world, and you’re taking a bit of risk in terms of investing in younger guys, which a lot of this powerful don’t, or actually most of the world don’t. People tend to ignore the younger guys pretty quickly and say, Hey you don’t have enough of yours on your CV and therefore you can’t be better than the guy who’s 50. The reality of it is the 50-year-old doesn’t have as much hunger as the 30-year-old. And so essentially we’ve kind of said, Hey I think if you’re pragmatic and I think if I did this, I don’t know, 10 years later, it would have been a very different outcome, because I probably didn’t have the drive or the hunger to do such a thing anymore. But because I’ve had enough of technical skills and coming back over here, it was a nice coming back.
Kalani Scarrott (27:32): Yeah. And do you view that almost as part of your edge, being able to take those risks or bets on younger people and younger companies?
Rachel Lau (27:42): Yeah. I think so. You spot them early and you grow with them. And again you understand what everybody’s pros and cons, or what’s everybody’s strengths and weaknesses. We’ve always said that we’re not investing in you, we’re partners, so we’re true and true partners. We don’t walk in front of you, behind you, we’ll walk side by side and hopefully grow along the journey. So whatever help you need, which is capital, whether it’s technical skills, whether it’s introductions, whether it’s just being someone with an agriculture background, which we’ve got someone who helps us with that, that’s helpful. And I think people like that story. So we’ve been pretty successful in building them to some businesses, because ideally you want to be value-added, not just throwing money and hoping it works.
Kalani Scarrott (28:25): So what does a typical day look for you? Are you reading numbers? Are you meeting with founders? What’s it look like for a typical week maybe?
Rachel Lau (28:33): Yeah. So I think it’s a hodge podge of everything. So that’s basically it, right. You meet founders, you look at numbers, you’re speaking to people about different ideas, and it’s quite interesting. And as I say, it’s an interesting place to be in, because you’re constantly learning about things. There’s always a new idea, whether it works or not, I don’t really know, but to be fair, it’s nice in a sense that everybody’s passionate about this new idea and rightfully so. If I look at my schedule, I’m now out and about most of the times and then you’re meeting a lot of people.
Kalani Scarrott (29:06): Yeah. And it’s infectious, meeting passionate people as well, hey?
Rachel Lau (29:06): Yes. Correct.
Kalani Scarrott (29:07): Is there anything you wish you learned earlier when starting RHL Ventures?
Rachel Lau (29:11): Yes. Capital raising is not easy. So I think founders who find it difficult to fundraise, we found it really difficult to fundraise when first started. And I think the validation came when the first company was doing well, the second company was doing well and the third company was doing well, right. Capital fundraising was much harder than I thought, everyone takes it pretty lightly. I learned not to now. So capital is much harder than they think. So you don’t want to blow money on unnecessary things, or you don’t want to be throwing money on companies that might or might not make it, or it’s just good at parties and selling when there’s no actual product.
So I think probably that. And again, I think another thing that I would like to know a little bit more, was Southeast Asia was a difficult place to navigate. I think when I first came back, I thought its the same, right? I approach it from one lens, it’s far from that. And so again, if you’re able to embrace the diversity and leverage off what you’ve learned and leverage off other people’s talents, I think that’s probably a good thing.
Kalani Scarrott (30:17): And we talked about it a little bit at the start, but given the sectors you’re invested in, can you tell me everything you’ve learned just about customer acquisition? You mentioned mobile before?
Rachel Lau (30:24): I’d say it’s interesting, right? We’ve got a business called RPG Ventures. When I met him, again, I tell everybody this story, he was 24-year-old. He came in shorts and tshirt. He was telling shorts, so I guess he should have worn his shorts, and I think that was what he was trying to tell me. So he came in shorts and again, it was quite interesting, he was selling a bunch of shorts, which again, were more impressive than I ever thought. And he ended up selling eight digit millions, more than 30 million US dollars of shorts. And it was a span of being a year for a business. So from that standpoint, I think these are the guys that you want to back a little bit more.You want to be a bit more pragmatic, in terms of the way you invest. And again, so we were investigate him and growth has been stellar, but it’s been interesting to see where everybody’s been over the last couple of years.
Kalani Scarrott (31:19): And if it’s all right, I’ll move to my closing round of questions. Is that all right?
Rachel Lau (31:21): Sure.
Kalani Scarrott (31:22): So I’ve just got a few for you. What do you think is the most undervalued life experience that university age students don’t give weight to? So you’ve been abroad a bit, but what do you think is an underrated skill or an experience that you think most people should have?
Rachel Lau (31:33): I think traveling has been helpful. So I spent a lot of my twenties traveling and again, different places where you to Europe, you go to the US, you go to Africa, you’ve learnt a lot in different and culture and different experiences. But so essentially it’s exposure. The more you know, the more open-minded you become, and you’re willing to find new things and then you grow, you’re learning and you grow, right. And I think if you’re able to learn and grow, that’s a very powerful skill. The guys who stand still and the guys who say, I cannot change, are guys who will fade away, they’ll be extinct and someone will take them over. And I feel really sorry for people who say, I can’t change, this is who I am. That’s pretty sad. Because do you really want to be the same person at 80 and 25, right?
So I think that’s probably it, travel, be exposed, be open-minded, seeing different things, try different things. University doesn’t allow you to do that. At university, you don’t want you to be conformed to everything. Uniformity is quite funny, because I tell my mom, right, when I was younger, I say, Hey, you told me to try everything. And then when I went to university or school, you’re trying to get me to sit down and just learn from the book, and just follow everything, what the the teacher says, right, and go be a doctor, be an accountant, be a lawyer. And so what’s the individualism and that? What’s the uniqueness in that, right?
How do you strive for excellence, you’re conforming to social norms? So ideally we want to be able to embrace everyone’s diversity and being true to yourself. And so, I mean, I don’t know, I feel really sad when people say, I can’t change. And again, the universities that don’t like it. Your first class honors, you get your 85. I mean half the worlds founders haven’t even got a university degrees, or half the world’s founding billionaires don’t have university degrees. So it’s kind of nice.
Kalani Scarrott (33:28): No, I honestly couldn’t agree more. And I love the idea that if you behave the same as everyone else, you will achieve the same as everyone else.
Rachel Lau (33:38): Exactly, right? How do you stand out? How do you be different if you’re going to conform?
Kalani Scarrott (33:42): Exactly. And you obviously read a lot, is there any books that have been influential in shaping your world view?
Rachel Lau (33:47): So when I hit 13, I had this immense fascination about China. So my grandparents were from China. I’ve never been to China at that point in, so actually I’ve never been to China until I was 22, actually. And so I think there was an immense curiosity about China and the Chinese value, the Confucianism. So there was a book called the Chinese Cinderella by Adeline Yen Mah, and I think the fact that she depicted China in three very different eras, one was the mature era, which was the emperor was there. Two was between communism and what it is currently, right. So I think it depicted China in three different governance or community or society in a relatively short, 60 years. I thought there was quite interesting, right. And so learning and seeing how society’s changed, was interesting for me.
So we always say, Hey Malaysia’s a lost hope, there’s no hope for Malaysia. It is what it is. We decay along the way. And you look like a country like China, it’s gone through one king for, I don’t know how many destinies there was, and then going to then the more socialism communities and setting, and then coming into a communism setting. But now really, it’s Capitalism at it’s very best, right. And so again, having seen that huge spectrum was genuinely interesting for me. So for me, I mean, I don’t really politics, because I think politics is a sham, but I’m curious on the human evolution and idealistic and how it worked. So again, this particular book was interesting for me, because it was basically that. I’ve never seen a country change so quickly in 60 years, and evolved so quickly into idealism and socialism, right. So again, it was quite interesting. So that’s probably one book that probably had a lasting impression on me.
Kalani Scarrott (35:52): No. Great answer. And I love a new book recommendation.
Rachel Lau (35:54): Yes.
Kalani Scarrott (35:55): So my final question is, what plans do you have for the next five to 10 years? What areas you most curious about going forward and …
Rachel Lau (36:00): I think for RHL, we’re building a financial institution, right, and people say we’re a VC, but essentially we do VC, we do private equity, we do advisory. So I think the way we’re looking at it, is building a large-scale financial institution, that’s nimble in terms of the execution. And again, a bit more innovative in the ways that we look at businesses investing in partnering businesses, right? So for us, we want to find good businesses to partner with. Ideally we grow along with all these guys, and hopefully we change the whole. And I think if we can do that, I’d be pretty happy.
Kalani Scarrott (36:38): Yeah. No. Awesome. Rachel, cheers a million for being on. Anything else you want to plug?
Rachel Lau (36:41): No. Thank you for having me.
Kalani Scarrott (36:43): No, it’s my pleasure. Thank you.