Gary Rieschel on China Tech (Radio)

great to have you with us. I mean, we've seen Presidents Biden and she now meet for the first time since President Biden became the leader of the United States really trying to find an off ramp here in these U S. China tensions. How are you seeing that all play in to your business? Are you still seeing strong I guess demand or is this really starting to impact business?

I think over the last several years, and by the way, thank you very much for having me this morning, But over the last several years, um, the entrepreneurial community, that early stage of venture capol community in China has continued to be quite active. Um again, I think that there's a significant separation between you see in the geopolitical realm and what's happening on the ground with real early stage

start up entrepreneurs, which is what chieving businesses. You could almost feel, however, this morning, when people started getting together, there was this this exhale of Okay, the US and China are going to talk. And I think that the world has been waiting to at least acknowledge or at least understand whether or not they're going to talk. And I think that that makes a significant difference, and you can feel it really in the conversations with people this morning.

The entrepreneurs in China, however, the last several years, none of them wake up in the morning deciding whether to start a business based upon chijin p They are really there to satisfy the growing and substantial need in the Chinese market, and particularly the areas of technology and healthcare,

which the two areas achieving focuses on. So I could say everyone's happy, everyone's has a chance to be slightly less despondent today, But I don't think it really has impacted how entrepreneurs think about their role in Chinese Chinese economy. What about what we saw from the Party Congress. Then did you see some changes in terms of whether or not there's going to be more funding and have you

been seeing a drop off and funding at all? So there is a drop off in funding, particularly in the late stage crossover round so pre I p O rounds. When there's no I p O then they can't have a pre I p O financing. UM. I think that in the early stage startups, the firms that are organized to deploy capital against those real technology development UH cycles. Our average holding period in achieving is eight plus years in our portfolio for people that are in that world.

I still think there's robust capital and I still think there's quite a bit of activity. But the big dollar, the big headline dollar deals that Tiger Global, soft Bank and others do, those have definitely UH either disappeared completely or dramatically reduced. This year nine I p O is for achieming this year and not not a bad year. I think you called it decent when you're on Bloomberg Television earlier, What have you been mainly investing in? What

are you looking to invest in? So what we made we made a significant change about seven years ago and we moved from having a significant waiting in the consumer facing businesses to more core tech basis. So on the tech side, UM, we have a robust UH semiconductor UH set of investments, quite a bit of software as a service, intelligent manufacturing AI. It's hard to really bucket AI because AI really really is tied to applications. So those are

really the core areas for the GMIN tech practice. Healthcare you see more and more investment in what i'd call early stage pharma and again technology development around self therapy, gene therapy UM, and then the service assiety in China. China is still short four million doctors, it's still short for seven million nurses. So you're thinking about adding eleven million healthcare professionals just to kind of get to the

base of what's required to provide care. That's a big number. Okay, So healthcare certainly and focus there, and as well, you've been looking at the software infrastructure. I mean, we look at the inflation picture, higher rates from the FED that does often aid into TACH funding. As we've discussed in terms of your funding levels that you're seeing, do you see opportunity if we are going to see a global downturn, is this the time when the entrepreneurial spirit really tries

to pick up talent that might be dropped elsewhere. I think that that is correct. So some of the larger firms now they're shedding quite a few employees UM in the US. Haven't seen quite as much of that in China yet, but but a substantial amount in the US if I'm looking at it just from the perspective in China. The market opportunity in China to kind of rehost the entire economy on a century technology platform that has not changed, and what's going to change is the rate at which

we move in that direction. So what we can't really decide to, we can't really look at today or predict today, is how rapidly will China develop all of its own cloud services? How rapidly will right now? In advanced manufacturing intelligent manufacturing, only seven percent of China's manufact actuation base has moved to and tell what we'd call and consider intelligent manufacturing, So there's still some very very long tails

in terms of reaching critical mass in those areas. That is probably a little less certain today because you're not sure what the following capital of the ability is going to be. So We're gonna have to see how that plays out. When do you see a full reopening of the China economy, So it has to it won't occur until there's a significant uh just elimination or ignore a zero COVID policy, So that's probably in the third quarter of next year. We want to talk as well about

your aunt steak. What evaluation have you assigned there? I'm sorry, what's taking your aunt steak? Oh, we don't have an ant steak. You don't have an cheaming. I wish I had an ant stake, but I don't have an answer. That is that is my about on on my radio search there. And we thought you did in terms of how you're evaluating your China allocation there, but what about reevaluating exposure in any way there? So I think that

what you reevaluate is reevaluate again by sector. So you look at is the consumer sector going to recover bounce back quickly? Know? Anything where the government has sensitivity over data ownership, that's not going to recover quickly. Um, So what you do is you tend to look for areas where okay, this is purely a commercial enterprise and you have less and less government interference. Clearly, if the government's putting their finger on the scale in a particular area,

that's scenario we would probably avoid. You mentioned earlier, a big sigh of relief. How do you feel the world has also just changed in the past year or so. I'm not sure if you're at the Blimberg New Economy Forum a year ago, but Singapore has certainly opened up so much. I mean, you must be seeing a lot more opportunity and ability to start to do business more freely Singapore. I was here last year and Singapore is a very very good microcosm of what's happening. So the

energy in Singapore is amazing. Clearly a great deal of capital has flown into flown into the area. But you almost seech Singapore taking on a global rule now as the Geneva of Asia. So going back years when they were global conflicts and wars, Geneva broken by the Swiss, was still able to have different constituencies Nazis, Jews, etcetera, get together and have conversations. You see Singapore now being able to have North Asia, China, India, Southeast Asia, people

from your people from the United States. It really, it's really, it's time and I think it has an extraordinary base to work from today, the Geneva of Asia. I love it. Thank you so much for your time. Teaming Adventure Partner's founding managing partner Gary Michelle with me here at the fifth annual Bloomberg New Economy Forum in Singapore