Jay:  So I’m here in the lovely office of Chris Fisher who is the managing partner at Click Ventures. Chris, thanks for inviting me up here. Chris is a VC here based in Hong Kong. He works for Click Ventures, which is an early-stage venture capital that invests in technology startups around the world. Click Ventures was recently named Top Ten Hong Kong Early Stage VC by the Hong Kong Economic Journal. So, Chris, welcome to the show.

Chris:  Hi, Jay, yes, thank you very much.

Jay:  It’s great to do these podcasts in person, actually, being here in Hong Kong. It’s funny because we’re all so busy, and we all have different schedules, so it’s rare that we get a chance to actually do one in person, so this is a nice, unique experience. And it’s a lovely office. You’re right in the middle of town in Central. How long have you been in these offices?

Chris:  This one for about a year. Before this, I was about three blocks away on Hollywood Road, so a similar location.

Jay:  Yeah, you have some interesting art in here, actually, or collectibles, I guess. Is this from your travels around the region?

Chris:  Yeah. They’re actually from different art shows and things around the world. I like to have a comfortable environment. I do a lot of conference calls and things late at night, so it’s good to be surrounded by things I like.

Jay:  Yeah, definitely. Okay, well, why don’t we get started. Maybe you could give us a little bit of background for those in the audience. Click Ventures is somewhat of a household name now in Hong Kong, but maybe you could give some of your personal background for the audience and maybe tell us how you got into VC.

Chris:  My early background, I was in a corporate world doing some direct investing, and also I was a CIO, IT guy for a large conglomerate in the US that we sold to a Hong Kong company. And I spent about 10 years doing M&A for the Hong Kong company. On the side, I was doing some angel investing because I really enjoyed working with the earlier stage companies that I’d worked with early on.

While I was working corporate, I was traveling around a lot, meeting a lot of interesting people around the world. I’d always kept an eye towards my angel investments. So around 2014, I started to see more and more interesting deals in Hong Kong and in Asia. So I found more and more opportunities to do more angel investing. So I gradually refocused towards full-time angel investing.

Then one of the people I’d frequently angel invested with was Carmen Chan, who is the founder of Click Ventures, and she was growing nicely and had a lot of really good deal flows, so I joined her about a year ago.

Jay:  Fantastic. I just want to touch a little bit upon angel investing itself before we jump into what you do on a day-to-day basis now here at Click. I think a lot of people get interested in angel investing, but few are actually successful. Maybe I can take a peek behind your brain and see how… I myself personally started angel investing maybe 10 years ago and quickly found out that, basically, it’s very expensive if you don’t know what you’re doing, and most people don’t know what they’re doing, or they don’t have the network in place yet when they start off. It’s obviously very glamorous to try to find the next Facebook or unicorn, and a lot of people fall prey to that early on and end up spending a lot of money — or wasting, rather.

So how did you find your angel investing experience? How did you find success in a process or a network that you built there?

Chris:  That’s a very good point. It is an extremely expensive education. I started building my network, actually I’ve been building my network through my whole career, and I had some mentorship very early on in my career that explained to me that everyone you meet, you should be making connections and building out that network, understanding where people have strengths and being able to tap into those.

Then I really built out my network in business school, I would have to say. So a lot of my initial angel investments were classmates from business school. Fortunately, they were very successful early on. Really, the key to angel investment, and the reason why it can be so expensive, is because of a lack of diversification. Diversification is everything. Most of these deals fail, so if you’re only doing 10 or 20 deals, there’s a good chance that most of them will fail, if not all of them. If you do 100 deals, there’s a good chance that at least one of them will succeed.

I was very lucky early on that I had some really good entrepreneurs in my class, and I could sense immediately that they would be successful, and so I did everything I could to support them and to invest in them but also to try to provide them as much interactive support as they were building their businesses and things in the early days. That then, as they become successful, then they make other connections with other of their people that they’re working with in their communities that will also introduce more deal flow from other successful people that they know.

Jay:  Right. It’s almost like…I guess it’s called the scout model in Silicon Valley where entrepreneurs invest in fellow entrepreneurs. It’s a good model, but if you’re not in that network, it’s very hard to get exposed or even break into that.

Now how much of your angel investing experience and success would you attribute to your network versus your actual process of evaluating companies, screening, looking for key characteristics that might prove to help their business model, like a personal investment process? I’m just curious myself. I spent a lot of time trying to refine my process, and even that was not able to save me some of the money that I squandered.

Chris:  It’s a little bit of both. You end up saying no a lot, if you know what you’re doing, in terms of the screening. So I’ve said no literally thousands of times over 10 years. I’ve had yes maybe 15 times. So you have to have that deal flow. If you’re only seeing 100 deals, I wouldn’t have done any deals. So it is having at least some high quality flow in there, and I’ve said no to some things that later on were quite successful, but that’s par for the course, I guess.

Jay:  Yeah, I think that’s an important mindset to have, and it’s difficult when looking at early-stage companies because a lot of people get excited about ideas, and it’s easy to extrapolate out and think this could be the next world-changing idea or XY&Z disruptive technology. But it is, like you said, it’s a numbers game, and you have to go in with the mindset of what could go wrong over what could go right, because it’s easy to look at what could go right. I guess if you get the deal flow and you’re okay with saying no and don’t have the FOMO of “I might miss out” on one or two of the next unicorns, then you’re probably going to have a better chance of success.

Moving on then, now that you’re working as a full-time VC, how much of that network and skill set do you also use? And what’s different about working now at a VC versus just doing private angel investing?

Chris:  Certainly with a VC there’s a lot more resources we can bring to bear. So at Click, we’ve got some capabilities and data analysis. We have a network of venture partners throughout the world, and we have a track record which helps with fundraising, and so we have more funds available to diversify better.

So from that perspective, it’s quite a bit more flexible and you can draw in more resources to make better decisions, essentially.

Jay:  Right. Well maybe, Chris, you could give us a little background of Click Ventures itself. How was it started? You mentioned that you and Carmen were doing a lot of angel investing together, so maybe you could give us a little background on the firm itself.

Chris:  Okay. Carmen originally started… Well, she’s a successful entrepreneur, has had a couple of good exits. So she also started angel investing, I think, about seven years ago and has had some success. So she started taking in other money from some of her friends and family and then eventually brought in some corporate investors and some institutional money and raised a second fund and then a third fund. So I joined for the third fund. So she’s basically invested in about 30 portfolio companies over the previous two funds.

Jay:  Got it. I know that you guys are based in Asia, but you invest globally. I know a large portion of your portfolio is not Asia-based companies but more global. What are some of the things that you look at? Any specific verticals, industries, locations that you specialize in?

Chris:  We’re basically sector-agnostic because we look for a very specific business model that conforms well with our expertise and with some of the resources that we can bring in to actively help the portfolio companies develop. So we’re especially strong, again, in like data and data analytics, big data. We have data science skills that we can bring to bear. We have a lot of e-commerce experience, metrics, and understanding how to promote things online.

Jay:  So when it comes to VC investing, I think that, from an entrepreneur standpoint, when their business starts seeing some traction and some success and VCs start circling around, trying to get some investment dollars in there, I think who they partner up with is also a very important consideration. Speaking with entrepreneurs, some VCs are notoriously known for demanding board seats and coming in strong and basically, once they’ve fulfilled a round or led a round, rather, they tend to take over, so to speak. It’s a fine balance, it think, because a lot of these are the big brand-name VCs. And so an entrepreneur could somewhat feel intimidated. On the other hand, other VCs or maybe private investors simply write a check and that’s it, and they’re hands-off. So where on that spectrum do you and Click Ventures lie?

Chris:  It’s quite situational. I think a lot of VCs are generally relatively lazy. They just want to put their money in and make sure it’s a really great entrepreneur and just back that entrepreneur, be there, be available, if the entrepreneur needs something, to make the introduction to a key client or to help to raise the next round…but basically to let the entrepreneur run its business. We’re kind of more on that side of the spectrum. We’re there to help when we’re needed. And it’s also very situational, depending on… As problems arise and things like that, we may become a little more active. But in general, we’re pretty flexible in how we work with the team.

Jay:  So if an entrepreneur were to ask, “Why Click Ventures…?” Let’s say it’s a really good entrepreneur with a really good idea, and there’s a lineup of venture capitalists, so they could have their pick of the litter, so to speak, what value would Click bring to the table that they might not be able to get from a brand-name, large, old-school Silicon Valley VC?

Chris:  That’s an excellent question. Actually, I would look for actually every founder we work with to ask that question. Like, “Why am I taking this money from this particular VC?” So we strive to have a very good answer for that. Our portfolio is based all around the world. It is somewhat weighted towards North America, but we also have quite a bit in Europe and in Asia as well. And we’re both based in Hong Kong in Asia, and we travel frequently throughout the region and throughout the world.

So with that, we have portfolio companies all over, and we also have venture partners all over that can help with market introduction, with advice about expansion into various countries, geographies. We have a lot of resources among skillset, talent, in places like Estonia and China and Philippines and different places in the world. Because we’re so active in so many regions, I think we help to bridge a lot of gaps, whereas you see a lot US VCs there’s just a 300-mile rule for a lot people. They don’t really deal with stuff that they can’t drive there in a couple of hours.

And then you have other kinds of VCs which are all over the place, but they’re very large and maybe don’t have time to be active with the portfolio companies. We’re very much, I think, in a sweet spot where we have time to work and to help. We have the connections, and, again, we have some of these data science connections as well, in terms of resources.

Jay:  And then as far as stage, you mentioned you were sort of industry-sector agnostic. But as far as the stage, you guys normally come in pretty early? Are you looking the lead the rounds? How do you determine how much and which stage to get involved?

Chris:  We will do seed to Series A. And then individually, I think my partner and I, we both will do later stage as well. But really the fund is focused on seed and Series A.

What we look for most is early traction. We get excited about companies that bootstrap or take a little bit of angel funding, and they build something — an MPV, a minimum viable product that can attract eyeballs, can attract users, and start to show traction with relatively little investment. Something that generally sells itself or has virality that would suggest that if we put some money into this and we look carefully at this traction, that we can drive traction rapidly. Drive rapid growth.

Jay:  Sure. That makes sense. That’s interesting, and I think that for the founders listening to this, there’s a little cheat sheet tip for you. If you want to get in front of Click Ventures, make sure that you have some sort of traction and scalability that you can demonstrate before you start trying to pitch Chris here.

Chris:  It doesn’t have to be revenue either. It can be users. There’s a lot of different ways you can measure traction, but it’s compelling to see some kind of hockey stick to start to take shape and people continuing to use it. Somebody uses it, it provides value enough that people keep coming back, and they tell their friends, and it’s starting to grow.

Jay:  You mentioned that your team there at Click is quite global. How do you view the venture-partner model? How critical is that to finding deal flow and providing follow-on support to portfolio companies? And is that probably the primary source of your deal flow? Or is it a combination of that and just inbound cold pitches?

Chris:  Cold pitches are about half of what we look at. Venture partners are very useful in analyzing the deals and sussing out the market, validating the model — things like that. They do bring some deal flow. Really, actually, it’s our successful entrepreneurs bringing our most attractive deal flow, I would say.

Jay:  I think it’s an interesting model. If you find the right types of VPs, they could be almost like the secret sauce. But then I’ve also heard of people sort of bringing on VPs, and they just don’t provide that much value, and then… So I guess it’s a hit or a miss, just like everything else.

Finally, as far as your diligence process, I’ve heard from entrepreneurs that are going into some large rounds that some of the larger VCs have a very, very, very stringent due-diligence process — and I’m talking pages and pages of modeling and, literally, all legal documents that they could get on you, almost like an acquisition-type merger model or something like that. And then I’ve also heard the other side of the spectrum, just like everything else, where it’s basically a couple of meetings and — bam — there’s a check. So again, where does Click lie on this large spectrum?

Chris:  Much more towards the latter. At the stage we play, it just doesn’t make any sense to look at projections or models or even the valuation things. Of course we look at the size of the market — what’s the potential, and what’s the addressable market? That’s just a sanity check to make sure we’re playing in the right space. Of course, the company has to be set up properly, but we can advise on some of that, and it doesn’t take a lot of legal due diligence or anything. We just want a clean company, ideally set up within the last couple of years that doesn’t have a lot of bad history in it or anything like that.

So that’s pretty quick, although we’re not… I’ve seen other VCs that are very scattershot. They’ll literally just invest in a hundred things, like everything they see almost. We are very selective. We look for traction, again. So it’s more a kind of market due diligence, business due diligence and looking at the traction, probably do a little DD on the traction to make sure that it’s real numbers, and then that’s what we base our decision on.

Jay:  Got it. Thanks for giving us some insight on how you guys work there at Click. I hope this is useful to some entrepreneurs that are hoping to get themselves in front of Chris or the team here.

Taking a step up, as far as on the macro-picture basis, right now it’s an interesting time in markets, I think, both public and private. I think valuations are a bit frothy, and I think most people in the investment world would tend to agree with that. Having said that, there are a handful of verticals that are quite exciting, and a lot of people are excited about. One of them, obviously, is Asia and China and innovation and technological developments that are happening there that we see right across the border here in Shenzhen and this sort of thing. On a high level, Chris, what are some of the themes that excite you for the next five to ten years? And then also, does the valuations right now, does that worry you at all?

Chris:  Yeah, I’m extremely worried about the valuations. I don’t want to mention any names, but, yeah, some of the very large funds are really driving up the later-stage valuations, I think, way beyond sustainable levels. It bothers me at a couple of levels. It bothers me when you look at the usual suspects — the Ubers, things like that. I think those are too high, and then it’s compounded by the type of risk that you see in market like China. So you look at Asian… Asian companies value in a lot of growth, which may or may not actually come to pass, especially if we have a significant economic slowdown. So there’s two layers of risk there. Of course, then by driving up the later stage valuations, they’re also driving up the expectations in the earlier stage where we play, compressing the kind of returns that we can get because we’re…

So I have a lot of concern about the music stopping relatively soon, I think, in that regard. But with that said, there’s still a lot of really good deals out there if you get the right company. This easy money of just taking some idea from the US or from Europe and taking it to Asia, I think that’s… There’s more potential for that, but to make money on it with the kind of valuations we see in the early stage right now is not going to be sustainable. I think the valuations will come back down. Then it will start to make sense again.

Jay:  Any verticals or thematics that you are interested in or excited about that have a longer term trajectory than if, say, we see a correction in the market on a valuation basis? Are there any that particularly excite you?

Chris:  You mentioned Shenzhen, and actually, that leads to something that really excites me general. It’s just the deeper tech stuff that’s happening in Asia. There is a trend towards more local innovations — true innovation in Asia. Globally, technology-wise, one thing that really excites me is voice. The Amazon Echo type of voice, I think, is going to absolutely change the media landscape. It’s going to change us from kind of random access, like we look at a computer screen, and, as we’re browsing, we can see ads and things in a certain way.

When we go to voice, everything is going to change. It’s going to be a serial-type interface. And when people are ordering things, there’s going to be a very different marketplace established around which advertisers or which purchases are being promoted through that channel. So when I say “buy detergent,” who is going to own the detergent keyword and what brands? And how is that process going to work? I think that the whole advertising model…it’s going to challenge a lot of models that currently exist.

I’m also have excited about self-driving, is interesting.

Jay:  Absolutely. Yeah, I think the voice thing is going to be interesting to see how it plays out. It’s definitely going to be fully integrated into every person’s life at some point. So it’s just a matter of trying to find the right race horses or jockeys or whatever it is that are competing in that space that will make it to the next level and become one of the household names, so to speak, within voice.

As far as Click Ventures goes, is there anything… You said you’re working on fund three right now. How is that process going? Is there anything in the near future that you’re working on or excited about that you’d like to share with the audience?

Chris:  We’ve actually just closed fund three.

Jay:  Oh, okay. Nice.

Chris:  So we still have quite a bit of capacity left in fund three. We’re also starting fund four already. This will be in partnership with AngelList, a US company. We’re so doing a little different structure. This will be a US entity, whereas before, we were Cayman companies, Cayman funds. We’re very excited about that. We haven’t launched it quite yet, but we’re in the process of getting ready to launch.

Jay:  Is there any specifics about the partnership with AngelList that you’re allowed to talk about?

Chris:  It’s still evolving. But essentially they’re doing a lot of the backend stuff, and we’re still very much the main advisor to the fund. We’re essentially doing the work, but we’re going to use them, work with them, but they’re basically going to administrate the fund.

Jay:  Got it. That’s exciting. We’ll definitely have that on the radar and looking forward to seeing how that unfolds for you guys to the end of this year and early next year.

Before we look to wrap up, Chris, I just wanted to ask a couple of final questions. This goes more on the advice for entrepreneurs and also advice for maybe newbie VC investors or even angel investors. If you could give a piece of advice to an investor, one, and then, two, an entrepreneur that wants funding from Click, maybe you could share a piece of advice for each side, if you could.

Chris:  One piece of advice for both sides is to make sure the market is big enough. One thing I see in Hong Kong, especially founders in Hong Kong or VCs in Hong Kong looking at countries in Asia, make sure that the problem is big enough, the market is big enough, because every business you start is going to be a lot of work. It’s really, really hard. It’s the same amount of work to introduce a product into a much bigger market.

Jay:  Right. That’s a good one. You actually got both sides. As far as network building and networking — some people don’t like using that word — it’s a very necessary and important part of being an investor and being an entrepreneur if you’re looking to raise funds. How active is Click Ventures in being out there, being at conferences and this sort of thing, if an entrepreneur were trying to get ahold of you or land their pitch deck right here on your desk, which I’m sure you get hundreds of every week, what kind of advice could you give there?

Chris:  You’re always welcome to address us directly and just send us a pitch deck directly, but it’s always better to be introduced by somebody mutual, a friend. Those are the best ways, but we are very, very active in the conference circuit — both Carmen and I and Fred, one of our analysts. We speak frequently, everywhere around the world. Everywhere we get invited, we go there, and we like to reach out and meet as many new entrepreneurs or existing entrepreneurs as we can.

The problem is conferences is you’re often very busy. We’re often speaking and after the conference, you get swarmed with people and the name cards all end up in a stack, so it’s important to follow up  if you do meet us at a conference and you want some attention, definitely follow up with some kind of email and send us your deck, basically.

Jay:  When is the next conference that you’re speaking at? Any to the end of the year?

Chris:  I think Carmen is at one now.

Jay:  Any to the end of the year here in Hong Kong or are you probably on the road?

Chris:  Oh, there’s a startup event on the third. I will be speaking on the third, actually.

Jay:  Okay, cool. Like Chris said, it’s always better to have a warm introduction. That goes for pretty much any sort of networking or entrepreneurship-type introduction. If you’re an audience member, I’m going to give you a little hack. You can email me, and then I get give a warm intro to Chris.

Chris:  An introduction from you is worth twice as much.

Jay:  That’s right. Or maybe worth half as much.

Chris:  No, no, at least twice.

Jay:  Well, Chris, thanks so much for the time and for letting us take a peek behind the screen there, what you guys do there at Click Ventures. Obviously, you’ve enjoyed a lot of success, and we’re looking forward to hearing more about you and fund four and this sort of thing.

The last question I have for you is basically what’s the best place that people can find you, follow you, or cold pitch you?

Chris:  Our website, ClickVentures.vc. You can also send me an email directly at Chris@ClickVentures.vc.

Jay:  Wow. There you go. I hope I didn’t just blow up your inbox.

Chris:  That’s alright.

Jay:  Great. Thanks for the time, again. And look, we’re wishing you the best of luck for your current fund and your next fund. It’s always good to catch up with another fellow Hong Kong investor in the ecosystem. So thanks again, Chris.

Chris:  Great. Thank you very much, Jay. It was really a pleasure.

Jay:  Alright. Appreciate it. Bye.