What happens when hundreds of the world’s biggest capital allocators get together behind closed doors to talk about venture, private equity, and where the next $30B is going? Maxine found out firsthand at Super Returns Asia, where she chaired the LP–GP relations stage.
In this episode, Cheryl turns the tables and grills Maxine on everything she learned — from why India and Japan are suddenly hot, to why Southeast Asia is struggling, and why Australia didn’t even make the winners or losers list.
They break down how institutional investors really think about funds, what “look-through ownership” means for angels and VCs alike, and why co-investing has LPs hot under the collar. Maxine also shares how family offices are thriving in the current market, what mega-funds like a16z’s $30B raise mean for everyone else, and why building long-term LP relationships is the only real way to get “super returns.”
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Maxine Minter: So you're telling me that There was hundreds of people in, in this room with capital allocators with billions of dollars worth of funds up on stage, and nobody thought to ask the question, how do we get you to invest in our fund?
Cheryl Mack: Yep, that's exactly right.
Maxine Minter: I believe that the next Canva or really huge outlier success is going to come from a small thematic fund that is investing early stage.
Cheryl Mack: At the end of the day, they are just trying to own as much of the best companies in every single generation of tech companies as possible.
Maxine Minter: Which is what we're trying to do.
Cheryl Mack: Which is what we are trying to do. Which is what everyone is trying to do. Okay, 3, 2, 1.
Maxine Minter: Hey, I'm Cheryl.
Cheryl Mack: I'm Maxine.
Maxine Minter: This is First Check, part of Day One, the network dedicated to founders, operators, and investors.
Cheryl Mack: If you wanna be a better early-stage investor, this is the show for you.
Maxine Minter: So TL;DR, if you don't wanna suck at investing, listen up. Well, it is not often that I get to bug Maxine for a whole hour on various knowledge and things that she knows, but this is one of those episodes. So you're going to get to listen to me ask Maxine lots of questions and she is going to drop some knowledge on us. The topic for today is super and super returns in particular and what it means for us as investors. For all of you angels out there that might think, ah, I'm going to turn this off. No, no, no. This is relevant for you too. You'll find out why.
Cheryl Mack: You're listening to a DayOne.fm show.
Maxine Minter: So with that, I'm going to jump in and ask Maxine about the recent event that she went to that she acquired all of this knowledge in. So Maxine, you recently went to an event, it was called Super Returns. I kind of like the play on words there because super, but also like, yeah, everybody wants super returns in both senses. I can't even like make the analogy there, but you all know what I mean.
Cheryl Mack: So Landed the bit. I love it. I mean, it is extremely well branded, but you're right. Like, actually, let me just say, it's really nice to receive the intro. We do these intros with people so frequently. I've like forgotten how lovely and warm and fuzzy it makes you feel when you get one of these intros. So, heart hands. Yes. So I went to Super Returns. So Super Returns, for those folks that are not familiar with it, It's a conference. It is about private market investing. There's a few of them all over the world. The first one that they started off with was in Berlin, but now they do one for Asia as well. And so this was actually their 20th anniversary for, so it's been going for a while. Obviously venture capital is part of the private markets, but it's not the only part of the private market. So there's also discussion on real estate, there's discussion on PE, there's discussion on other alternatives. As well as VC. But so it's a cool ecosystem of people that allocate to it, but also who are investors in the private market and then service providers in the private market coming together in a conference to nerd out about all things private market. I was chairing one of the stages there at Superreturn talking about LP-GP relations. So I thought it'd be a fun thing to nerd out and to share what we learned. 'Cause honestly, it is a corner of conversations that even as fund managers, we very rarely get to be part of, right? LP to LP conversations at the institutional level, LP to LP conversations at the family office level. Hopefully this is going to be useful for everyone. But as you said, if you're an angel investor and you're starting to listen to this and you're like, womp, this is not for me. Let me just say, I actually think it's really educational market-wise, what's going on in the private markets and specifically for venture capital, because it helps you understand how money is flowing in and out of this asset class in the APAC region.
Maxine Minter: Absolutely. So everybody stay tuned. Don't turn off your mics, speakers.
Cheryl Mack: Feel free to turn off your mics at any point while you listen to us.
Maxine Minter: You all knew what I meant. Okay, so you chaired a stage as in like you were the MC for the whole day on the stage. You didn't just MC a panel.
Cheryl Mack: That's right. Yeah. So they do this thing, they've got different summits, so they call them summits under Super Return. And so you can kind of like pick your track when you attend. And you can choose which one you want to attend. There's usually ones for the underlying asset classes. So there's like one for real estate, there's one for venture, there's one for kind of PE-backed companies. And then there are summits that are more at the kind of like LP level or matter for the LP level. This time, of course, there was an AI-themed one.
Maxine Minter: Mm-hmm.
Cheryl Mack: Though it was kind of cut across all of the different industries. But yes, so I chaired the summit that was focused on LP and GP relations and fundraising. A topic close to lots of people's hearts right now.
Maxine Minter: Mm. Yes. Yes. And how busy was it there? Was the stage full?
Cheryl Mack: Uh, very full. Yeah. It's so every single one of the panels had like at least 3 folks on the panel. Some of them were like 5 or 6 and then packed house as people were trying to learn about it. And one of the things we'll talk about, one of the themes that came out of it was just how challenging a capital raising market it is for across the board, but especially for emerging managers, but across the board for, uh, private markets at the moment. And so, you know, as each of the speakers were going off stage, they would get like swamped by like 50 to 100 fund managers. Um, pick me, pick me, pick me. Yeah, pick me. Really incredible to watch.
Maxine Minter: Amazing. All right, we will get into some of those themes, but if you had to give me like 1, 2, maybe max 3 words of like sentiment throughout the day, what would they be?
Cheryl Mack: Oof, that is such a hard question. I think excited for returns. Did I use too many units there? That's one. One theme, sentiment one. That's one. Excited. Pessimistic for the dynamics they're seeing regionally and business as usual for a pretty distinct absence of innovation I am seeing at that level. Mm. Okay.
Maxine Minter: Excited, pessimistic, and as usual. Good headlines. Okay. Now I would love to dive into some of the themes that I, that you pulled out in terms of, uh, let's start with like LP sentiment, LP, uh, view perspective on the market at the moment. And actually, maybe let's break it down first. When we say LPs here, we are talking about super funds.
Cheryl Mack: Not just super funds. So I actually think I want to take a step back here and, cause I think for a bunch of the folks that might be listening, you know, what happens above the fund manager level, so the VC level is kind of like a black box for a lot of folks. So I think actually it'd be like helpful to talk about who are the players on this particular stage and why does it matter into the like VC to startup relationship or angel to startup relationship. So in this stage, we're talking about institutionals. So that is large asset allocators. So people who invest money for a living out of large pools of capital.
Maxine Minter: Give us some examples there.
Cheryl Mack: Yeah. Like big banks.
Maxine Minter: Like, okay, big banks, pension funds.
Cheryl Mack: Pension funds, super funds, sovereign wealth funds. Foundations. Foundations. Yeah. Although foundations are really huge.
Maxine Minter: And like university funds.
Cheryl Mack: Yeah. University funds. So large endowments, right out of US, but also international. But then there are a bunch that are like, they're called asset managers. They're folks like HarborVest, StepStone. Their job is to, they run like a big service. Professional services firm where their job is to invest into certain asset classes. So they have like big teams that invest into the public markets, big teams that invest into the infrastructure, big teams that invest into the private markets. And then they have clients that buy their product.
Maxine Minter: Like, so it's like a multifamily office that is focused on a particular asset. So they might not manage an entire family office, but they manage lots of family portions of lots of family offices, but in an asset class.
Cheryl Mack: There are those as well, but those, I, they wouldn't necessarily be institutional unless they are huge. Institutions are like LGT, which is like LGT Crestone is a, is a well-known brand in the Australian market. So what happens is wealthy individuals and/or the public market like invests into their products. And then their products invest into underlying assets.
Maxine Minter: Got it.
Cheryl Mack: So like mutual funds might buy them or those kinds of things. So it's like this extra layer above the fund manager layer. So these folks are investing out of billions and billions of dollars of assets under management, like BlackRock, Blackstone, all of these kind of folks, right?
Maxine Minter: Yeah.
Cheryl Mack: They're investing in either into fund managers, who then invest those assets, or sometimes they're investing directly into those assets if they're like Brookfield, which is a big asset, like real estate asset manager, is buying directly into those assets. But then I think maybe has some fund managers that they work for. So why does this matter is for a lot of the bigger funds, think like in our world, Blackbird, Square Peg, Airtree, they are wanting to work with institutions, not just super funds, but also other big institutional funds. So if you start kind of raising funds above the $100 million mark, you're going to have institutional, maybe even above the $50 million mark, you're going to have institutional LPs invest in you. And so this is a forum that they all come together and they talk about their business, which is how to find really excellent fund managers, how to diligence those fund managers, how to invest in those fund managers in the same or a similar way that we talk about as fund managers talking about that. into companies that we work for.
Maxine Minter: Yes, yes. I have, we, I mean, that's what we do all day, right? You and I, we sit down with other investors, other fund managers, and talk about how we get into great deal flow. So they're doing the same thing, but at a higher level. Got it. Okay.
Cheryl Mack: That's exactly right. Yeah.
Maxine Minter: So at that level, they, like those investors, tell us some of the themes that were pulled out from the data they're looking at.
Cheryl Mack: Yeah. So the first thing is, is I would say that the APAC region is really a, a region of winners and losers, and I didn't actually understand the degree to which this was the case. So let's talk about the winners first. India, China, and Japan. Everyone was all aflutter about them. India is having this moment where there is a whole bunch of capital apparently that is flowing back into India, right? A repatriation of a bunch of capital. Some, in a lot of circumstances outside of the US, but also just domestically, they're starting to have kind of really strong economy. It is building a bunch of appetite in the Indian IPO markets. And so the IPO markets are really hot at the moment. And as we all know, when the IPO markets is hot, that means liquidity is flowing through their market in a really strong way. Unrelated, I had an interesting conversation with a friend of mine who runs a growth fund in the US that also allocates into India. And they were saying, we're actually not investing in India at the moment, because we are paying more on a multiples basis in India than we are paying at growth stage in the U— in the US. Right. It is that overpriced in the market. So there is lots and lots of capital flowing around in the India market, which everyone's really excited about. Lots of money flowing in, lots of IPOs happening, lots of liquidity happening, cycling through that ecosystem, and a lot of companies being funded. Great. Let's all move to India. Yeah. Let's all move to India. That was one of the takeaways.
Maxine Minter: Sounds like they're still partying like it's 2021.
Cheryl Mack: Right, right. Or they've just accelerated through this down cycle into a really exciting moment for them. Yeah. Okay. So a lot of really interesting stuff happening in the India market. Obviously the Indian market, right, is a really big domestic economy, so a lot of huge businesses can be built just for that ecosystem. So that was super exciting. China as well has seen a really strong liquidity story apparently. And so we're starting to see kind of a lot of folks come through in there. Although I think that that's a little bit more nuanced in that some of the things that the LPs were saying was like, it's really hard to invest in China just for geopolitical reasons, right? And so you kind of have to kind of pick your lanes. It's China or rest of world, which seems to be a pretty tough call to make. And then the last one that I was really interested in was And Japan? Japan. Yeah. So Japan, so both India and China are like liquidity stories that the LPs are super excited about allocating to fund managers that are investing into those opportunities. Japan is slightly different, right? Japan has stagnated as a market for a really long time and it's just starting to, it sounds like, kind of free up some really interesting capital into the private markets. They've put a bunch of government-level stimulus programs both into the private market and also allowing a larger number of people to invest in the public markets. What you can imagine that means then is that there's a lot more capital flowing around those ecosystems, a lot of retail and sophisticated investor capital coming into Japanese ecosystems. What I found super interesting was when you double-clicked on why they were excited about it, no one talked about the underlying companies. They were all talking about the amount of capital flowing in at the VC level. And I don't know if that's just because of the way that, that's the way that they thought, but I, I am intrigued by the fact that Japan has a bunch of reasons why it's interesting to raise capital from there. And a bunch of reasons why it's interesting therefore to allocate capital, because a bunch of government stimulus, but no one talked to me about a really strong founder pool or really strong tailwinds for that domestic market. And obviously if you're building in the Japanese market and Japanese language, you are just serving the Japanese market. And so it was an interesting one, but everyone was very excited about it. It seemed like the kind of ecosystem du jour. What broke my heart was Australia was nowhere on this list, right? We weren't there for the winners, but we also weren't there for the losers. We were just not considered. And so one of my takeaways was—
Maxine Minter: Just not even. Yeah. Like, and when they say like they're excited, what like, are excited to like go to the party or are they excited to like put money down at the party?
Cheryl Mack: Apparently they're excited to put money down at the party behind Japanese fund managers, people that are allocating to the Japanese story.
Maxine Minter: Okay. And India and China.
Cheryl Mack: And India and China. Yeah. Where they weren't excited was Southeast Asia, right? It actually, as I was saying, so this, this is the kind of excitement story. Right? A lot of people are getting quite excited there 'cause they're starting to see liquidity run through. Where they're not excited at the moment is Southeast Asia and in Singapore.
Maxine Minter: We heard that from Sachin the other week, right?
Cheryl Mack: We did. Yeah. So it put, so another kind of couple of underlines to his, what he was telling us about, which is just like Southeast Asia is tough. Quite a lot of fraud, a lot of folks piled into the asset class, didn't see returns, et cetera.
Maxine Minter: No liquidity lately. No liquidity lately.
Cheryl Mack: And so that definitely seemed to be the story. You can imagine that meant there's actually quite a few fund managers up there where those funds are going through consolidations or they are just, they've stopped allocating, they're changing their stripes. There's a lot of change happening in those fund managers. And so a lot of pressure, a lot of pressure there.
Maxine Minter: Did you raise it? Like, you're like, hey guys, Australia wasn't named at all here. Like, do we, can we get like a sense check? Do you guys just not know that we exist? Or do you think we're like the stuff of fiction, fairy tales?
Cheryl Mack: I love it. If you wouldn't mind just like rolling the globe slightly further around. Yep, yep. That's us down there. Yeah, just down there.
Maxine Minter: Are you aware of this place called Australia? It is a real place. Do you know it?
Cheryl Mack: I found myself having a lot— I mean, I like talked a little bit about Australia on the MC, but my job was to kind of facilitate the day, not advocate for Brand Australia, but I did slip a few Australia, uh, hype stories in that. I will say though, one of my takeaways was that I think the Australian ecosystem— we talked about this with Tom, right? But the Australian ecosystem just is really missing a trick on Brand Australia.
Maxine Minter: Or at self-promotion.
Cheryl Mack: Yeah, we're not doing a good job of telling the story why Australia is so interesting. For all of the reasons that Japan is interesting, Australia is interesting. What was very disheartening for me was that they think of, at this level, they think of Australia as a mature market, but that's because they're thinking of our private equity and our infrastructure ecosystems. They're not thinking about venture in Australia. Hmm. Australia and venture are not associated.
Maxine Minter: Similar, like Commonwealth, like similar to Canada, UK in the sense of like where we're up to. So that makes sense.
Cheryl Mack: Yeah. So I think opportunity for us to be crowing to the rooftops about the cool stuff that's happening. In Australia and also for Australian founders to continue to do their thing, like build amazing companies. We know from Sachin and the team that they really have seen the opportunity in Australia. And I hear this more and more on the ground from fund managers. So keeping in mind that these folks, this forum is like the next step removed above fund managers. Hopefully that will happen soon. But yeah, a lot of regional winners and losers. Okay. Spicy topics on your stage? Ooh, it is not a community that does spice very well. It was like all suits. I was there in this like dark blue velvet onesie and everyone else was wearing like suits and ties and I was like, oh, I have missed the brief on the outfit.
Maxine Minter: I would really love to see the dark blue velvet onesie.
Cheryl Mack: I will send you a photo.
Maxine Minter: Like right now I'm picturing kind of like, you know, those Halloween fuzzy animal onesies. That's, that's what I'm picturing at the moment. I'm guessing you didn't go up there in like a blue koala suit, so I'm going to need a photo.
Cheryl Mack: That's, that's more Cheryl vibes than Maxine vibes to go on stage in a koala suit.
Maxine Minter: If it was a blue koala suit though, like, I mean, honestly.
Cheryl Mack: Honestly, if it helped that, that room realize how amazing the Australian ecosystem is, I'd do it. Like, I'd take one for the team. I'd put on that Velveteen Koala suit and I would get up there and I would advocate. I just think it would do more harm than good, if I'm honest. I think it would destroy credibility for both me and the koalas and the Australian ecosystem all in one foul swoop.
Maxine Minter: They'd be like, those mythical creatures, Australia doesn't exist. They've sent a fairy tale person to our conference. Okay, great. Yeah. Awesome.
Cheryl Mack: But I will send you photographic evidence of the onesie and also I might be able to find one for you where there is a like compare and contrast, rest of room in black and dark blue suits, me in shiny velvet onesie.
Maxine Minter: Perfect. Okay, so no spice. I just outlined some of the topics that were covered.
Cheryl Mack: Yeah.
Maxine Minter: Like obviously somebody spent some time choosing topics that this audience would be interested in. So keen to understand what those were.
Cheryl Mack: Yeah. So one thing that I thought was super interesting was co-invest, right? My narrative had been that co-invest is a thing of the Australian ecosystem because it's heavily driven by super funds. So co-invest is when you have investors in a fund invest alongside a fund manager. Into the companies that they work for. So like Blackbird is writing a pre-seed or like probably more like a Series A check. And then one of the super funds that their investor comes in and invests like, you know, half a million dollars alongside them.
Maxine Minter: And it's usually at the later round, right? Like usually the fund will invest first and then at the next round or the next round when the company's doing better and it's de-risked, then the fund, the super fund will want to come in and get that co-invest. And the narrative I've heard here is that they do this because they want to essentially round down their cost of investment. So they're paying higher fees on the fund, but then they don't pay anything when they co-invest. So it kind of evens it out.
Cheryl Mack: 100%. Nailed it. Right. Like you are essentially increasing the overall denominator of funds that you are allocating through this vehicle, but you're only paying a certain amount of fees, the numerator. And so ultimately you're paying less. And so I had always thought it was just an Australian thing. I had thought it was something that our super funds were doing because of the regulatory pressure, 'cause APRA set certain like fee requirements on them. It was hot, as hot as you can imagine for a bunch of folks who work for large sovereign wealth funds. And I didn't see Smile most of the time that they were on stage and they were hot under the collar for co-investment. Which I thought was really exciting.
Maxine Minter: With zero fees, because I've heard a lot of co-invest happen in the US where it's still through an entity and the fund still charges fees, if maybe smaller fees, but still charges fees and it's through an entity versus what we do, which is direct. So was there a difference there?
Cheryl Mack: They didn't talk deeply about the fees, but my sense is they were still thinking, like assuming that it was fee or it was feed, but I think it was less fees.
Maxine Minter: Less fees. Yeah. Right. Whereas everyone in Australia is like, no, no, zero. I want to go direct. And I'm like, what founder then wants random Superfund A on their cap table?
Cheryl Mack: Totally. Yeah. I haven't seen as much of that unless it is like at super level. The supers are able to push it because they have a captured market, but like other institutionals and family offices, I haven't seen them be successful and they're like, I'd like to invest fee-free. And the fund managers in Australia would be like, no worries, come on in fee-free. Like, I haven't seen that happen as much. Have you?
Maxine Minter: Ah, I've seen it.
Cheryl Mack: Really?
Maxine Minter: Yeah.
Cheryl Mack: Yikes. Interesting.
Maxine Minter: My sense is that it doesn't happen in the US where it's like they're, they're co-investing, but they're still co-investing through an entity that has minimal fees. Is that right? That, that's the sense you got?
Cheryl Mack: Yeah, that's right. That's what I see. Yeah. In, in the US for sure. What it really crystallized for me is so much of venture capital even all the way up to the LPs, right? The institutional LPs is essentially, this is just look-through asset ownership oriented. What I mean by that is like the name of this game for us who are worshiping at the altar of the power law, you and I, it is exactly the same for the LPs, but they're just one step removed, or in some cases, two-step removed, right? Where they might be allocating to fund managers who are then allocating to funds. Ultimately, especially in venture, the end of the day, they are just trying to own as much of the best companies in every single generation of tech companies as possible.
Maxine Minter: Which is what we're trying to do.
Cheryl Mack: Which is what we are trying to do, which is what everyone is trying to do. And I think the moment you get like super clear that that's what everyone's trying to do, ultimately everyone is just trying to find that like 10% of every single thematic or every single vintage. That is the outlier, like they drive all of the returns up and down, back to front, no matter how you cut the data in a different way. Actually, it doesn't matter even in terms of fees. Like at the end of the day, if you don't own a percentage of those companies, you don't own enough of them, you can't get your fund to math.
Maxine Minter: You can't get the math to math.
Cheryl Mack: The math just will not math. If you don't own part of those companies, no math is mathing. And so what I thought was super interesting was like, I wonder why we don't talk about look-through ownership more often. Say more. Like I, as LPs, right? When we are, when you and I are investing into funds as LPs, even though we don't only do it in a little way, I'm not spending as much time thinking about how do I make sure I own as much of the best companies of this generation? As possible. Because if I was thinking about that, I would try to be allocating to as big a tech as possible to potentially smaller funds who are investing as early as possible.
Maxine Minter: I mean, that is my strategy, so I win.
Cheryl Mack: Right. But are you doing it? I love that you're like, wait, wait, hold on a second. Maybe you are just investing wrong, Maxine. Yeah.
Maxine Minter: Like, sorry, the only funds I've invested in are small thematic funds that are investing at the earliest stages, which is like, you know, my financial advisor would not advise for this strategy, but yes, that is my strategy.
Cheryl Mack: Yeah. Yeah. Not financial advice. Are you doing it because you're trying to own as much of the best companies of this era as possible?
Maxine Minter: Like I think I say it in a different way. I say it by saying like, I believe that the next Canva or really huge outlier success is going to come from a small thematic fund that is investing early stage. And so I say like slightly different way of saying it, but yes, that's kind of what I'm saying.
Cheryl Mack: Yeah, it's a slightly different driver, but I think you get to the same outcome.
Maxine Minter: Yeah.
Cheryl Mack: Which I think is true. Like there are many different ways to skin that particular cat. I haven't thought about it in that way. Right. Where do I think the biggest outliers are going to come from? And then who is gonna own the most of them and how can I own the most of them?
Maxine Minter: But then we hear supers, super funds and fund, like large institutionals going for the larger funds and the, the less risky funds all the time. So like you, it's interesting you're saying that that was the thematic that came out and yet we see in decision making that many of these are still allocating to larger, later stage funds.
Cheryl Mack: That is such a great point. It's not the only thing that they're trying to solve for, right? So if you are a large super fund, the amount of risk that you are willing to take and that you can take under mandate, it's way less. And so you can only invest in a fund that has track record, i.e., has shown that they can repeatedly generate the right return. Window that you're seeking on their strategy, at least for venture, given how long it takes to like build into a repeatable motion. Usually you're talking about fund 4 because they need to see DPI, right? They need to see money distributed back from the strategy that works. So it's not, it's not fund 1, because usually fund 1 is a proof of concept. So then it's DPI, it's money distributed back from fund 2. Which is usually like year 14.
Maxine Minter: Yeah.
Cheryl Mack: Womp. So they can only work with brands that have that kind of track record where they work with emerging managers, like managers earlier in those fund cycles is usually where they are doing an investment strategy that they've done under a different umbrella. And then they are like stepping those out and just rebranding, but a like a known formula they've showed that they could build, you know, or, or get returns from them in a previous scenario. So on that side, they can't simply be like, great, Cheryl Mack, you are super close to some amazing companies. Here is a huge check for you to go and invest. The other thing is that they have minimum check sizes, right? Like if you are investing out of billions of dollars, it doesn't make any sense for you to allocate You can't write a check into a $25 million fund.
Maxine Minter: I can though, so I win.
Cheryl Mack: Exactly. Exactly. And all the angel investors, they can.
Maxine Minter: One day I'm just going to, I'll be my own institutional because I'll have so much money from this strategy.
Cheryl Mack: Let's hope. Let's, I hope, I think you will be a wonderful institution, institutional. I also think you would wear way better outfits than what they brought. To the conference. If you ever show up at— when you become institutional, you start showing up to those events in blue suits, I will shed a tear.
Maxine Minter: Uh, when I am super rich and have billions of dollars to deploy, I am showing up in my koala onesie at an international event to represent Australia 100%. And I'll hand out those little koalas too, you know, the ones that clip on. I'll just be like, you get a koala and you get a koala and you get a koala. Wanna be rich like me? Come invest in Australia.
Cheryl Mack: I love it. I love it. I love it. So good.
Maxine Minter: Okay. Back on topic.
Cheryl Mack: Back on topic, back to super returns. I will say that, as I said, there was loads of fund managers there, and I think the next thing that popped out for me was just like, it really crystallized how tough a funding market it is for emerging managers at the moment. So if you are an emerging manager listening to this, like, I feel you. It is hard. Out there to be raising capital, know that it is the market. It is not necessarily you. One thing that popped out for me actually on the Australian ecosystem in particular is that a lot of the maturity in the Australian ecosystem, right? A lot of the newer funds coming through in the Australian ecosystem started in like 19, 20, 21. And so fund one for them were all deployed into a cycle that makes it extremely hard for them to show really attractive returns and really kind of high-quality performance. Unfortunately, a lot of our domestic allocators as well, like family offices, high net worth individuals, they went in really heavy 19, 20, 21. And so I think in the Australian ecosystem in particular, we have this kind of generation of fund managers who just from a market timing perspective have got a lot of headwinds on their portfolio. Performance, which I think, just to call that out, like that makes it really, really hard for both LPs in the Australian ecosystem to feel faith that there's opportunity in the Australian ecosystem, which feels obvious to us. And like you and I get to see it all day, every day. But if you are looking on those kind of longer term horizons and/or you need to see track record, I think that makes it really hard for the Australian ecosystem, but also regionally, right? We're seeing a lot of emerging fund managers and I mean Fund 1, Fund 2, Fund 3, sometimes even fund for, really struggling to put away funds at the target that they're going out there for. The good news story for that though is it makes for, if you can raise capital, it makes for extremely attractive investing environments, right? Not a lot of competitive deals going around, even in the kind of AI space, some incredible founders that we're getting to invest in. If you are like in that situation to be allocating. So a couple of the topics that came up on a few of the panels was just like fundraising in this environment, how to think about it, how to build relationships with those LPs, how to think about fundraising. Two themes or two elements that came out there. One is the kind of group of funds that are able to raise funds with Cornerstone LP. So you had like a big LP coming in and writing a huge check and that's what you kind of, is your centripetal force around.
Maxine Minter: Build it around. It's like a lead investor in a startup round.
Cheryl Mack: Exactly. Yes. I actually think that is such a great analogy. So it's like a lead investor in a startup round. The other version of this is like a party round.
Maxine Minter: Yeah.
Cheryl Mack: Right. They fill in a fund with just a bunch of different individuals. And so if anyone listening is still thinking about raising a fund or like has that in their future at some point, you know, don't necessarily be disheartened that you can't put away a fund. You still can. People are still closing their funds. You just have to be fairly creative about the way that you think about it. The way you think about fundraising from these communities. And also, you know, there continues to be great businesses that are being built. There continues to be profits from those great businesses. So family offices, I think, are exceptionally well placed in this particular kind of market to be allocating to venture and getting into like really interesting funds and being able to put capital to work. And so there was a few people from family offices that were talking about like, they are having the time of their lives. Like having a lot of fun allocating, a lot of fun working with great managers, a lot of fun doing those co-invests, right? They're able to like lean in and get close to interesting companies, buy pretty meaningful ownership positions.
Maxine Minter: Because there's not as much competition.
Cheryl Mack: Exactly.
Maxine Minter: For those later stage deals that are doing really well.
Cheryl Mack: Yeah, that's right. Especially at the institutional level, there seemed to be a fairly like clear sense of a flight to quality, i.e., like brand names. And so it's leaving this gap in the market that a lot of family offices are taking the opportunity to kind of lean in. And invest in. So that was cool to see and great to see them hopefully be rewarded for taking that risk. 'Cause I think that they will actually, interestingly, in a similar cycle in 2012, or like 2010 to 2012 was when a lot of the more established funder funds built their names in the US because they got to go and invest in, you know, USV, Fund 1. Founders Fund, Fund One, and similar, which is pretty cool.
Maxine Minter: Because there was a gap there at the same time where it was, it was tough for funds to raise. So fund of funds came in and got positions in some really great funds.
Cheryl Mack: Yeah. Yeah. And then started to build those relationships, right? Because a big part of like, once you have a proven track record and a model that really works, right? And you are an LP in one of those funds. You just keep investing. You get an opportunity to invest, but it's hard to get net new capital into those funds, right? Because those, the strategies cap out on the amount that you can raise behind them.
Maxine Minter: Yeah. Yeah, that makes sense.
Cheryl Mack: So the next theme actually is then into mega funds and to evergreen funds. So there was a lot of discussion about what happens in this new world where you started, you're starting to see kind of Sequoia, A16. I mean, A16 is in market at the moment, and raising a $30 billion fund. $30 billion.
Maxine Minter: Billion dollars.
Cheryl Mack: With a B.
Maxine Minter: Surely that's distributed across fund strategies though. Like surely within that there is like an early stage piece, a growth piece, a pre-IPO piece. Like there's different funds within that fund, right?
Cheryl Mack: Yeah, that's right. I mean, like if you think about General Catalyst, I believe they've raised $32 billion, but that's spread over all of those strategies plus an AI like PE strategy. And then also a like debt-like product, you know, they like spread them into a bunch of different directions. I think A16 has a venture debt product as well. Like they've, they are more like an asset manager at this point than they are like a venture fund.
Maxine Minter: Yeah.
Cheryl Mack: And so that's the way that they run their business. But $30 billion in a single fund. I will say I was looking, I don't know if you saw Nucoma leaked their deck.
Maxine Minter: No. Can we see it?
Cheryl Mack: Yeah, you have to pay Newcomer some money, but yes, you can.
Maxine Minter: How much, like $10? I'll do that.
Cheryl Mack: Yeah, I don't think, I think it's like $10. Like it's just like a content subscription.
Maxine Minter: But it isn't one fund though. This is my point, right? Like if you're an institutional and you're like, cool, I'm gonna go invest in A16Z, you then get a choice of I can invest in the venture debt fund, I can, or do you invest in one fund and then they decide how to distribute it between those things?
Cheryl Mack: I think it depends on the name. I have heard, I've never tried, but I've heard with Sequoia, they won't let you into their best performing product until you buy into their other products.
Maxine Minter: Wait, what? Sorry, you have to buy our shit product before we let you buy our good product?
Cheryl Mack: Yeah, cuz their good product is really good. And so you have to have like, it's kind of like, you know how banks have like minimum relationship depth? Oh, like this is like a concept in the US. You have to have a certain amount of like a mortgage and cash with them before they will like actually treat you like a human being. I think it's a similar concept. I don't see this as much in the Australian ecosystem, but the US is sick for it.
Maxine Minter: No, I know in like, uh, in Blackbird, for example, like you choose which fund do you want to go. They have core fund and a growth or opportunities fund.
Cheryl Mack: Yeah.
Maxine Minter: And you can get in, you can choose which you want your money to go into. So I don't know. I like, I, I'm imagining that if you invest into A16, you get to choose which of the funds you go into, but now you're telling me Sequoia doesn't do it that way.
Cheryl Mack: So follow-up questions. I actually think this is an amazing point because I think it is hard to comprehend from within the four corners of the Australian ecosystem how different the power dynamic is between allocator and recipient of capital in the US for the best opportunities. So like, if you are an amazing hypey company in the Bay Area, right, you have a completely different power dynamic with the investors than anything we would get to see in the Australian ecosystem. Like you can pick and choose whoever you would like to work with.
Maxine Minter: And you're saying it's the same thing with like, yeah, Sequoia and a16z are the amazingly hypey companies. That basically can pick and choose which LPs they wanna bring in.
Cheryl Mack: That's right. Yeah.
Maxine Minter: Whereas we don't, we don't really have that. Even, even like Blackbird and Airtree has not struggled, well struggled, but like they, they had a more difficult time raising their latest funds.
Cheryl Mack: Yeah, that's exactly right. I mean, a16 distributed $15 billion back to their LPs in one year.
Maxine Minter: Well, if that was a $30 million fund, then that's not good.
Cheryl Mack: No, no, no. That—
Maxine Minter: A $30 billion fund.
Cheryl Mack: I mean, they're 50, they're $30 billion. B. 30 with a B.
Maxine Minter: It depends what the base was. If the, if the amount paid in was $30 billion, then that's not good.
Cheryl Mack: No, no, this, that would've been their like—
Maxine Minter: I can do math.
Cheryl Mack: I can math it. I would imagine that was probably their 2017 fund, so maybe it was a few billion dollar fund.
Maxine Minter: Okay. Well then, yeah. Good job. Good job.
Cheryl Mack: Good job. Very good job. Oh my, no, it was probably, it was probably across a few different funds, but $15 billion, that's a lot of bees. That's a lot of bees. Back to their LPs in a single year. Just one year, 2021. Great year for them.
Maxine Minter: That's true. That's just one year. That doesn't include exits and returns for the next year and the next year and the next year.
Cheryl Mack: That's just one year.
Maxine Minter: Yeah. Okay. I get it. I mean, like, do we think our ecosystem's gonna get to that? Or actually, no, better question. Do we think that they are going to lose their top position at some point. Like, do they keep growing and being able to return those types of returns forever? Or like, do they tap out at some point and lose out?
Cheryl Mack: I think that that is the $30 billion question for them.
Maxine Minter: The $30 billion question, isn't it?
Cheryl Mack: You know, I mean, I will say for this market, opportunity accrues to the winners, right? I will still say for most of the great founders that I know, if A16 or Sequoia or Kleiner or Khosla came to the table today and was like, hi, I would like to invest.
Maxine Minter: Take your whole round, F off everyone else. They would F off everyone else.
Cheryl Mack: They would F off everyone else. So I think that continues to be true. The stronger they get, the more that that becomes true. I think the question is like how much capital can this strategy or these collection of strategies in the private market consume before they start to deplete your returns? And I think that's the question, right? I mean, better minds than me will say both sides, right? Obviously the folks raising $30 billion funds will say, absolutely, we can continue to return you like a 2.5x on $30 billion.
Maxine Minter: No way. They, they would never say that.
Cheryl Mack: Not in a million years. And then a bunch of other people will say like, that is incredibly hard to do. You have to believe that there is, you know, $300 billion or more that these firms own a meaningful percentage of those companies, right? So that you have to believe it's like $3 trillion worth of enterprise value is created over this cycle that you can hold onto. Probably it will.
Maxine Minter: Anything's possible.
Cheryl Mack: I buy it. If I had an opportunity to invest in A16z, would I take it? Heck yes, I would. But I think it's really interesting in the Australian ecosystem, right? Like if we think about the world that we get to see in the Australian ecosystem, like that competitive dynamic is just not present at all, or I don't get to see it at all. And I would say it was not present in the super returns context either, right? Australia was, I'm sorry, the US was like an afterthought for this ecosystem. It was very, very much focused on APAC, very much focused on China, India as the big markets.
Maxine Minter: It's funny, they say, you say they're focused on APAC, but like the start of APAC is Australia and they didn't remember we were there.
Cheryl Mack: I think the A in APAC is Asia, not Australia.
Maxine Minter: One of the A's is Australia, right?
Cheryl Mack: Uh, I think it's Asia Pacific.
Maxine Minter: Oh.
Cheryl Mack: I don't think we even make it into the acronym.
Maxine Minter: I think it's Australia Pacific.
Cheryl Mack: Um, yeah, let's go with that. I like, yeah, I just think that we should do the America version and put Australia at the top of the map. Yeah, I like the top of the globe and then make the rest of the world referential to Australia. Yeah, incredible.
Maxine Minter: I'm just renaming acronyms left, right, and center here.
Cheryl Mack: I love it. Just say it with conviction enough times and it will, it will catch on. I did.
Maxine Minter: If you hadn't called it out, people on the podcast probably wouldn't believe that. They would've been like, oh yeah, yeah, yeah. A and APAC, Australia. Yeah.
Cheryl Mack: Oh dang. APAC. Yeah. Australia Pacific, obviously. Obviously. Weirdly enough, we held the conference in Singapore of all places. We should have held it in Australia if it was for Australia Pacific. Yeah, that was a miss by us.
Maxine Minter: Or maybe it's AAPAC.
Cheryl Mack: AAPAC. We're right at the, at the top of that acronym. I love it so much.
Maxine Minter: All right, carry on. Back on topic.
Cheryl Mack: Anyway, back to usual programming. So I thought it was very interesting that the US, I mean, the US last year, 30% of global venture capital came out of the Bay Area alone. Right. It is the dominant market in venture capital. Implications then are you should think about the IPO markets. You should think about the liquidity markets in this market because the liquidity, both IPO and M&A ecosystem in the US is often the buyer at the end of the chain for most of the companies coming out of the Australian ecosystem, but also coming out of the New Zealand and the UK and Canada and blah, blah, blah. Right. It all ends up in the US. But what was very interesting is At this summit, at the very least, most people were talking about liquidity markets in India, talking about liquidity markets in Hong Kong, talking about liquidity markets in China, and talking about liquidity markets in the region. Also, a lot of people talking about starting to pull out of the US market because of a fear of currency deflation. So especially for things like real estate and private equity, if you fear that the market is going to correct by say 10%, and the average return in that asset class is say 20%.
Maxine Minter: Is 10%.
Cheryl Mack: Yeah. Or even 10%. Like you are going to depress a whole year's worth of returns, maybe more if it continues to fall over time. And so there was lots of speculation that part of the jubilance in the India ecosystem that they're seeing at the moment is a repatriation.
Maxine Minter: It's just people pulling out of US.
Cheryl Mack: And putting their capital into domestic exchanges instead, like into the India Stock Exchange or the Singaporean Stock Exchange, et cetera. So I thought that was an interesting theme. I wonder the degree to which we're seeing that in the Australian ecosystem. I don't think we'll see repatriation of capital to the Australian ecosystem in the same way, because there isn't that same kind of discomfort with the US.
Maxine Minter: Mm-hmm.
Cheryl Mack: Not just on a currency basis, but also just political discomfort between those two. Those two ecosystems. But it does mean that maybe there is this kind of artificial buoy that will then happen to the APAC ecosystem because a bunch of liquidity will come back domestically into those markets and buoy the, at least the liquidity profiles in those markets. Because as we know, right, liquidity is everything. Getting money back at the end of this is the name of the game.
Maxine Minter: Recycle that.
Cheryl Mack: Right. Recycle that capital.
Maxine Minter: Recycle those tendies.
Cheryl Mack: That's exactly right.
Maxine Minter: Oh, actually funny question. Surely somebody asked at some point of these fund managers, like, or of these fund capital allocators, some fund manager stood up and said, how do I get you to invest in my fund? What was their advice to that question?
Cheryl Mack: It was the most bizarre question-answer dynamic I have ever seen in any conference. No questions were answered, were asked even in circumstances where the opportunity was offered.
Maxine Minter: No questions. Nobody asked a single question.
Cheryl Mack: One person.
Maxine Minter: What was the question?
Cheryl Mack: In 6 hours of programming.
Maxine Minter: You only had to remember one question, Maxine.
Cheryl Mack: The question— you had one job. The one question that was asked was essentially what happens when AI takes everyone's jobs. Then what are you going to do?
Maxine Minter: Were they being facetious?
Cheryl Mack: Uh, not really. They were particularly interested in like how those allocators to allocators were thinking about the seismic community shifts in underlying thematics and how they're allocating to protect their assets in that shift.
Maxine Minter: Okay. I buy that. What was the answer?
Cheryl Mack: The answer was We are worried about it. Okay. Which makes me think they don't know yet, which I think is a fair shout. Like I think none of us really know.
Maxine Minter: I mean, does anyone?
Cheryl Mack: No, exactly. I don't, it is completely unclear how we are both from a human level and as an investor level, right? Like what this change is gonna look like. I'll say for myself, I am definitely a techno optimist. I think on the other side of this change, we have an incredible abstraction away from all of the boring stuff. Like, I think about all of the mind-numbing hours I spent as a baby lawyer reading the same document, trying to look for like differences in commas. And I was a terrible exception checker.
Maxine Minter: Baby lawyer.
Cheryl Mack: In that regard, like, I should not have been doing that. AI can do that job way better than me, and I will get many hours back in my day. But I think that, yeah, it's gonna be a tough a tough transition, and I think they probably agree it's entirely unclear how we're gonna support. So no spicy questions were asked.
Maxine Minter: So you're telling me that there was hundreds of people in, in this room with, uh, capital allocators with billions of dollars worth of funds up on stage and nobody thought to ask the question at like, how do we get you to invest in our fund? Yep.
Cheryl Mack: That's exactly right. I think those questions were probably asked in the throngs that would then swarm each of the speakers as they went off stage. Like one of my core jobs as an MC was to shoo the people away and like put them outside so they could have their conversations. 'Cause they— Shoo, shoo, flies. Because they would have these like sidebar conversations.
Maxine Minter: Were you like also bouncer? Like you had to be like, hey, you know what? $30 billion fund manager guy, he, he needs to actually like leave. You can't keep pitching him your fund.
Cheryl Mack: I am truly honored that you thought I would be even remotely effective as a bouncer.
Maxine Minter: First of all, just my physical intimidation skills and No, no, that's why I'm asking the question if that was your role, 'cause you'd be terrible at it. And I think I would pay money to see you try.
Cheryl Mack: No. Okay. Well, I felt good for about 2 and a half minutes there. No, no, it would be hilarious to see you try to help to know they didn't get you to do that. Okay, great. No, no, no. I was not hired as the bouncer, just the MC. Brought the vibes.
Maxine Minter: So I was hoping to give some of our fund managers some insights into how to get big monies into their fund. And you're telling me we can't give them that on this podcast?
Cheryl Mack: Well, no, I, we can give them that. They did talk to that, but no one asked the question. So for anyone who's listening who might, might want to work with some of these allocators, a couple of thoughts for you. One is relationships are so important. These folks, especially right now, as I mentioned, the markets are really, really tough. So there's loads of people trying to get in front of them. And so a lot of the way that you get access to these kind of folks are at events like these, right? A lot of the fund managers are actually like paying for access. So in private equity, it's pretty normal to use placement agents. And so that was a whole discussion. A placement agent is essentially a third party who you pay to raise capital for you. That is not common in early stage funds, even at growth stage, it's tougher. For if you're raising for VC, then it's a lot of going to conferences like this. It's spending time at events with these kinds of LPs. It's going on to conferences. It is swarming them as they walk off stage and trying to hand them your business card.
Maxine Minter: Is it though?
Cheryl Mack: I don't know that that one works.
Maxine Minter: That seems like such a poor strategy.
Cheryl Mack: I don't think that that one's particularly high signal. No.
Maxine Minter: Having been swarmed after getting off a stage, I can tell you Like it's, it's not very effective. I take your card and I immediately toss it.
Cheryl Mack: Have you ever invested in a company that has swarmed you after getting off the stage?
Maxine Minter: No.
Cheryl Mack: Interesting.
Maxine Minter: No. And I like, I very rarely take the meeting either.
Cheryl Mack: I think, I don't know if I have invested in the company, but I've definitely taken a bunch of meetings or I actually, no, I have. They ended up joining a company that we invested in, like joined as a co-founder., but I got to know him after I spoke to him coming off the stage and was very impressed with him in person. And that helped my decision to invest after. Okay. But that's 1 of 30, so it's not a high probability strategy.
Maxine Minter: It's not a high probability strategy. Yeah. But I mean, better than lotto.
Cheryl Mack: It is better than a lotto. Yeah, it is better than lotto. So if you are thinking, you know, you're wanting to, and I hope you are, right? Australia needs more emerging fund managers. It needs more people starting to build funds and ambitious funds, 'cause there's so many great opportunities in the Australian ecosystem for investing. So if you are thinking about working your way to raising institutional capital or just starting to raise, like think about raising a fund, there were a bunch of wonderful Australian VCs at Super Returns who are raising for funds 1, 2, and 3. And those folks were there raising from these kinds of LPs. There's a lot of family offices up in Singapore. A lot of them come to this conference. And so it's a wonderful way for you to get in front of a bunch of those family offices to get to know them. Also these institutional folks, but similar to large growth stage VCs, like they do source through a network of people. And so the more that you can get to know the kinds of other fund managers in their portfolio can also be an access point into those institutionals. And then also starting to kind of develop relationships through them, with them through other like subject matter areas, right? So if a particular institution is interested in say biotech or healthcare, right? Then getting to know them through that channel is a great way before you just start to try and pitch them. So like a lot of things in raising for venture funds, it is a long-term game. LP relationships are a lot of work, but worth the work, right? Wonderful partners if you can develop them and then they grow with you as you grow your business over time. So if that's— what you're interested, definitely worthwhile. As an angel investor, it's less useful, right, to go along. But I think that's why we're trying to open source it in this forum so that you don't have to go along. You can get the insights and you don't have to pay the fairly exorbitant fee to go along.
Maxine Minter: The Maxine's notes. How do I, how do I MC a stage so I get a free ticket?
Cheryl Mack: Find the people that are organizing it or start a podcast like ours. I think those are my two options for you. Find the person that's organizing it and pitch them, or join a speaker bureau, then they'll do that work for you. Or sometimes marketing teams will do it, like in the same way that they'll pitch podcast guests, they'll also pitch speaker spots. All right, sweet. Well, I got one of those ticked off. You do. Yeah. You're at least 25% of the way there on the journey.
Maxine Minter: Ooh, did you get any money out of it for your fund? Did you get any money out of it for your fund?
Cheryl Mack: I wasn't fundraising for it. With my, like, I wasn't there as my, with my fundraising hat on. So I was much more in like facilitation mode than fundraise mode, but met a lot of really interesting people. And as we just talked about, relationships take a long time to develop. So maybe.
Maxine Minter: The answer is possibly, maybe in the future.
Cheryl Mack: Possibly, maybe, possibly, maybe one day, possibly.
Maxine Minter: So call me maybe.
Cheryl Mack: No, I think we covered it all. I just would love to say next year I would I would love to see Australia on that list of winners.
Maxine Minter: Right.
Cheryl Mack: So that is my personal goal. Australia recognized as an ecosystem that is growing in a really exciting way on that list of winners.
Maxine Minter: All right, let's make it happen. Thank you very much, Maxine.
Cheryl Mack: Thanks for having me. This was fun. I actually really enjoyed the Q&A.
Maxine Minter: We should do it again. I know I'm hilarious.
