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Asia’s Rising Consumers and the unique challenges of a millennial-managed family office: Q&A With RHL Ventures’ Rachel Lau

Rachel Lau, Managing Partner, RHL Ventures

March 23, 2020 Founded in 2016, RHL Ventures is a multi-family office private investment firm headquartered in Kuala Lumpur, Malaysia. Currently led by Rachel Lau, Raja Hamzah Abidin and Jo Jo Kong, the firm focuses on investing in startups as well as small and medium medium-sized enterprises across the Southeast Asian region.

MarketCurrents WealthNet spoke with Rachel Lau to learn more about Asia’s emerging cohort of young consumers, the innovative businesses that hope to cater to them and the challenges of working in Asia’s nascent venture capital scene.

Could you tell us a little about yourself?
So I started on the buy side, based in Hong Kong, New York and Australia, doing public equities and emerging market debt. Different jobs but the focus was always public markets.

And then about 2015, I think Hamzah [Raja, co-managing partner] and I were in Hong Kong at the time and joked about starting a business together. Eventually we took it more seriously and decided to delve into venture capital because that’s where we believed we could have a competitive edge. So, at the moment, we’re anchored by a family office and are raising third-party capital. Our US$100 million fund is focused on startups in Southeast Asia and private equity in terms of small and medium-sized businesses in Malaysia.

Could you describe the firm’s investment strategy and which sectors your team focuses on?
The way I see it is, the traditional way of classifying startups is too tech-heavy or tech-focused. We don’t mind looking at technology, but what we’re really looking for is a team that can disrupt an existing market and create value. So that could be an innovative F&B chain that’s cheaper or healthier or cleaner and more sustainable than anything else on the market. Or media companies, healthcare, cosmetics or coffee. That’s the type of business we’re focused on.

We’re also focused on Asian consumers specifically. I recently spoke about “Asia for Asia” in terms of our business focus, and that’s because Asia is already such a significant part of the global economy and such a substantial portion of the global population. That’s only going to accelerate, so that’s where we see opportunities.

As an Asian VC focused on Asian consumers, what sets you apart from your Western counterparts investing in the same region?
I think, being based in Malaysia, localization gives us an edge. When people abroad talk about Asia, they overlook the fact that there’s tremendous diversity here in this region. Mumbai is very different from Kerala. Malaysia is very different from Vietnam. Thailand’s military is deeply ingrained in the political system, whereas Vietnam is evolving away from its communist system. So I feel like in this part of the world, we don’t have a uniform set of regulations or rule of law, we don’t have a common monetary system. Understanding the fact that, for example, people don’t use credit cards as much here or that the culture for tipping is different, is important when you focus on consumer businesses. Understanding the consumer, of course, is key for us.

What are the unique challenges of working in Malaysia’s venture capital sector?
The biggest problem with Malaysia is funding. I think we touched on funding a bit into the direct-to-consumer side. But the biggest issue is that there’s no appetite for risk funding. Malaysia hasn’t had great success in terms of unicorns, or billion dollar businesses that have relied on venture funding on mobile or richer funding to accelerate growth.

This isn’t just for Malaysia. I believe you see this in Vietnam or Thailand as well. Investors tend to be more conservative, which creates a funding issue for startups. However, we are seeing this change. It’s early days, but I believe what we do here at RHL goes a long way towards pushing this ecosystem forward.

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