Marvin Liao is an Investor-Operator, executive coach and formal advisor to several large Family Offices. Marvin is a Partner at Rolling Fund Diaspora.vc, Manages the Angel Fund Sukna Global & a Board member at Game Groove Capital, an International Gaming Holding Company. He was previously a Partner at Venture Capital Fund 500 Startups, running the SF based accelerator program as well as investing in Seed stage start ups. He has invested in over 414 Pre-seed & Seed stage startups during the 6 years spent there. Marvin also spent 10.5 years at Yahoo! as an executive with extensive operating experience expanding businesses across Asia, Europe, Latin America and the United States in his career at the company.
Marvin presently serves on the Investment Committees/Advisory boards of several Venture Capital funds. He also mentors at numerous accelerator programs around the world.
Marvin Liao is an Investor-Operator, executive coach and formal advisor to several large Family Offices. Marvin is a Partner at Rolling Fund Diaspora.vc, Manages the Angel Fund Sukna Global & a Board member at Game Groove Capital, an International Gaming Holding Company. He was previously a Partner at Venture Capital Fund 500 Startups, running the SF based accelerator program as well as investing in Seed stage start ups. He has invested in over 414 Pre-seed & Seed stage startups during the 6 years spent there. Marvin also spent 10.5 years at Yahoo! as an executive with extensive operating experience expanding businesses across Asia, Europe, Latin America and the United States in his career at the company. Marvin presently serves on the Investment Committees/Advisory boards of several Venture Capital funds. He also mentors at numerous accelerator programs around the world.
Transcription
Pemo Welcome Marvin, so nice to speak to you. We never have got to meet live yet. But hopefully soon in the future. I know that you’ve done some great work at 500 Startups. Do you want to update me and the audience on what exactly you’re doing now?
Marvin Yeah, sure. So maybe a quick bit about my background. Spent 22 years in tech, did the startup thing for a couple years. I was a big tech Exec at Yahoo doing international expansion for about 10 and a half years. Did the boards and advisory boards and angel investing for a bit. Then I joined 500 Startups as a Partner.
Pemo Yep.
Marvin At 500 startups, I helped start the San Francisco office and helped run Fund 3 and Fund 4 and also ran the Core Accelerator Program. So I did that for about 6 years. I left at the end of 2019 and you know, walked right into the pandemic right though I thought I was going to take last year off and go do some hiking and a lot of reading and writing etc
Pemo Yep.
Marvin Basically go and do some angel investing and actually the conference tour circuit and well that didn’t happen. So um, you know I think we’re just trying to survive last year but now thankfully sort of everything’s kind of worked out and so now I have a small angel fund.
Pemo Ah, yeah, really yes.
Marvin But I’m also on a bunch of boards. I sit on a bunch of investment committees about 5 different VC funds and I have my own small little rolling fund that folks called Diaspora that I partner up with a buddy. We invest in Pre-seed founders from Europe who want to come to the USA
Pemo Okay, okay. It’s fabulous. It sounds like an exciting business that you’ve got there. Lots of interesting and passionate people I’m sure that you come across. So I’m mainly focused on Fintech but of course you have a huge investor network. So I was wondering about what you’re seeing now.
Marvin Yeah, so Lucky.
Pemo If you could talk a little bit about the environment due to current events. How has investing been for you and other investors? Since the crisis?
Marvin Ah I mean it’s been nuts right? So if you think about sort of everything that happened last year where it’s like I feel sort of like the offline world kind of disappeared and we all kind of went online right? So we’re sort of.
Pemo Yeah, yeah.
Marvin I talked about that in an interview a couple weeks ago where I kind of feel like we’re sort of in the metaverse now right? Most of us have not left our house. Most of all our interactions even as you know here in the Bay area, it’s like you want to meet people, nobody really wants to meet even though I’m right down the block. You ask to meet over coffee but they’re like let’s just do a zoom call.
Pemo Right.
Marvin And so it makes me wonder what the hell am I doing here spending all this money. We are kind of living this metaphoric life. So actually from an investor perspective, I think we’re all recovering from the shock of the pandemic.
Pemo Yes, yes, yes.
Marvin In 2020, it was very quiet from like you know March, April, may where it’s like we’re just trying to assess work with their portfolio companies. And then July just went crazy. I wasn’t investing last year and was just watching from the side. Talking to a lot of my portfolio companies and it was like everyone was raising money. Everyone was out in the market. I was talking to a lot of my VC friends and last year was frenzied like I’d never seen. It was crazy or busy last year and normally it would slow down during the summer. But in July, August, September it was busy all the way through.
Pemo Wow.
Marvin I think the last week of December and this year everyone came back hard in mid January. I definitely saw a slowdown in July like june/July of this year.
Pemo Okay, yep, yes.
Marvin Because I think a lot of people went on holidays and stuff, but it was still very active I would say compared to the prior year. It was still very very busy compared to 2019 although it was not as crazy compared to last summer This summer compared to say 2019, or 2018 and 2017 was nuts. So I think investors were really busy. The velocity deals have gone up. It’s been nuts. It’s been nuts.
Pemo Well I’ve heard that yeah that everyone’s doing very well which is great after that shock last year and so tell me what are you seeing? The direction of startups that are reaching out for investment. Like what sort of focus and domains are they coming from in life.
Marvin I mean Saas and Enterprise software continues to do well, although I think I’m a little bit biased there too right? Because I’m best known for this space and a lot of my best companies in my portfolio tend to be enterprise software or saas companies
Pemo Right? Yeah.
Marvin As well as Fintech, so you kind of get a lot of inbound even though I’m better known for sort of SaaS. For Fintech, I have quite a few like very very good Fintech companies in my portfolio and so I’ve gotten a combination of those. Also Fintech has done incredibly well right? It’s been such an explosive space.
Pemo Great. Yeah, yeah, yeah.
Marvin It did very well last year and I think yeah, it’s been booming right? and so like every single sector right? Like payments, when I was investing back in 2014, we thought the space was done and an area that people did not want to touch. But now like the last 2 or 3 years payment spaces have exploded.
Pemo Exploding right? Yeah yeah, Yeah, yeah, yeah, yeah, yes.
Marvin I see this in Pakistan, in the MENA region, in Southeast Asia. Like literally in every single region and country like Latin America. Fintech is really like we just want to talk about fintech because of your audience. Fintech overall as a space is just really, really important.
Pemo Yes, yeah.
Marvin Crypto which is its own sector and trajectory world. It’s an exciting time to be in the business. So let’s see in the last 2 months, I’ve done 6 deals.
Pemo Great
Marvin Six or seven weeks myself you know with my angel fund with my partner Fares out of Saudi Arabia and we’ve done 6 deals and 2 of them were fintech related.
Pemo Yeah, great and do you think that it was the crisis of everyone going online that helped support the boom in fintech.
Marvin I think that’s one big aspect of it and I do think more people coming along, so a lot more market demand. I also think I’m going to rant about Paypal right? So you know somebody sent me some money today and it’s like they ream you with fees.
Pemo Go for it.
Marvin They take a fee there, and then you want to send the money to your bank account and they take another fee there too. And you’re like what? It’s like up to 7 or 10 percent of the money you got. no wonder they’re going to go spend this money buying Pinterest.
Pemo Yeah, yeah, yeah, yeah.
Marvin PayPal is going to spend 40 or 45 billion dollars potentially going to buy Pinterest and that’s crazy. And of course they’re going to do that because this is a potential way for them to get more customers right? And integrate their offering in with this stuff and okay that’s logical, but think about the amount of money they’re minting.
Pemo Woo. Yeah. So rich. Yes, yes yeah.
Marvin Right? So just like I think about Paypal as just one example and they’re pretty old right? They’ve now been around like 20 years and so they’re kind of considered the old guard and the user experience sucks so badly.
Pemo Oh. It does. Yeah.
Marvin There’s all these processes. Wow this is why there’s so many opportunities right? The banks suck They all suck right? The UX is terrible and not mobile friendly, so you look at all these examples. Of course Fintech is huge right?
Pemo Yeah, yeah, they do? yeah. Yeah, yeah, yeah, yeah.
Marvin And you look at me and I’m an old person. I’m like forty seven where it’s like Wow, look at young people where their expectations of user experience or expectations of speed, their expectations of everything is so high. Then they go and use these systems they go “This is terrible of course there’s going to be huge opportunity right?” And then you have remote businesses.
Pemo So yeah, yeah, yeah.
Marvin There’s all these new industries growing like in the creator space or just remote work. Now most businesses started are built on remote perspective and so if you think about that part, like a lot of these old banking systems. A lot of these old payment systems. Many of these old payment tracking systems are not set up for this.
Pemo Yep, yes. Yeah, yeah, and so how do you see things? What’s your vision of what’s going to happen in the financial industry? Let’s just focus on the USA. But what’s your prediction, where do you think things are going? Obviously we’ve also as you mentioned we’ve also got.
Marvin For this new world, there’s lots of opportunities opening up.
Pemo Bitcoin crypto and blockchain are really shaking up the markets up and down, boom and bust. But what’s your perspective? What’s your insight that you see coming?
Marvin Yeah. I actually think a lot of the innovation is not going to happen in the USA. I’m Canadian. So I just came back from Canada a couple days ago and it’s like wow, the US financial system and players are so backward. In Canada, their banking system is so much further ahead of us. Just like the tools, and products. And this is right next door to the USA. The reality is that it’s an oligopoly in the US banking system right now and they’re basically anti-innovation.
Pemo Yes, yeah.
Marvin They understand the regulatory aspect right? Regulation’s good and bad. I think there’s just too much regulation in the USA right now. A lot of the big companies here, and I would say a lot of the established players are hiding behind this regulation which is basically why they’re not innovative because they don’t need to be.
Pemo Yes
Marvin So that’s one of the biggest problems with all the regulatory hurdles that startups are going to have to manage. And I think there’s also generational change right now. A lot of millennials don’t have money right now. I think that’s going to change over the next 10 years as this money passes from the boomers.
Pemo Yes, yes.
Marvin With all the money the millennials will inherit, that is going to shift right? So all of a sudden there’s going to be new demand. The market demand is not here yet. I’m going to say there is market demand but it’s not pressing. I think that is going to change over the next 10 years where if these big companies do not adapt to the needs of the upcoming generation, these newer companies will be well positioned.
Pemo Right.
Marvin And if they don’t adapt to the needs of these newer users and newer customers, They’re probably gonna be toast. That’s actually where I think the startup opportunity is, if you’re starting to work with these early stages. You look at companies that are public. Whatever people think about Robinhood, it is very easy to use.
Pemo Yes, that makes sense
Marvin Very much built for that younger generation right? And so you look at instruments and products like that where I think they’re instrumenting themselves to sort of be like the dominant player 10 to 20 years from now, which is smart.
Pemo Right?
Marvin I do see a big change in the US. But that’s not going to happen for a while. So realistically I think most of the innovation is going to be happening from new places like in the Philippines or any of the big African countries like Nigeria. I have a portfolio company called Chipper Cash. That’s just an incredible company right? And that company has grown. Way faster and bigger than I’ve ever expected it to be. It’s a great example of the future, in my opinion. There will be a lot of the future innovations in fintech.
Pemo Wow.
Marvin Much of the innovations are going to be coming from places like India, from Africa, from Latin America. I don’t think it’s going to be coming from like Western Europe or the USA. I spend a lot of time overseas, I’m on the board of a very successful gaming company out of the Ukraine. The banking system there is in some ways very behind. But look at the innovations that are happening like in the payment space. They’re really really far ahead. They’re doing some really interesting things. So you look at the edges and innovation actually comes from the edges.
Pemo Ah, yeah, and how do you see crypto and blockchain figuring in this new world that we’re going into?
Marvin I mean I think there is something about it where crypto is really a movement. And I legitimately say this is almost like a religious movement.
Pemo Yes.
Marvin And there’s a power to that. There’s actually a lot of power to that. But the structure of decentralization is quite interesting. I don’t know enough so I can’t consider myself an expert in this at all. But I’ve done a lot of reading, writing and talking to people about this space.
Pemo Right
Marvin I’d say over the last 2 ½ to 3 years I’ve read everything I possibly can in this area. The thing that’s fascinating about it is why a lot of young people are really attracted to this space. Because of the promise of crypto, of decentralization, of financial inclusion right?
Pemo Yeah.
Marvin Of removing a lot of the middlemen that are sucking out fees, like Western Union. Awful awful company right? Like the example of Moneygram, really egregious when it comes to preying on the people who can least afford them.
Pemo Yes, vulnerable people. Yeah yeah for sure. Yeah.
Marvin Probably people that really can’t afford to pay the fees that they charge. And that’s sort of the promise of even things like NFTs as I know it’s really bubblish right now but the promise of NFTs are when you support an artist in the early days. An athlete that you like and can bet on early days where like that person is going to be somebody right? Or the rock band or the artist where this person has promise. And you know supporting them from the beginning, NFTs ultimately are like I’m going to back you from the beginning, as a community. And as the community grows, the community actively supports and helps grow this artist and I mean the term artist broadly right? And when the artist is big, you all benefit.
Pemo Got it. Yes, of course.
Marvin You’re benefiting from that as well too. So it’s in your interest. So like it’s almost like this alignment of interests right of both financial but also sort of like the political and social capital of hey I back this person from day 1 or I back this art from day 1 and look at them now.
Pemo Right.
Marvin And now you can actually financially benefit from that so I think that’s interesting.
Pemo Okay, I’ve had other investors saying that there’s definitely froth at the moment.
Marvin So it will be interesting where this ends up. So I find that interesting. Yeah, but the mechanism itself is interesting. You just have to look deeply back at how many ecommerce companies came out in 1997-1999, most of them didn’t make it.
Pemo Yeah. Gold Rush right?
Marvin But the ones that did became very very big right? So there are kernels of truth in the froth? So it’s one of those things of just like can you go and pick the sort of signal from the noise and this is hard right?
Pemo Yeah. So tell me Marvin, you being in the Bay area for so long, how can you tell what is going to work?
Marvin Anyone who says they can do that is lying? Like you’re ultimately guessing you know, educated guessing but you’re guessing.
Pemo What do you think about the movement out of Silicon Valley? Like so many people are leaving and so much change. What do you think’s happening around that because obviously it’s been the Holy Grail for a long long time?
Marvin I think it’s overblown. So I’ve spent maybe a total of 3 months here in the Bay area, I’ve traveled a lot, I’m in Europe a lot, I’m in Taiwan and Asia a lot.
Marvin Been in Canada a lot. Because, honestly there are just nicer places to live right? but also less expensive and closer to family? There are actually just nicer places to live but the reality is that San Francisco is still an important place. So I keep my place here and still consider this a base.
Pemo And yeah, yeah, yeah, yeah, yeah, yeah, yeah, yeah.
Marvin I’m in and out over the next couple weeks and months but this is still the center. And a lot of young people moved here. So if you look at a lot of the people who left were a lot more established already and so when you leave you have a network already right? You have a network, so you leave, you still have a network so you can always come back.
Pemo Right? Yes, yeah, right.
Marvin Most of those people who left were established. It’s not. It’s not the up and comers and so you know the reality is a lot of the up and comers came here last year because this is still the place to build. They might not be here forever but San Francisco has always been a boom and bust town. so people are in and out all the time. I don’t think that’s changed.
Pemo Like us right? That’s correct. Yeah.
Marvin And so you know my view is this is still going to be the center because this is still one of those places where there’s still a critical mass of money, of lawyers, of angel investors, and smart founders. That hasn’t changed.
Pemo Yeah, yeah, yeah.
Marvin I Love Kiev. I Love Tokyo. I Love Taipei. I Love Vancouver. I Love Montreal, Mexico City but l you just don’t have the critical mass of tech people. Even in all these places you still do not have the critical mass of the conversation of things you still have here.
Pemo Agreed? Yeah yeah and I don’t think anywhere else in the world has such a high concentration of venture capitalists that I think it has.
Marvin Yeah I would say that is slowly changing. I would say probably like Beijing and Shanghai probably. But that’s their own separate ecosystem right?
Pemo Oh okay.
Marvin I watch it closely but I don’t really understand it and I will never play there. I literally will never ever play there because I have no edge and I just don’t understand right? It’s just its own ecosystem. But in the Western world. It’s still in the San Francisco Bay area though.
Pemo Yeah.
Marvin The California & San Francisco government is doing everything they can to wreck it. I’m talking about the government right now. I’m not a libertarian but I just think there’s a very anti-tech sentiment here. I think the leftist woke movement is also doing some weird stuff here. What I call the progressives.
Pemo Right.
Marvin And so this is not meant to be political, but just like it is. It’s very interesting how they’ve just become very anti-tech and blaming all the issues on tech. It’s not all tech driven issues here right?
Pemo No, not at all, not at all. In fact, it’d be great to see some of the homeless problems cleaned up because that too has been getting worse in the 11 years I’ve been there.
Marvin It is terrifying. Yeah, it’s filthy. It’s filthy.
Pemo And it just got worse and worse every year and to the point where I can’t even bear to go into San francisco anymore. It’s filthy, filthy even for the homeless people. It’s filthy like what’s going on?
Marvin And that is not a tech issue. That’s actually the ultra left progressive not wanting to do anything about it or just throwing more money at the problem right? I voted Democrat, it’s not like Marvin’s this libertarian. I’m a Democrat.
Pemo Exactly.
Marvin Left-leaning I grew up in Canada and you know, somewhat socialist. So I buy this stuff like I’m a believer in government but California government and San francisco is very dysfunctional. It’s really really dysfunctional.
Pemo Yeah. Yeah, somethings wrong?
Marvin Canada is a socialist government that works to some extent right? They have their issues but it works just like, just like Australia and other other Commonwealth countries? So I do believe in some level of socialism but not the level that we have here in San Francisco where it’s just dystopian now. Dysfunctional dystopian and it’s because of this that it’s weird.
Pemo Yeah
Marvin Like a lot of people who come here, we want to make things better, but it’s just hard and I don’t know if it’s like voting for lesser evils. Unfortunately.
Pemo Yeah, and definitely tech is not to blame for that. It’s the local government. So Marvin, totally inspiring, so great to talk to you today and I know my listeners will really enjoy it when I publish this. So thank you again for joining in.
Marvin Yeah, thank you for having me. It’s great to talk to someone who’s optimistic about the future. We have a lot of problems but I feel we have to work on fixing them. We have no choice but to solve them, right? and I do think Tech is an enabler of that. Tech is neutral but I think most people in tech want to do something good.
Pemo Ah, yeah, yeah, exactly yeah. Of course change the world. Thank you so much Marvin
Marvin We all legitimately want to do something good. It’s not just about the money. Thank you for having me.