5-Minute Interview with Edmond Hui, Acacia Venture Capital Partners

In this series of 5-minute interviews, I shine the spotlight on up-and-coming fund managers in private markets across the globe. All geographies. All strategies. All sectors.

Here's my conversation with Edmond Hui, CEO & Founder at Acacia Venture Capital Partners.

Quick facts? about Acacia Venture Capital Partners:

• Sector/thematic focus: Tech-enabled companies and emerging technologies, geographic arbitrage
• Investment stage: Early stage (seed to Series A)
• Geo focus: Emerging Markets
• Year established: 2016
• Location: Shanghai (China)
• AUM: $10m
• Number of funds closed: 2
• Current fund size: $25m
• Current fund life: 10 + 1 + 1
• Equity size invested in companies: Initial investments of up to $300K, follow-on investments of up to $1.6m

Q: What is Acacia Venture Capital Partners’ investment strategy?

A: We invest in early stage technology companies across emerging markets and in emerging technologies.

Q: What is the size of the market opportunity here?

A: It is massive. For each investment we look at a minimum of $2bn market opportunity. Multiplied by 30 investments, we are looking at $60bn market opportunity collectively.

Q: What is your sector-specific expertise and how do you source deals?

A: Our team has significant experience in finance, real estate, payments, fintech and private equity. This allows us to drill down to a high level of granularity and diligence well.

We source deals from a variety of accelerators like Y-Combinator, Berkeley Skydeck and LSE Generate. We also receive deal flow from our strong network of founders and from the broader VC community. The key differentiator for us is our rigorous due diligence process, through which we select a very small number of companies to back.

A couple of examples of deals we have done come to mind. I invested in Rappi at seed stage, at a $22m valuation in 2016, and it has now grown to over $5bn in valuation (at the last round). I was very confident of the potential for food delivery in LATAM, which is why I doubled down on this investment at that time. Another deal we have done is 99 Minutos, where we invested at a $35m valuation and it reached a valuation of $650m within 18 months. Our internal process had predicted this outcome in 24 months, so I am very proud that our process was spot on in this case.

Q: What hands-on expertise do you have?

A: We have extensive hands on expertise in financial planning, such as financial model-building and cash management. I have worked at UBS in mergers and acquisitions. One of my fellow investment committee members, Sean Zhou, has previously worked as Head of Innovation at Sunrate, a fintech, and has an INSEAD MBA and a CFA.

Q: How are you building your team?

A: The current team consists of 5 people, including me on the IC and 4 others for managing the funds. I have known the IC members for a number of years, and over time we have built trust amongst ourselves which is pivotal to our investment decisions. The team members bring a treasure trove of experience from a variety of fields, as well as having lived through the founder’s journey themselves. We have a collegiate culture in our team that welcomes constructive dialogue as we believe that only through discussion can we make strong investment decisions. This has enabled us to deliver outsized returns to our investors.

Q: How do you see your business scaling?

A: We believe that our current strategy is scalable as we raise a new $25m fund. This fund will cement our track record and expertise. We aim to raise a fourth fund in about 4 to 5 years’ time, targeting north of $100m. We believe that we are on a learning journey and we will grow as we go through this process.

Q: What is your secret sauce?

A: The secret sauce of our excellent returns is the team around me and the culture within Acacia. Everyone has an equal voice and can raise concerns around investment decisions. We do not make unilateral decisions and I have been wrong in the past, only to be corrected by my team members. The people around me empower Acacia to continue making sound investment decisions and I am confident we can deliver high returns to investors in the future.

Q: Sounds like a highly collaborative team. What valuable lesson have you learnt that helps drive your approach?

A: The darkest time is before dawn, especially during this entrepreneurial journey, so it is important to stay the course, be resilient and expect things to change often for the worse. Plan for the worst and hope for the best!

Q: What succinct advice would you like to share with our readers?

A: Growth comes from being open and willing to learn, listening and understanding. I constantly keep myself open to new ideas, conversations and interactions and enjoy connecting the dots of all of these moments to make myself a better investor.

Edmond Hui Acacia Venture Capital Partners

#privatequity #venturecapital #innovation #investing #emergingmarkets #technology #entrepreneurship