In this episode of Ignite Podcast, we sat down with Simon Wu, a partner at Cathay Innovation, a global venture capital firm managing over $2.5 billion in assets. Simon’s journey into venture capital isn’t your typical one. He started by building his first computer as a kid, driven by a passion for technology and a desire to create something from scratch. That passion carried through his career, leading him to study at UC Berkeley before diving into M&A at VMware and UBS.
It wasn’t until later that Simon transitioned into venture capital, leveraging his experience in corporate development to identify high-growth opportunities in tech, fintech, and digital health. His early exposure to how companies scale through acquisitions gave him an edge when evaluating startups, allowing him to spot trends that others might miss.
Now, as a key player at Cathay Innovation, Simon is helping shape the firm’s investment strategy, focusing on global opportunities and working with some of the world’s largest corporations to back the next generation of startups.
How Cathay Innovation Leverages a Global Strategy
Unlike many VC firms that focus on specific geographies, Cathay Innovation operates across multiple continents, with teams in the U.S., Europe, Asia, Africa, and LatAm. The firm’s investment philosophy revolves around identifying market trends that may be 12-18 months ahead or behind in different regions and leveraging that insight to support portfolio companies.
Simon explained how Cathay’s corporate LPs play a significant role in their investment approach. The firm counts global industry leaders like Unilever, L’Oréal, Sanofi, and Michelin among its LPs, giving them direct access to market insights, partnerships, and potential customers for their startups. This network helps Cathay offer more than just capital—it provides a pathway for portfolio companies to expand internationally and scale efficiently.
One example is Ghost, a B2B surplus inventory marketplace that Cathay backed in a competitive Series B round. Thanks to Cathay’s corporate LPs, Ghost gained direct access to major retail brands across multiple regions, accelerating its growth beyond what traditional venture support could have provided.
AI, Market Cycles, and the Changing Nature of Moats
A key theme of our conversation was how AI is reshaping venture capital and startup growth. Simon pointed out that traditional tech moats—such as proprietary technology—are becoming less defensible as AI rapidly evolves. The focus has shifted from technological differentiation to distribution and execution.
We discussed how AI is enabling startups to scale faster than ever. Founders can now get to $500K to $1M in ARR with just a few team members before raising external capital. This dynamic is changing how investors evaluate early-stage companies, placing a premium on founders who can leverage AI to accelerate customer acquisition and revenue growth.
Simon also highlighted how the venture industry moves in cycles. Just a year ago, fintech was out of favor, with very little funding flowing into the sector. Fast-forward to today, and fintech is seeing a resurgence, with multiple growth-stage deals being preempted. He likened this to the AI boom, where every sector is now racing to incorporate AI-powered solutions.
Lessons in Portfolio Management and Exits
When it comes to managing a portfolio, Simon shared some critical insights about taking chips off the table at the right time. He revealed that Cathay Innovation was able to return 2x their first fund within the investment period by strategically selling portions of their positions in high-growth companies.
This sparked a discussion about secondary sales, which are becoming increasingly common, especially as many late-stage startups delay IPOs. Simon noted that while holding long-term can be valuable, trimming 10-20% at the right valuation can significantly de-risk a portfolio and provide LPs with early liquidity.
In today’s market, where AI startups are seeing billion-dollar valuations in just a few years, deciding when to exit or partially exit becomes even more crucial. Simon’s perspective: “You can sell too soon, you can sell too late, but no LP will ever complain about getting their money back earlier than expected.”
The Road Ahead for Venture Capital
Wrapping up the conversation, we explored the broader trends shaping the future of venture capital. Simon believes we’re entering a new phase of the VC cycle, where valuations may never return to 2019 levels, and the industry will continue adapting to rapid innovation. The combination of falling software development costs, improved distribution channels, and AI-driven automation means that startup formation is accelerating across every sector.
For investors, this means a renewed focus on backing high-quality founders who can execute quickly rather than just those with the best technology. For founders, it means finding investors who bring more than just capital—those who can open doors, provide strategic guidance, and help navigate the inevitable ups and downs of startup life.
Final Thoughts
This conversation with Simon Wu was packed with insights for both investors and founders. Whether you're looking to raise venture capital, scale your startup, or understand where the industry is headed, Simon’s perspective offers a valuable roadmap.
If you want to dive deeper, check out the full episode on Spotify, Apple Podcasts, or YouTube. And for more insights like this, subscribe to Ignite Insights, our Substack newsletter, where we break down the biggest trends in venture capital and startup growth.
👂🎧 Watch, listen, and follow on your favorite platform: https://tr.ee/S2ayrbx_fL
🙏 Join the conversation on your favorite social network: https://linktr.ee/theignitepodcast
Chapters:
Welcome & Guest Introduction (00:00 – 00:40)
Simon Wu’s Background & Path to Venture Capital (00:41 – 02:15)
From M&A to VC: Lessons from Corporate Development (02:16 – 04:25)
Early Days at Cathay Innovation & Building a Global Firm (04:26 – 07:09)
The Role of Corporate LPs in Venture Capital (07:10 – 09:46)
Investment Strategy: Sectors & Geographic Focus (09:47 – 12:37)
Scaling Startups: Key Challenges from Series A to Growth (12:38 – 16:57)
AI’s Impact on Venture Capital & Startup Moats (16:58 – 21:26)
The Market Cycle Shift & The Return of Fintech (21:27 – 25:41)
Evaluating Growth Startups & The Importance of Distribution (25:42 – 28:25)
How Secondary Sales Help Funds Manage Risk (28:26 – 32:11)
Lessons from Managing a $2.5B Venture Portfolio (32:12 – 35:54)
Fundraising & LP Strategy for Growth-Stage Firms (35:55 – 40:21)
Navigating Competitive Deals & Winning Founder Trust (40:22 – 44:23)
The Future of AI, Venture, and the Startup Ecosystem (44:24 – 50:15)
Final Thoughts & Advice for Founders & Investors (50:16 – 51:25)
Share this post