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What motivated you to launch Snowtide Capital, the first partner search fund in China? Could you tell us more about your professional background and explain why you chose the ETA path?
Snowtide Capital came out of a combination of macro timing and personal conviction. We saw a structural opportunity for search in China now, and it aligned closely with our desire to be long-term operators rather than passive investors.
At a macro level, China is entering a significant succession moment. A large share of privately owned businesses were built by first-generation founders over the past three decades, and many are now facing real questions around continuity. At the same time, financing conditions have improved materially. Chinese banks are actively expanding their M&A loan books. The result is a rare combination of available succession opportunities and low-cost, long-duration acquisition financing.
On a personal level, the ETA model resonated because it allows us to be entrepreneurs first. Through experiences across commercial, investing, and operating roles, we each realized that we wanted to build and operate businesses for the long term. Sally brings experience across East and West. She was part of ByteDance’s early international expansion efforts and later led China go-to-market at Deliverr (acquired by Shopify), growing China’s book of business to eight figures. Liam brings a background rooted in China’s industrial economy, with years of experience across intelligent manufacturing and the new energy vehicle supply chain, including roles at Siemens and NIO focused on lean operations and channel expansion.
We believe Snowtide sits at the intersection of international best practices and local execution. We want to not just provide capital, but to bring governance, operating discipline, and long-term stewardship to small businesses at an important inflection point.
Both of you studied at Harvard, yet most of your investors are based in Spain. Are American investors still reluctant to invest in Asia? How challenging was it to secure local backers, and what concerns or questions come up most often?
We see this less as reluctance and more as familiarity and focus. For many American investors, the center of gravity remains in North America, where regulatory frameworks, deal processes, and operating risks are better understood. Asia, and China in particular, is often viewed as more complex, with additional regulatory and geopolitical considerations and a higher activation cost relative to markets American investors already know well.
In contrast, we found European investors, especially in Spain, to be more internationally oriented. Many of them have long invested in other emerging markets, so they’re used to underwriting operators and business fundamentals in new geographies. Geographic and time zone proximity may also play a role in making Asia feel more accessible for European investors. We’ve also been fortunate to be supported by investors such as Ambit Partners, who take an emerging-markets-first perspective and are thoughtful about how the ETA model can be adapted and scaled in new markets.
Securing local investors is challenging but a common hurdle for emerging-market searchers. From our experience and conversations with others, trust is the main issue. In China, many local investors are used to minority investment structures with limited operational involvement, so the search model – where searchers take control and run the business – represents a new paradigm. This requires explanation, and more importantly, credibility.
For us, leading with a clear investment thesis and being very explicit about how we plan to add value as operators has been helpful in bridging that gap. In addition, in many cases the “yes” comes more from belief in the searchers’ entrepreneurial drive to just figure it out than deep conviction with the search model itself. We’ve also found our personal networks and referral-based introductions to be the most effective channel for building that early trust. We definitely faced our fair share of rejections, but learning to handle rejection is also part of the process – and good preparation for search.
From both a regulatory and cultural perspective, what have been the main challenges in structuring your search fund?
The setup has been relatively straightforward, supported by the availability of Hong Kong as an effective bridge between mainland China and international investors. From a regulatory perspective, the core challenge we foresee is cross-border capital. The structure must allow foreign investors to participate while remaining fully compliant with PRC capital controls and repatriation rules. Importantly, this needs to work not just at acquisition, but also for ongoing dividends and eventual exits, so capital can flow offshore in a predictable and compliant manner. Much of this complexity needs to be solved upfront at the time of acquisition. Luckily given China’s long history of cross-border M&A activity, there is a well-developed ecosystem of advisors, and we’ve benefited from working closely with experienced cross-border legal and tax experts who understand common pitfalls and best practices.
From a cultural perspective, we’ve also benefited from a maturing search fund ecosystem in Asia. Early pioneers and search fund investors have played an important role in educating the market, which has helped reduce friction for fund builders. Today, a growing base of lawyers, bankers, and advisors has made the ecosystem more navigable, and we’ve found our legal and banking partners to already be familiar with the search fund model.
Over the past two years, Asia has seen a wave of pioneers entering the search fund model across various countries. What are the key specificities of the Chinese market?
Asia is highly heterogeneous, and the search fund model looks very different across markets. China, in particular, has several defining characteristics.
First is scale. As the world’s second-largest economy, China has a massive domestic market. This allows us as searchers to pursue not only export-oriented businesses, but also purely domestic opportunities with meaningful regional or national scaling potential, such as franchise and platform models.
Second, institutional gaps still exist, even though many are gradually closing. In practice, this means incentive alignment often matters more than relying solely on legal protections. Issues such as weak governance, inconsistent legal enforcement, multiple sets of books, or informal tax practices remain common. In this environment, aligned incentives and downside protection can be more effective than contractual enforcement alone.
Third, the role of government is more pronounced in China. Many businesses that appear to be traditional B2B services – including waste management, healthcare services, or utilities – are effectively B2G, with local governments playing a significant role as customers or stakeholders. Understanding these dynamics is critical to deal evaluation.
China is also relatively well supported on the financing side. Similar to Japan today, there is ample domestic liquidity and increasing openness to M&A lending at attractive rates. This contrasts with markets like India, where acquisition debt is often harder to access and significantly more expensive.
Finally, exit dynamics differ. While private equity activity in China is more limited, strategic M&A is very prevalent, and small-cap IPOs remain a viable option.
How would you characterize the current landscape of founder- and family-owned businesses in China in terms of succession planning and willingness to sell? How do you plan to source proprietary deal flow in a market where private M&A transactions tend to be less transparent?
We’re seeing a noticeable shift in mindset among founder- and family-owned businesses in China. As China’s economy has softened and with the passing of age, many founders are becoming more open to the idea of succession and partnership. A lot of these entrepreneurs spent years being the central decision-maker in their business, but more are now coming to terms with the limits of their capabilities and are thinking more seriously about continuity.
That said, valuation expectations remain high. Many founders anchor their expectations to public market benchmarks, which has been relatively strong in recent periods. Bridging that gap between expectations and fundamentals is often part of the conversation and requires patience and trust.
When it comes to sourcing, we’re focused on three parts. Referrals remain foundational. China is fundamentally relationship-driven, and being in the right circles matters. These circles can be highly regional and industry-specific, which means we often take a targeted industry first approach to search. We also invest a good portion of our time in relationship building with advisors, industry associations, and intermediaries. Second, we focus on targeted outbound by looking at industry databases of specific niches and doing cold outreach. Third, we focus on building a scalable inbound engine through visible and credible presence using social media content and public engagement. Over time, this trust compounds, and that’s when the most interesting opportunities tend to surface.
What is your investment thesis, and which sectors are you particularly interested in? How complex is it to leverage acquisitions with Chinese banks?
We’re focused on a small number of sectors where we believe we can build real operating expertise over time. We are particularly interested in niche manufacturing and selective franchise or platform opportunities across B2B and B2C services, where businesses exhibit strong cash flow and opportunities for operational improvement.
On the financing side, leveraging acquisitions in China has been more straightforward than many people expect. Banks are increasingly open to M&A lending, with explicit mandates to grow these loan books as policymakers see consolidation as a solution to supply-side overcapacity. We’re seeing interest rates in the low single digits, typically around 2–4%, with lenders willing to underwrite against cash flow rather than relying solely on hard assets. Loan tenors in the 7–10 year range are also common, which supports long-term ownership and value creation. In addition, local governments are very supportive of foreign investments. That can translate into tax incentives or other policy support, which further improves deal economics when structured thoughtfully.
For entrepreneurs or investors considering search funds in non-traditional markets, what key lessons from Snowtide Capital would you highlight?
A key lesson for us is that local relationships matter. We’ve found that in China, being plugged into investors, industry participants, brokers, and operators is essential, as this is where trust and information flow. Without that local context, it’s difficult to source well or underwrite risk accurately.
We’ve also found it helpful to engage potential investors early by inviting them to act as advisors. Many are generous with their time, and even if they don’t ultimately invest in the search, maintaining those relationships is valuable for deal evaluation. Their experience often provides valuable pattern recognition during diligence and helps sharpen our judgment.
Before fully committing, we would recommend doing some low-fidelity testing – setting up a basic website, gauging inbound interest, and spending time with bankers and ecosystem participants to stress-test assumptions and understand how the market actually works. In China specifically, domestic social media platforms have been powerful tools for narrative testing and brand-building. Being visible and credible on platforms like WeChat and RED has helped us build relationships and surface opportunities that would not have emerged through traditional channels alone.
Finally, the best way to learn is to start. Taking a bet on ourselves and saying yes to the road less travelled has been daunting but incredibly rewarding. As a trailblazer, you get to shape the ecosystem and make the path clear for those who come next.
