AI Eye Podcast - Interview Alset Capital; the new kid on the block making Headlines on the Global AI Stage

AI Eye Podcast - Interview Alset Capital; the new kid on the block making Headlines on the Global AI Stage

Episode Transcript

(00:00):
Welcome to today's edition of the AIIwatching stock news, deal Tracker and advancements
in Artificial Intelligence. Thanks for joiningus on the show today. Our interview
is with Hunter Scarf with all SetCapital Inc. All Set trades on the
TSX venture under the symbol KSUM.Allset Capital, Inc. Is an investment

(00:23):
issuer that is focused on investment indiversified industries such as technology, healthcare,
industrial, and special situations. Thecompany is led by an experienced entrepreneurial group
of executives having a diverse industry incapital markets background, Allset Capital, Inc's
investment portfolio compromises forty nine percent ownershipof Cedar Cross International Technologies, Inc.

(00:47):
And forty nine percent ownership of vertexsAI Ventures. To learn more about all
Set you can go to allsetai dotcom. For disclosure purposes, this podcast
may contain forward looking statements and allSet Capital is a paid for client on
Investor Ideas. Investors are reminded todo their own due diligence and read all

(01:07):
disclaimers and disclosures on Investor Ideas websiteand at the end as a show.
Hunter, great to have you onthe show. For investors new to the
story, can you go over whatall Set Capital is doing. You're fairly
new out there for investors, sohow long have you been in business and
tell us about what's going on inthe AI sector? Yeah, for sure,
thank you for having me. So. All Set Capital is a public

(01:32):
company. It's an investment issuer,meaning that the company focuses on finding investments
that hopefully are very accreative for thecompany's shareholders. And management has recently been
really excited about the opportunities that they'reseeing in the artificial intelligence space and have

(01:53):
really invested a lot of time infinding companies that they think are working on
things that are citing in the space. Obviously, there's a lot of news
and a lot of momentum at amacro level in that space. And you
know, all Set has closed aprivate placement for six million dollars in March
and now has real capital to goout and find exciting investment opportunities. And

(02:15):
we've made a few of those,first of which was actually in the summer
of twenty twenty three a company calledcedar Cross International Technologies, which is one
hundred percent focused on peer play AIinfrastructure, meaning that they own and operate
the world's most advanced Nvidia GPUs.GPUs are used to design large language models

(02:38):
and different sort of softwares in artificialintelligence. If you've ever used chat,
GPT or barred or grock, allof these models are designed on servers on
GPUs like these, and so theyare in the business of owning, operating,
and leasing that computer space out tocompanies that need it that are focused

(02:59):
in the space. And then we'vealso made follow on investment into that company
by providing a secured loan to thecompany. And it's quite similar in structure
to other transactions that have happened inthe space where it's secured against the GPUs
in those h one hundred servers,company called core Weaves in the US,

(03:20):
which is one of the larger privateleasing businesses for AI computing hardware, had
a similar transaction. And so youknow, very excited for the all Set
shareholders to get access to sort ofexposure to investments like this. We hope
that All Sets management finds other excitingopportunities like this. And the nice thing
about being an investment issuer is thatyou can explore any and all opportunity and

(03:45):
you have a lot of flexibility aroundstructure to make sure that every transaction that's
chosen is hopefully very accreative for allset shareholders. Speaking of some of what
you just talked about in Nvidia isa pretty good company to keep. That's
obviously a stock that has done verywell and definitely on the radar for a
lot of people. Can you justtalk to investors that maybe aren't as well

(04:10):
versed in the microchip and AI spacewhat's going on on a global macro scale
and why that's so important? AndI mean, obviously I think everyone knows
why Nvidia is exciting, but justhow that ties into all sets. Yeah,
I mean we could talk about thissubject for hours, because it's just
very complicated and subtle. You know, it involves sort of an It has

(04:31):
an international supply chain consequence because alot of these GPUs are designed in Taiwan
by Nvidia, and there are alsoa lot of them are manufactured in Taiwan
as well, and then the finalserver manufactured in North America or closer to
its final final customers by different companieslike super Micro. And so really the

(04:53):
reason why these GPUs have become ademand for them has exploded is that in
Vidia's created something that is very veryhard to replicate. And you might have
heard the news not too long agothat Sam Altman was looking seeking funding for
up to seven trillion dollars to tryand replicate what Nvidia has built with their

(05:15):
GPUs. And so there's a massivemoat around the design and structure and manufacturing
of these GPUs. But it's alsodelicate in many ways because of the dynamics
between the US and China. Andit's really why the Taiwanese manufacturing of these
GPUs has become sort of a centerfocus in the geopolitical landscape, just because

(05:40):
they're so critical to the proliferation ofAI. And it's a very interesting jurisdiction
to have such a critical piece ofthe supply chain designed in and you know,
that's why it impacts a lot ofdifferent businesses. It impacts a lot
of different technology innovations. And youknow there's tons of capital, billions and
billions of dollars being invested did intobuilding AI products by fortune five hundred companies.

(06:03):
And part of building AI products isyou need access to the hardware.
It's critical. And so that's whythe demand has gone up for these machines
so sharply. The supply dynamics,being that they're specialized products designed in an
international jurisdiction also limits the supply ofthese gps, and so you're in this

(06:28):
vortex really of extremely high demand,limited supply, and you know, who
knows how long that lasts, butthe moment they're in right now creates a
very unique dynamic for companies like cedarCross that ALSOT is invested into to be,
you know, a real competitor inproviding this compute if you have the
relationships to get access to them.So, speaking of a good company,

(06:51):
you also just had a recent announcementwith Earthmade as well. Can you talk
to us about that and why that'ssuch an exciting partnership to add on as
well in this space. Yeah,so Earthmade is a really critical piece of
cedar Cross's ability to get access toGPUs. So Earthmaid is a verified distributor

(07:12):
of a company called super Micro.And this is a company that some of
your listeners might have heard of aftersort of Vidia had their massive success in
the stock market. Super Micro quicklyafter really primarily in Q one of this
year, really had a huge explosionand value And the reason for that is
that people realized, in my view, that super Micro, which it is

(07:34):
one of the largest manufacturers of theend H one hundred server, and within
each H one hundred server there's eightGPUs that are designed by Nvidia, and
so I think people really realize thatsuper Micro is a critical piece of that
supply chain because they manufacture or assemblethe final H one hundred server. And

(07:55):
so having an arrangement with a companylike Earthmade really allows Cedar Cross to have
access to the hardware that they needto build a infrastructure business and gets their
hands on the most advanced H onehundreds as soon as possible. So when
all set works with companies, I'massuming you're not working with like a Google

(08:20):
getting them like H one hundreds,that you're working with a smaller cap mid
tier I'm assuming to get them thisequipment versus the big guys that probably have
enough money in their pocket. Listen, the supply of GPUs that is out
there, although it's limited, isgoing to companies like Google and Microsoft and

(08:41):
Meta. Okay, they've got billionsof dollars of capital to put to work
to buy these machines and do allthe other things that they're doing. What
happens is that with all that computebeing soaked up by the bigger players.
They're typically in the business of beinga large leaser of this equipment. We
are in that business, but infact, a lot of the resources that

(09:03):
they're putting together to buy these machinesis actually being put towards building their own
products. Internally, Google's designing theirown AI, Microsoft designing their own AI
Open AI Meta. These companies arein the business of competing against each other
in building massive AI products. Andwhat happens is all that supply being soaked

(09:24):
up by composed companies that I mentionedleaves really only crumbs for the balance of
earlier stage ventures anywhere from seed togrowth stage and public companies the Fortune five
hundred companies that are looking to bein the AI space. It leaves them
with a limited supply to get accessto. And so where traditionally a company

(09:48):
would be looking to lease, saydata storage compute from AWS or a sure,
they're not necessarily finding attractive pricing andthose options on those companies right now.
And so cedar Cross is playing andfocusing in that earlier stage business where
there's a huge demand for this computeand there's a limited access for them to

(10:16):
actually be able to lease from.And the one thing that I'll say too
is that you know, if you'rea company that just raised ten million dollars,
let's say you're a very successful earlystage technology company, you don't want
to go and spend four million dollarsfive million dollars on buying AI hardware.
Okay, you don't want to usehalf of that round that you just raised
on buying hardware. And so havingan option to lease and really rent that

(10:41):
compute from another company gives them theflexibility to go and raise more money and
not have such a big capital allocationtowards the hardware. It feels like you're
kind of a robinhood for h onehundreds, except for your making money as
well. You know. The funnything, one of the things that is
different is that cedar Cross signs longterm contracts with their customers. And you

(11:03):
know, cedar Cross is a revenuegenerating, gross margin generating business when it
signed if it signs these leasing contracts. But the other thing is that our
customers take big, big orders.Okay, cedar Cross is signing hopefully multimillion
dollar contracts that last multiple years.That's the perfect world for cedar Cross there's

(11:24):
lots of businesses out there that arethat are putting compute on a marketplace where
you can rent it for an houror a month or really anywhere in between.
But the challenge is that that doesn'tgive you the long term access to
steady supply of compute. And sothat's the niche that we want to fill,
is signing long term contracts with customersthat need compute for longer periods of

(11:46):
time. And you've recently also justannounced that Tea Across signed a four million
dollar AI computing leasing agreements, Socan you just tell us a little bit
about that as well. Yeah,so that cedar Cross's first execution of a
major leasing contract, which is reallyexciting. So they purchased ten h one

(12:07):
hundreds for total consideration of approximately threepoint two million US dollars and the contract
that was announced this week is afour million dollar US two year deal and
so we're really excited about that becauseit's a revenue generating contract. We believe
the margins are going to be quitestrong on that, and it just demonstrates

(12:31):
that there's demand for this type ofcompute and hopefully cedar Cross is able to
replicate that business over and over againover the next months and years. I
really like the fact that your storyis easy to digest for an investor that
wants to get into the AI spacethat maybe isn't so technical that they understand

(12:52):
the evolution of AI, how itkeeps changing almost on a daily basis.
Now, to understand that it's justlike the hardware, I think really makes
sense for an investor that wants toget into the space but doesn't want to
make a bet necessarily on which technologyyou need to know is going to win
the AI race. Yeah, thishappens a lot. With My view is

(13:13):
that this happens a lot with latenttechnology sectors. Investors get sort of inundated
with maybe hundreds of different companies,and there's a lot of great AI companies
out there. Some are working onfinancial services, some are working on healthcare,
some are working on heavy industry.There's tons of different applications, and
there's lots of different businesses that areworking on those potential applications, and it

(13:39):
often becomes simpler to find a companythat provides the picks and shovels or the
infrastructure business that underpins that whole opportunity, where you say, hey, I
don't know whether the healthcare business orthe financial services business is going to do
better or worse than the other,but I do know that hardware INAI is

(14:03):
a critical infrastructure elements to the proliferationof the technology. And so when you're
buying a piece of all Set,obviously it owns fifty percent of the cedar
cross business, you are buying apiece of that infrastructure business that underpins AI.
So can we talk a little bitabout all Set and your team who

(14:24):
you have in place, Why youguys felt you want to jump into the
AI space. Yeah, I meanagain, all Set really looks for the
best investments for its shareholders, andso the team is sort of a balance
of investment focused individuals, meaning thatthey have either corporate finance or public company

(14:46):
backgrounds and understand how to look atcompanies and allocate capital. And then there's
people on the team that are morefocused on specific sectors. So there's people,
for example, have much more experiencein the AI data center really the
data center business and the AI infrastructurebusiness, and those people are obviously leading

(15:11):
the choices that are made around AIinvestment decisions. And then there's obviously the
element of actually deciding whether investment isattractive from a structure perspective, and that's
where kind of the whole management anddirector team comes together to make those decisions.
So can I know you talked alittle bit about in the beginning year

(15:31):
six million dollar base. Can wejust talk about your marketcap and where the
companies add to the how many surethat are at current and are also are
you planning to add a US listingon as well? Yeah, so the
company trades at around a thirty tothirty five million dollar market cap approximately right
now, and you are correct,the company hopes to have a US listing

(15:56):
quite soon here. Nothing for certainright now, but we hope to have
it very soon. I know wedon't have a crystal ball here, but
what have you seen some of yourchallenges so far in your first year in
the microshift AI space? And thenwhat are some of the things that you
were looking forward to most for twentytwenty four. Obviously we've seen Nvidia and

(16:18):
a lot of the AI stocks havea really exciting start here. Do you
think we're gonna see more coming towardsthe election? And like some of the
geopolitical tensions as they you know,don't think they're easing anytime soon. Just
kind of give us some of yourspeculations for the year for AI and the
microshift story. Well, as youmentioned, I am certainly not an investment

(16:42):
professional and so definitely don't take myword for it, but you know,
it does get very interesting coming intoa summer that's leading up to you know,
we're in an election year. Typicallythat leads to volatility in my view,
and so you know, you canget lucky on the upside and you
can also get unlucky on the downside. But you know, to me,

(17:03):
I think that really how I lookat the AI space and my view is
that we're in the first inning ofwhat is going to be a very exciting
long term trend in technology. Andso this company, all Set, you
know, takes a long term viewon the sector and believes that there's going
to be tons of exciting developments andopportunities in the space. And so,

(17:30):
you know, it's tough for meto say where I think the market's going.
I'm certainly not an expert, butI do think that if you are,
like me, excited about what's goingto be coming in the AI space,
we hope that all Set is positionedproperly to get exposure, give investors
exposure to that blossoming industry. Idon't know if you even have a dance

(17:56):
to this, but is there anythingelse that could be used instead of the
H one hundreds? Like how howbig is the gap for the supply demand
right now that if someone wanted to, you know, try to change or
move to that level. Is thereeven anything close in the space or is
it just H one hundreds that's it. It's not it's not really just the
H one hundred. It's in Vidia'sGPUs And so right now the H one

(18:19):
hundred is the most advanced hardware.There's an H two hundred as well,
but it's really it's not really thatmuch faster than the H one hundred.
But Nvidia is going to continue toiterate their technology, and so I was
actually personally at the Nvidia GtC conferenceearlier this year where Jensen, the CEO
of Nvidia, unveiled the B onehundred and the B one hundred Blackwell.

(18:42):
GPU is the next iteration of thattechnology and that will be rolling out in
the future and it will be moreadvanced, and so there's going to be
continuing iterations of this hardware that youknow, are going to lead to more
discoveries hopefully in the AI space,which is great news. And I think
cedar Cross's perspective on that is thatthey want to find, or rather they

(19:07):
want to access the most advanced hardwareof the time, and right now that's
the H one hundred and h twohundred, and certainly in the future there's
going to be to be one hundredand there'll be iterations after that as well.
So long as we, you know, hopefully with our exposure to cedar
Cross get access to the most advancedhardware, will be in good shape.

(19:29):
Oh I love that. That's veryexciting. So where can investors reach out
and connect with you? Obviously allSet Capital's website, but are you going
to be any roadshows or conferences thatthey can find you at as well?
Well? Of course we're you know, any of the major technology conferences that
are based in Canada and hopefully inthe US as well. We will try

(19:51):
to have a presence, so feelfree to come up to the booth if
you do see us or a teammember there. In terms of online you
can find us on Twitter, Ishould say x now. Our user name
is at all Set AI A LS E T A I and then our
website www dot allsetai dot com.You're going to get the most up to

(20:11):
date information from those two sources.You know our email addresses ir at allsetai
dot com and so if you everwant to reach out and have any direct
questions, the team would be toanswer them for you. Well. Thank
you so much, heunter. It'sgreat to see a Canadian company taking charge
in the space and we're excited tohear more down the road. Thank you

(20:33):
so much for having me. I'mexcited to be sharing more updates and again
happy to answer any questions that yourlisteners may have and hopefully you'll invite me
back soon. And that's it fortoday's ai I. If you would like
to be against your sponsor for thispodcast, contact Investor Ideas dot com.

(20:56):
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