How to Build an Investment Team That Eliminates Bias Entirely | EBC12

So, thank you for inviting us. Eh, EBC. Um, and welcome to the panelists. Before we get started and talk about the very controversial topic of bias, I think it's important for people to know who we are and who is speaking now. So, Andrea, would you like to tell us a little about yourself?

Of course. Um, yes. Hello everyone. My name is Andrea Beaumont. I am the Managing Partner of SBI Ventures Europe.

SBI is a 30- Ventures Europe. SBI is a 30- year-old traditional finance company traditional finance company . It is one of the largest financial conglomerates in Japan. We own banks. We own stock exchanges.

We own securities. We own insurance companies. Many years ago, we actually made analog finance digital in Japan. However, we also became one of the first investors in Ripple, collaborated with Solana, collaborated with Circle. We've really spent a lot of money and time partnering, investing, and buying on-chain buying on-chain players, let's say, over the last few years.

So, we are truly a traditional financial house with a large investment division, with over $6.5 billion in assets under management and many portfolio companies. But, coming from the traditional mindset of traditional finance, we are now moving to the belief that the world will move to blockchain, and we want to be a significant player in that. And I manage European investment activities in this direction. Good.

Thank you and congratulations, Vinita. Good afternoon, everyone. I am Vineet. For the last 6-7 years, I have been working in the venture capital sector in the digital asset industry. Before that, he managed two funds and made over 300 investments.

I am currently a partner at Sigma Capital. Some of my investments are Sui, Solana investments are Sui, Solana , Ton, Casper Labs. You know, those crazy projects that took off in the last two cycles. Again , Sigma Capital is a fund , Sigma Capital is a fund based in Dubai and again invests in digital assets. We made several investments.

Six or seven of them will be announced in due course. Again, people say that crypto is dying. I think the crypt is the best place. Implementation is happening right now. Market prices do not reflect the benefits that crypto brings.

And you know, in a bear market, that's what I was telling the other gentleman. I was at the ATZU conference in Saudi Arabia two years ago when there was a bear market and the hall was empty, like it is now. I said: " now. I said: " Next year it will be full." We just need to remember who stays here during a bear market—the people who will build the future of money.

Thank you. So, you know, it's great to have you with us today on this panel discussion. Obviously, we are here to talk about bias. Bias can be viewed as a broad range of issues that we face in the venture capital industry and that you face. I think we should start with a basic question: do we believe that bias can be eliminated ?

Is this a realistic goal? Or we assume that we will live with elements of bias simply because it is inevitable. So, what is your opinion, given your experience both in the traditional field and specifically in venture capital? I think we will disagree on many things today, but we will probably agree that it is impossible to completely eliminate bias . I believe that, first of all , this is impossible.

Secondly, I'm not even sure that's a good thing, because if we remove bias, we'll all think the same. And I don't think that's actually a good thing. I believe that diversity in all its manifestations and different frames of reference are critically important if you are aware of it and know how to work with it . But is this possible? The answer is very short.

No, we won't be able to do that. Again, the world is run by fear and greed, and where there is fear and greed, prejudice will never go away. You know, emotions come to the fore . Here's an example: everyone suddenly says that this particular area will be successful—that's bias. If you think back, three years ago we were all saying that the gaming industry would become very big, but today they hardly mention it.

Now, if you look at every conference, they talk about real assets—this creates a bias in the mind of the specialist who is evaluating the deal. But the main question is: how do we build checks and balances to deal with this? Are these real assets really in demand? Just because a building is "in the chain" doesn't mean the chain" doesn't mean everyone will rush to buy it because there's no liquidity, right? I buy part of the house, but it is impossible to sell it later.

It doesn't make sense. So can we completely eliminate bias? No, because we are also a retail-oriented market, and if there are any venture capitalists here, they can ask their assistants: half the time they are on Twitter, trying to understand what is happening in the world. Therefore, bias cannot be completely eliminated. Certain safeguards can be put in place so that decision-making is at least more based on data and analysis, and not just random Twitter posts.

Okay, it's good to hear that we shouldn't be guided solely by social media social media , emotions, or data that isn't really reliable. Let's talk a little bit about one element of bias—the of bias—the potential financial incentive that influences deal choice, shall we? This is an important factor, right? And how do you distinguish between a genuine belief and one that may not be entirely sincere? You talked about decision-making.

I understand you mentioned fuses. How do you actually distinguish true confidence in what is worth focusing on? Then again, maybe there are helpers here who want to know what they should focus on so they don't get emotionally biased by what's happening in the market. Let's do it. How do you deal with this in your company?

I think one of the examples I use is like getting married, you know? You don't see someone in a nightclub and marry them the next day. It takes time to understand another person. Because in the end, you person. Because in the end, you have to see if your views coincide, you know if your views coincide, you know , if your views coincide.

It's the same in investments: you actually need to go and sit with the founders three or founders three or four times. Many , like Sequoia, one of the largest funds in the world, have a three-month process where they talk to founders to understand what they are trying to do and what their motivations are. I had founders who told me on day one that they wanted to change the world. And at the third meeting, it was in Dubai, they said: you know, as soon as our token grows, we will buy ourselves a Ferrari. I'm like: seriously?

So the bottom line is that you really need to talk to the founders, understand what they do. You need to understand whether they have the ability and potential to build a billion- dollar company, you know? Everyone, even my, what should I call it, housewife, wants to build a billion-dollar company, but she doesn't have the skills and opportunities to do so. So you need to figure out all these things and based on that decide where to go and where not to go. So now we're talking about bias, because I always find it so funny when people come to me, and I personally think that in the crypto world, people often say, you know what?

There is a possibility, you have two days. Act, decide, invest money. Four hours. But that's enough for you. Two days is too much.

Okay, you see, here it is Okay, you see, here it is . No, but yesterday I had a really interesting conversation here with someone who said, well, you guys actually want financial reports, you want a data room or some kind of information. I gave you a six-slide presentation. I mean, that should be enough. And I say, "No, that's not true."

I mean, you are 100% right. A lot depends on the founders. You need to actually meet them. More than once. You need to have confidence in the founders, first and foremost, and that they really know what they're doing, and also that they know how to build—not just how to raise money, but how to build the foundation for it.

How are they going to take this to the next level. And in our traditional world, yes, it's pretty good if we can somehow talk to the client or look at some documents. Ultimately, I think there are two different levels. First, we as a team have to be convinced, and then we have to be able to justify it to our investors. And in my world, unfortunately in my world, unfortunately , “I am convinced” is not enough.

I need to back this up with research, data, and that's simply not possible in 4 hours, and it's also not possible to do it just by talking. I need evidence. No, that's quite fair. And look, I'll be honest. Yesterday I was on a panel discussion and talked about trust and how it takes time to build it.

So if someone is really willing to give you money, or, you know, you're raising funds, it's not going to happen tomorrow, or in 4 hours, or maybe in a couple of days. You need to build a certain level of respect, understanding between the owners, the founders, and have the right data to support the information. This means that you can reinforce the essence of what it is you are building. But now we talked about bias. We discussed one element of bias— bias— decision making, but there's also liquidity, which is also a big issue, right?

And there is the question of how to convince limited partners (LPs) in the decision-making process . I realize you've encountered this. What critical pain points or challenges have you seen there from a bias perspective that you think need to be addressed need to be addressed ? If possible, share your opinion, because this is also an element of bias that you may encounter. So, if we relate this to LP and the presence of bias, what is missing or worth discussing today that needs attention?

I mean, to some extent we're talking about this investment team. Our LPs want to know that we have a team that has access, first and foremost, access to the best deals. And if you want to have access to the best deals, you need to be in the heart of the action. You need to build relationships with top founders who can introduce you to other good you to other good , promising deals, you need all of that. And that means you need to speak the same language with them.

So from an LP perspective, they want to know that you have access, that you are able to evaluate the opportunity, and that you can convince founders to take your money, because a really good founder has choices and is not desperate, they can choose who to take money from, so you really need a value proposition that works for them. And of course, it's about how you can generate profits from this? What do you do after investing? How do you implement this? I believe that in this world of transition from traditional to on-chain technologies, with all this dynamism, it is extremely important to convince our investors that we have the necessary internal competencies to do this and can prove it.

So investors may be interested in crypto funds, in particular crypto funds, in particular . You know, many of my investors are investors are billionaires, they have a lot of money, and crypto fascinates them. For example, there was a guy who had almost $400 million in Bitcoin. He was not a crypto investor. By chance, someone advised him to buy Grayscale at a 50% discount, and he ended up making a fortune.

The problem with being in crypto is that if you look at retail traders retail traders , once they invest $1,000 in Bitcoin, and today it grows to $40,000, they still manage to become poor. Because when the amount reached $40,000, they started investing in Shiba Inu and other tokens without doing enough research on what they were investing in. So when it comes to investors, I see them thinking they know everything because they made money on Bitcoin, and suddenly their investments start acting crazy. You know, when you tell them we're going to invest in XYZ project because the founder is great, they ignore it, just because they heard on Twitter that Shiba Inu is going to explode. So the bottom line is that it's a completely different game.

You have to explain everything to them along the way, and it's a four-year journey. As for us, I just sent an email to investors saying we're down 10% while Bitcoin is down 50%, and the first thing investors ask is, "Oh, you just got lucky." " just got lucky." " No, we were unlucky." It was a thoughtful process, understanding that Bitcoin could fall 50-70%, and that's why it's a four-year follow-up process, after which, in the second fund, they start to be confident that you know your stuff.

Your team uses real data and understands where to invest and which trend to follow. So that's what I do, looking completely different, building trust over a long period of time. Sorry, but what interests me about his response right now is that we are sitting here on the same panel, supposedly discussing a similar topic, but we are still talking about completely different categories. We're still talking about worlds touching , but they're not quite...his LP won't become LP in my world because of certain biases.

Also, of course, there are different expectations for profitability, different time frames, and so on. And I think that's a big question too. How do we make these worlds start to converge, so that we really start to adopt skills and mindsets from this world, which, as I said, is not a bad thing at all. It's just different, and it's worth bringing a lot of that into my world. And maybe let's check things and facts from my world in this world.

And I believe that this is what we should strive for. And Andrea is right here, because you see, for me LPs are more like private individuals and family offices. But for her, it could be institutionals, because you know, the motivation for a private individual or LP is a multiplier, whereas for an institutional, it's 8 or 10 percent. I'll take any money from any crypto billionaire. I mean, please introduce me.

I will gladly do that . No, but a crypto billionaire...No, but a crypto billionaire, the problem is I went to this guy and he says, "How's your fund?" My first fund gave a 13-fold return, and the second one gave a 6- return, and the second one gave a 6- fold return, which is impressive in 2 years. So I tell this guy: if you invest capital in my fund, we will get 4-5 times the return over the next 5 years.

I said five just to be safe. And he's like: "No, you know, I'll invest money in Ethereum I'll invest money in Ethereum ." "He will make a 10- ." "He will make a 10- fold profit." I'm like, "Okay."

"I haven't seen Ethereum make a 10x profit in the last 2 or 3 years." So, their expectations are too high and they also think they have access to deals. For example, recently, just 3 days ago, I had this LP and he said, "You know, I'm working on this deal that's supposed to be announced within the next week." This is a top 40 coin. This is a liquid token.

And I tell him, " token. And I tell him, " You know, this is a deal worth making." He says, "Sure, put my name in. I'm sure, I'm a billionaire, they'll take my deals." But they don't understand But they don't understand that gaining access is not that easy.

Getting those 10x returns is not that easy. In a bull market, everyone has money. But no one has access. Perfectly. So, I think we're almost in the time frame, and I realize that we've moved smoothly from the previous startup battle.

So we tried to make it tried to make it , but one more question before we finish. You talked about the convergence of two worlds. I appreciate that you are both into digital assets, but you still see a difference between native players and financial institutions. So what positive things have happened in your world that the rest of the world should learn from? What message could you convey, because we want the audience to learn a lesson, since there are different people here, standing on different sides or in the middle.

What message would be useful for them : what to learn from traditional finance traditional finance , and what crypto-native companies are doing quickly and smartly, what financial institutions should learn. I understand that this is a difficult question, but I want the audience to take away something useful. Specifically, in the cryptosphere, and here's what I've learned over the past year. My path with the foundation was different. Five years ago, by accident, seriously by accident, someone gave me $10 million.

The second day, I didn't ask for money. Eventually, it turned into half a billion dollars. He gave them to me for two years. Then he gave $100 million again, and it became $250. It was completely by accident.

It's like winning the lottery. I would say winning the lottery. But for the last year I have been reaching out to institutions, trying to attract them to the fund. The problem is , I realized: as long as we take money from the "crypto-bros," we will stay small. The real money is with the Saudis, with different...

I don't want to name names, but I... Yes, yes, yes. So how do we attract this traditional capital, because otherwise I won't build a multi-billion dollar venture fund, because the average check in crypto is average check in crypto is $4 million. To build Uber, you need a billion dollars. A million, four million, and a billion— million, and a billion— that's a big, big difference.

So unless I become a $10 billion fund within the next 2-3 years, no company will be able to achieve mass adoption. So, the changes are that we are focusing on traditional capital. Traditional capital accidentally ended up in digital assets in the US, where it was simply burned. Yes. He was sent to ETF.

Venture capital missed this train, but that's what I'm building. And again, I don't need to do this today. This is a ten-year journey. I hope we will have that 10 billion by then. Andrea, do you want to add anything?

I think the main advantage of my world is that we really have to do our homework. The good thing about this world is that decisions are made much faster. And I wish we had more personal conviction than just ticking off all the points where we should play it safe and avoid risks. I believe that this world is much more focused on growth, while we are growth, while we are focused on protection from falling. As I said, we're doing more homework, but I wish homework, but I wish we thought more about the growth potential, not just the risks.

Well, that's fair. Regarding bias, I understand that there is an element of bias in that we look at risks more than opportunities, and that distinguishes one world from another, determining the direction of each. I keep track of time. What would be your final message to the audience, given the industry you work in? 10x, maybe 100x.

I understand that this is not investment advice, as we are not authorized to give it, but No, I personally believe that these two worlds will become even closer to each other. I believe that we need to act at all levels: entrepreneurial, institutional, and investor. We should communicate more, collaborate more, and try to find ways to build bridges. I consider this critically important. So my advice to everyone, and I say this publicly: everyone who is in crypto right now should understand what cryptocurrency does.

Being here, buying Bitcoin, doesn't here, buying Bitcoin, doesn't mean you understand mean you understand what it does. I've tested this on people tested this on people who have invested hundreds of millions in Ethereum, but still can't figure out what it does. They think that Bitcoin and Ethereum are the same thing. So my advice: if you are in this field during a this field during a bear market and really understand what you are doing, in 10 years you will have the power to control the future of money. If some venture fund says it's moving from crypto to AI, it will come back as soon as the market goes towards 200,000.

So stop listening to others and start believing in your own beliefs. A wonderful ending. So, thank you very much for your time and your thoughts. I understand that you will still be at the conference. Any advice—although it's fair to say I can't give investment advice.

I'm sure people will ask you about the next investment to make, but thank you again so much for your guidance and for having us here. Thank you. Thank you.