Venture Capital for Crypto in Asia - Panel featuring David Gan and Shuyao

um my name's greg i work at chainsafe i'm the cto there and i've got two lovely guests here i've got david if you want to introduce yourself oh hey everyone it's david here um founder of op crypto we're recently newly started pre-cnc venture fund focusing on really the metaverse um you know ifts as well as you know a lot of sort of dial infrastructure plays i was previously leading global strategy investments at holby for four years before launching the fund yeah hi everyone my name is era i lead digital assets at matrix capital we're 89 billion traditional hedge fund leaping from web 2 to web 3 before i lead early stage investment at galaxy digital and also focus a lot of the asia global expansion there awesome thank you both and so you know let's kick this start off let's talk about values because web 3 is all about values and when it comes to investments and making a thesis obviously we're all trying to make money but when it comes when you actually go to make that investment you're interviewing that project what values are you looking for and what do you hope that you can both benefit not just you know the fund but perhaps the people in your own communities in asia if you're investing outwards or inwards yeah definitely so i think ultimately like when you talk to a founder you have to understand like what is this native drive or what is this motivation and ultimately starting a project right like i think us as a valley at vc really looking to bridge the east and west and helping to facilitate a lot of some of the best western founders in their gold miner strategies in asia um we really try and see if the entrepreneur actually needs what we have to offer right so a lot of times when they're just talking to without really needing or thinking about sort of processes of really looking to tap into the asian market which is you know by far the biggest stressful market in the in the crypto space and also you know my experience um you know at the exchange whether they need help with that i think um there's a lot of sort of projects that are just there to raise money just money grabs and they don't really care where the capital is coming from so i think that's a big turnoff if they really don't understand like what we do uh right off from a bad and they don't really appreciate sort of some of the value ads the vcs are providing and lastly i think ultimately being able to really uh go more in depth with into like why they're ultimately solving the problem they're looking to solve and like how much of a long-term sustainable approach are they actually taking into uh solving that problem right yeah i think i will like add on top of it like on the like growth stage side where we focus is i would say like the 2017 to 2019 days there's a lot of experimental ideas has been proven out and when i come to like 2021 in 202 it's really like you know okay what's your go-to market strategy what's your growth trajectory right like whether it's like product expansion like a vertical roll-up um i think for us our holding period is about seven years long duration or even like go to public potential so that's kind of more on the growth side i would say on a more like web 3 native site i think now we're looking at the d5 2.0 summary coming up and really it's a new narrative when you think about the new composability and the more like you know we have the first um i would say the device summer you have the specialization taking a lot of the front foot hole now you have folks like trevor dao now the new like bundle service coming up so i would say the composability money legal part is very interesting and how we think about next generation the founder will build on there awesome what do you guys think about the difference between you know obviously being in the web 3 space it's a huge token economics or like 90 of you know what we're looking at what's the difference to you got you two when you look at okay this might actually be an equity play versus a token play and is that something that's even in your mandate that you're allowed to pursue uh well i think like i take a more contrarian belief that i think in three to five years um no one in sort of the really web 3 native projects are ever going to raise equity ever again because i think like you know token ownership is such a better form of you know made giving governance back to the community you know having and being able to uh pass on sort of that ownership and giving sort of upside um and sort that token structure as well i think equity plays um are much more sort of of like the web to like the exchanges right the custodians um a lot of sort of like the brokerages that really like needs to be regulated and needs to have sort of those um i guess like equity holding positions for them to ultimately grow from like a serious seed to like all the way up to up to ipo right i think with form of tokens like you're able to accrue value not only within or internally within the company but externally really bringing some um you know shareholders that might not be just the investor base themselves like the actual power user to actually contribute to the protocol that all told me they're able to enjoy some of the upside and that's where sort of the narrative is gonna be um you know changing into i think you know eventually most people are gonna be uh turning into that token structure and even now so like a lot of times projects um raise with equity but eventually still turn that into like a warrant save or a token warrant um you know down the road so i think on our side we look at more like a parallel structure like for a lot of like service providers right when you think about like prime broker custodian wallet like the c5 infrastructure there by nature is always more entity based and that's really you see like last year 2020 2021 about like 40 companies exceed 1 billion like massive like uh growth stage investing coming to space and when i come to like january this year is very obvious even though gross equity guys like tiger global solvent now they're also going to token as well you see massive like uh value markup on the liquid project as well so it's very interesting i think moving forward from our perspective we're thinking about the modern activist approach right you participate you stake you govern right there's a lot of different approach for you to get involved that's a lot of you know for a traditional hedge fund we're also thinking very aggressively how we think about multi-strat future there okay okay i like the response but now i'm going to throw a split curve ball at you guys let's talk infrastructure projects can an infrastructure project truly raise on a token and can that token actually drive utility back to the platform and as an example let's think infrastructure teams alchemy and fura right can they really actually do a token because and the reason i ask that's a pretty big play and you know like the upside's probably pretty good for a fund so how would you like look at it that way and say do you think in the future we're actually going to see infrastructure teams go and go on a token versus having an equity play i think on the infrastructure side it depends on like what type of infrastructure it is right and like how the token well it may benefits bigger ecosystem right like when you think about ethereum right like the token itself you know accrues so much value or not necessary right now but like ultimately with sort of all the gas fees that ultimately um are spent with utilizing the network and all the people that ultimately built within the ecosystem um has sort of some exposure to the greater ecosystem itself as well right so i think when you're thinking about like an infrastructure it's not just about the technology itself it's really about like what are you trying to build what are you trying to accrue to ultimately build upon that technology right so when you think about all the application layer products that ultimately come on top of the infrastructure that you're building right it's extremely important for them to have you know upside to have in the infrastructure itself so that whether it's like you know ecosystem grants where they give in form of native tokens where they're able to like instead of giving away like equity of a company like apple is never going to give away its um equity of shares to give to developers to build on ios right it's that kind of concept where it's like now if you're solana wherever avalanche you're able to like give out tokens to the developers so that they themselves have um you know funding to really like go go about and try to achieve their vision but at the same time you're not really diluting sort of your ownership or sort of your ecosystem in that you're like benefiting both both sides of the way right yeah i think to add on that part i would say the token definition also expanded a lot seven teams would talk about u3 token everyone said you know i'm like creating new worlds things like that but i think the defense summary you really the one point i'll see you know lp token rev share token right so depends on the token structure you can choose the way how you capitalize your startup um the i was on the like entity site you know right now the macro situation with different geopolitical risks or the more like interest rate high how i'll have dampened a bit like going public rail that's the reason we start to see more projects start to offer more like a liquid token structure to stay like capitalized and i think as a fun site i think we're very open to different structure and i love to see how it's about in the future thank you thank you now let's take a like quick break here you know we've all been listening to talks and panels but we're all humans so let's hear something what's like something a hobby or a pastime that you enjoy uh i mean i i like to play a lot of basketball you know obviously i think as a fund manager in the space you need to get your exercise and you need to have like a good mental state when you're talking to entrepreneurs you're going through investments but also maintaining a high level of energy and um just being present you know at any time where you're working with others right um also like you know like to play a lot of poker where it's like i think a lot of phone managers do not only web 2 but also in web 3 so i mean it's just like a game where you're able to really interact with other people but also like um you know be a better investor you know managing your risk managing your treasury manage your bankroll right taking sort of more concentrated bets when you have um you know certain hands that are advantageous to you but also like playing the field right like who what is sort of like the people you play with that also like you constantly have to like be able to adapt and be flexible in your strategies and especially as an early stage fund right like um you know sure i have a thesis right now for the next three to six months but like you know the thesis is gonna drastically change two or three years from now because like no one's gonna be able to really predict like how the technology's gonna evolve that what opportunities are gonna come out like three five years down the road so we always have to iterate always have to be early and uh always have to be sort of like trend setters in a space where you know we need to do our own research but at the same time help educate not only like people um looking to come into crypto but also like the entrepreneurs themselves right a lot of times um you know admire like what paradigm does with their sort of research they a lot of times give really good product ideas that they thought of as investors and they encouraged sort of the developers themselves to build right and we're sort of looking to take that approach especially in asia where um there's not as many sort of research-oriented firms that's really taking sort of that approach and really telling people sort of what is how sort of the next wave of crypto is being paved and like what people can really do to go about right developing in sort of the next iteration of like application um and sort of middleware right um i think for me it's boxing because you know like easy because you know this is a high stress industry right like we covered 24 hours market and innovation comes from everywhere now you have subscribers like d5 metabolism gaming right like and also we i have personally gone through like three massive drawdown right now or current experience one how to be like say resistant right not getting beaten down by a couple like a macro like price action i think it's very important to like you know sustain this industry in a longer fashion awesome i'm gonna ask two questions one's gonna be directed at you and the other one near you first let's start here yeah i'm sorry oh sorry sorry era we'll start with era we'll start with you um how do you see the different um oh the word i was looking for how about this everybody laugh everybody as the founder on like a startup site when you think about you know building your cap table building your community how you think about the global strategy right now your bootstrap in u.s how do you think about you know going global right now yeah that's a good question um so we as a team span across about 27 different countries um so we're quite out there and large so we focus on infrastructure which means we're kind of like really at the lower level so for us it because it depends on the network that we're building a node for so we build client software so like we have an e2 client a file coin client um polka dot and mina and really it depends uh it's really catered to those markets where they're really most popular for instance falcon does have a large asia community of miners um and you know they have very specific requirements on like how that software has to be built or like you know to make their competitive edge um especially in that type of a network where latency is super important between the nodes it's like you know as they concentrate over in that one area versus north america you know we have to really think about like how can we distribute the nodes that way um hopefully i didn't beat around the bush too hard on that that's great um but the other question i was going to ask though is um when it comes to the thesis between kind of like north american funds and asia funds where do you see the drastic difference between them um i think oh is this for me or whoever wants to answer yes okay um do you wanna okay uh so so i think like you know going forward um because crypto is such a global phenomenon right like i think there will be less of a shift between like what is asia funds and what is north american funds like for example for myself i've lived exactly half of my time in asia and half my time in the u.s right and continue to do so really splitting my time between the two places um so particularly for me i i wouldn't know how to exactly categorize us as whether it's a north american fund or asia fund but i think you know what we really try to do is really like blend sort of the two continents which is essentially the biggest uh markets in crypto by far um in consolidation of everything that's going on and like we have half the team in asia that really helps with a lot of the portfolio support you know go to market strategies to exchange collaborations as well as like the market making relationship but at the same time we have a big investor network here in the u.s where we're able to work with some of the best western founders and help them think about like how they're thinking about ultimate you know getting market traction in asia but at the same time you know when we're talking to people out of asia we help them you know get looped into some of the best institutional investors here in the us some of the best developers you know i think there's resources across both continents that are a little bit differentiated and i think that's why it's extremely important to have um people that understand both sides of the table that is able to be you know extremely helpful to projects no matter where they're thinking about you know developing their next markets awesome thank you now eric i have a question for you i come it came back to me um you know as somebody who's raised capital before um i know how stressful but also anxiety inducing like the whole process can be for founders also you know i've been so close to almost sweating you know you're the whole flushed face like it can be intense um but when it comes to advice and to founders who are looking to raise capital what's like let's say one red flag that they should try to avoid doing and then one thing to just provide confidence to say you know it's okay that that happens during a meeting because we're human it's going to happen and like where can you reassure people on that yeah i think for me the biggest reflect is more on you know when you talk about your like how you think about your market like pricing valuation you know give me a very lofty number without any like sauce put into it like for info you raise capital but what you use it for right r d product expansion i've seen that like software approach like that's really important for us um yeah so that's probably the most like rough life for me and how about like a vote of confidence you know what what are common things that you know happen during meetings that you're it's okay you know that like that's fine you know for instance maybe for me it's the stuttering it's like oh you know back in the day it was like uh i don't know yeah you know it's like what what things happen that you know we can tell founders like hey you know don't be worried that that happens we know it's scary it can be scary um what what some things do you see commonly that's just doesn't matter i think for device thunder especially you're like just like rainbow like a lot of a d5 suit vocabulary super like whack me like like pro like a bunch of like words but you have to understand for the institutional investor the learning curve is slightly different uh so that's what we'll say like dump it down first okay use some analogy right don't don't like try to assume people understand that we're very unique web3 community so i would say that that's park him you know help out a bit awesome thank you um we do have five minutes left and we can get a couple more questions here going but if there are any from the uh crowd or the audience here uh happy to take those as well yep um well my question is centered around uh your project projected financials while you're raising especially for web 3 companies since it's a new industry uh you often don't have one year down the line plans ready or what you can give back to the investor what your business model really is is probably going to change over time anyway so what expectation do you have from investors from founders sorry when uh they are pitching to you their product or service um i think from my perspective it's never about really like trying to predict your financial projections right i think that's never really the case for investment for us um because a lot of times you know projects for protocols don't really have that much market traction right i think otomy is really about like what are sort of the v3s and v um v4 is going to look like for your protocol in terms of like a technical development perspective right like what are sort of the other comparables in the market that you see uh moving towards that you can really differentiate and carve out a niche for yourself and like um like at the end of the day right like all the sort of future projections you can really envision in any sort of project it's always about like the road map right like what is sort of being said and are you actually meeting those deadlines right and um are you actually shipping code right and are you able to like maybe bring on like really good talent too like i think talent is also something like a lot of like i think web 3 company is just like the consolidation of like everyone on the team and their sort of net worth that they're able to accrue in value and sort of the product that they're they're ultimately creating yeah i think like for early stage you know if one thing investor expect is your financial problem to look right like it will change 100 um you know that's just natural i think at the early stage really more on the product itself like look give me your product demo how i like talk to your engineer get a sense i think that's more important to us for the later stage we'll be slightly different because right now you know you already see like vcdf companies start to emerge right how do you think about the effects fluctuation will impact the business model how you manage your treasury that's some sauce you have to baking a bit when you grow to that growth stage there hello hello wonderful uh we got time for one last question okay saw the hand first so um when you all saw from the founder point of view one of the things that can be really confusing is when you're new to the space you've got an idea and you've got some backing you've got the revenue model all sorted it's growing that because when you come from a technical point of view it's like well what the hell do i do now i can go around whip around the room find 50 vcs and raise 25 mil but then i'm sitting on 4 million in cash and what the hell do i do with that so i think that's one of the things where it's really confusing as a founder like what do you do as a vc to help that procedure of how to grow the business um from like a basic basic model can you rephrase the question please i mean all right because it's like how do you help new businesses grow their model if they don't have experience doing it before yeah no i think that's actually very important because for us we do a lot of different case studies like compare for info staking as a service there's different way you can monetize and i think for early stage funder right you identify like a market problem but how to monetization you know whether it's a sas or whether it's you know like transaction take rate fee there's a lot of different way um you know i won't worry too much because for any like early stage vc it's a season investor they will help you to guide it through but for you is to think about you know like how to monetize your ecosystem that's really critical and that some part is if you don't have that as a right answer it's really you know important to for you to garner your support for your community um so i think just quick 30-second response to this is that you really need to choose the right vcs that you want to work with right so like whatever sort of protocol that you're ultimately building you need to see like who's the ultimate expert in sort of that vertical and sort of on the investment landscape of things so like being able to pick the right partners and them having shown expertise in the past that they were able to ultimately help some of their portfolios in the past and really shipping their go-to-market strategies and ultimately helping them you know be ahead of the curve when it comes to like development um and execution i think you know and that's why you know all different vcs they have different value ads and different sort of thesis and focuses and it's important as a founder to really identify those early onset of things and they almost act like the co-founder alongside you to really best you know help your project in the long term on a final note for that as somebody that's like raise capital um definitely look for recommendations try to find people in your network to talk to about who you're raising from because you know as david said the most important thing is the right person that you know can actually not just say they can give you value-add but can actually sit down with you whether it's once a week once every two weeks actually chat about things and i think that's the most important and i just like to give a very nice thank you to these lovely two who beared with me and if you have any questions i'm sure they'll be somewhere around and you can chat with them