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How to Raise Capital for a Web3 Startup, Attracting Investors & VC Insights | Jason Fang | WT3 004
17 Plays1 year ago
In Web3, it’s always targeting one new narrative. It’s never the same narrative twice.” Join us for a deep dive into the complex and often misunderstood world of Web3 venture capital with Jason Fang, Co-founder of Sora Ventures, Asia’s pioneering crypto-backed VC firm.
In this eye-opening episode, Jason shares his unconventional path from engineering to VC and the lessons learned from navigating multiple market cycles. He breaks down his investment thesis, revealing why timing and narrative trump all, the red and green flags he looks for in founders, and the unconventional post-investment value his firm provides.
Jason also shares candid insights on the state of Web3 investing, calling out unsavory industry practices and highlighting the qualities that separate the 1% of true “givers” from the “takers”. Whether you’re a founder seeking to raise capital in a bear market or an investor trying to capture the next 100x, this episode is packed with actionable wisdom from the frontlines.
Tune in for a masterclass on Web3 investing and entrepreneurship from one of the most respected and visionary minds in the space.
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Transcript
Introduction to Venture Capital Insights
00:00:03
Speaker
Welcome to the W23 podcast. This is the Venture Capital Insights episode.
Raising and Utilizing Capital
00:00:08
Speaker
We are focusing today on how to raise capital, attract investors, and demonstrate why is capital utilization also when to raise.
Meet Jason Fagg, Sora Ventures
00:00:16
Speaker
Today with us, we have Jason Fagg. Thank you for joining us, Jason. Thanks for having me. A trailblazer in your space in the blockchain realm.
Blockchain Investments and Strategy
00:00:25
Speaker
Co-founder of Sora Ventures, Asia's pioneering cryptocurrency-backed venture capital firm,
00:00:31
Speaker
Under your leadership since 2018, when just a year after I started in the space, Soares invested in key blockchain-vested ventures, including Mithril and AlphaSlot, raising $30 million in assets. No mean feat.
Blockchain Beginnings and Growth
00:00:46
Speaker
You started your blockchain journey in 2016 at Fenbushi Capital. You played a crucial role in bridging the Ethereum Foundation with the Chinese community
00:00:54
Speaker
Beyond this, your investment success, your mental emerging tech talents at the Alchemist Accelerator and Startup Bootcamp, as the CEO of Sora Foundation, Chase and Drives Blockchain Community Development and Education, also serving on the Blockchain Institute Chicago's board. We feel that you really embody the spirit of innovation and blockchain and setting the stage. I mean, we just talked about your schedule, your flying,
00:01:23
Speaker
speaking, flying, speaking, flying, speaking, and then back in the space of a month. It's just incredible.
Jason's Journey to Blockchain Mastery
00:01:30
Speaker
I mean, how did you get started in this space? What was the catalyst for you to jump in in 2018? Yeah, no, I get that. First of all, I appreciate you guys for having me here.
00:01:43
Speaker
you know like the a big part of the industry in general is a lot of the early days people who got involved so I got involved in 2015 and the way I got involved similar to a lot of other investors is they had some kind of like dev or engineering background so I was doing a full stack ios just before I joined the friend bushy capital
00:02:06
Speaker
And I also had a finance degree, which is quite unique. Basically, if anyone goes to a finance degree route, you usually go straight into banking. And then several years of banking, you go straight into MBA. And then after MBA, you do private equity, a very standard route. But I ended up doing basically startups in college. And I ended up learning how to code, ended up doing a lot of that after I graduated.
00:02:31
Speaker
And that gave me the opportunity to really understand how blockchain as a whole functions. So I knew Bitcoin as early as 2012, but I didn't start trading it until I really realized kind of like the benefit.
Understanding Blockchain Potential
00:02:46
Speaker
the value that you know blockchain is kind of like at that time it was still early it was it was basically mostly Bitcoin blockchain but when I joined the industry and started investing on a professional level there are some applications of Ethereum blockchain and there are some
00:03:03
Speaker
kind of documentation in terms of what Ethereum blockchain could do. And so you really do need to have a lot of these, you know, Deaf background in order to start to kind of understand why is it even meaningful? What does it mean to be fully decentralized? Like how do blockchain like visually look like? Like how does the logic look like? Why is it unique, right? And there's a lot of these details that without the Deaf background or the engineering background,
00:03:29
Speaker
it'll be really really hard to get involved with this space. There's really two types of people in our space, like one, you know, mostly traders and speculators, and there's one who are more on a dev side or more of the tech side or genuinely believe in the tech. No, I like to say I'm more of the latter, which is more into the tech side. And so when I got
00:03:49
Speaker
you know, recruited to Fmbushi capital, like was one of their early employees there, was in charge of the US market, which at that time, like 90% of deals Fmbushi was coming from the
Blockchain's Industry Fit
00:03:59
Speaker
US. So I play a relatively crucial role in terms of building their first set of portfolios in Fmbushi.
00:04:05
Speaker
You know, when you did that, you kind of realized that it's like, you know, there are certain, certain industry that works really, really well with blockchain. There are certain industries that don't work really, really well with blockchain because of just how conserved the industry is. And so, when I started Saguaro Ventures, like one of the things I did was, you know, I really aim for, in my opinion, the low-hanging fruit.
Success in Entertainment, GameFi, and NFTs
00:04:27
Speaker
at a time, we call it entertainment. And entertainment referring to, in today's world, is really just GameFi, NFTs, Metaverse, SocialFi, a lot of these terms. But back then, they're basically non-existent, right? So we just call them entertainment. So 60% of our fund invested in entertainment, some did really well, some didn't do so well. But the part of venture investment is
00:04:50
Speaker
you know, it's always the larger wins. This is when this one deal, they give you 100X that kind of covers a lot of the losses, right? And that's how venture business works. So in this kind of like environment today, like we're looking more on, you know, we have several funds, you know, but fund one was mostly entertainment, which was, you know, 2018, early 2018.
Bitcoin Utility and Investment Thesis
00:05:11
Speaker
And our second fund now is which we launched early last year.
00:05:16
Speaker
that is on something called ordinals, which is basically Bitcoin utility. And that is something that we started investing when no one was investing. And that's really kind of our thesis here. We're not only investing in early stage startup, but also investing in early stage narratives.
00:05:34
Speaker
Generally, in our industry, you're really trying to bet on this early stage narrative because the idea here is the industry moved really, really fast. Bitcoin utility today is one of the hottest topics around Web3, but when we first started investing, people were doubting on us. People were saying, is this going to be a real thing? Historically, everything that had
00:05:55
Speaker
innovation around Bitcoin end up going to zero. Or it led to a bunch of wars between miners. So on all, it was all negative feedback. But regardless, I think there is some credit to building a fund that from 2018 is still alive. It probably means that it's not purely just luck. I mean, luck plays a huge part.
Complexity and Opportunities in Web3
00:06:15
Speaker
And I'm more than happy to share some of the stories that I've been through.
00:06:18
Speaker
But I think ultimately there is that element where it's like the skills involved, there's experience involved, there's a visionary part involved, there's an understanding about technology involved, there's an understanding of the user, the industry, the dev, all that involved. There's a lot of components.
00:06:34
Speaker
but web3 in my opinion is one of the hardest most difficult industries in the world because you know, whereas like in private equity you're trained to really just focus on one on one industry like for example, you'll have you know, you're in PE, you're going to be real estate, then you specialize in PE real estate, you'll do relatively well and web3 is like if you're web3 you gotta know everything, you gotta know marketing, you gotta know the secondary market, you gotta know primary market, you gotta know market making, you gotta know
00:06:59
Speaker
tokenomics, you got to know marketing, you got to know community development, you got to know Chinese ecosystem, you got to know the English, the Western education, Western ecosystem, and the culturally very, very different. And so like, it's not something that anyone can pick up easily. And for that reason, like, there's a lot of, you know, volatility in this industry, because in the world of trading, it's about like how much you know is the difference in knowledge. And web3 is one that's been amplified at a whole new level, right?
00:07:29
Speaker
Which means that it's early, it's very volatility, but also it means there's an opportunity to make money, right? And so this is what really what we're trying to do is we're trying to identify things that generally people don't see. And then over the course of several months, the industry pop or the narrative pop, and that's when we capture a lot of that alpha. So that is basically my business.
De-risking and Market Narratives
00:07:51
Speaker
It's very interesting, Jason, because in a sense, what you're doing is de-risking by getting information.
00:08:04
Speaker
We're sitting in a similar business, obviously, like we're doing tech, Charlie is doing the business and marketing. We're doing the same thing. We're getting as much information upfront of a project in order to de-risk it as it grows, so we get the most success out of it, the client gets the most. It's not that different from your perspective, except like you're going on a
00:08:24
Speaker
potentially risky early narrative, where the payoff can be huge. But you're derisking it by getting as much information and perspective as you can in order to make it a success, right? Yeah, I think it's, it's a bit of both, right. So
00:08:42
Speaker
and
00:09:06
Speaker
Especially in Asia, that was the biggest thing after ICO. All the VCs were betting on STOs. Everyone was like, this is going to be the next big thing. It makes a lot of sense. If you think about it, blockchain was always meant to disrupt the traditional finance. And so when they saw it was disrupting something, and then now it went into traditional finance, the STO narrative made a lot of sense.
00:09:28
Speaker
But, you know, being in Fabushi and being working, I guess worked in, and seeing a lot of things. Even at that time, it was only like, you know, two or three years. It did feel like it was, like, you know, five, six years. I've seen a lot, right, in the sense that, you know, I have a pretty good understanding of what is a backward step, what is a forward step, right? And, you know, the one thing we did not touch was STO, where everyone was talking about STO. We were looking at something
Navigating NFT Sectors
00:09:52
Speaker
called NFTs. At that time, it was called 721s, ERC 721s.
00:09:57
Speaker
And we were looking into gaming of 721. At that time, it was really very much on-chain gaming. There was not a lot of volume. In fact, at that time, a lot of our investors were saying, hey, why are you investing in NFT? It's literally less liquid on NFT, like OpenSea, compared to the SEO market. You should be going for SEO. I'm like,
00:10:17
Speaker
No, I feel like SEO, in my opinion, is a good step backwards. I don't think that actually makes a lot of sense, right? At least not now, right? But you know, work at Fenbushi and it was like a lot of investments that we did. We had to do a fintech with blockchain. It was a blockchain element with a finance element. And it was like, it didn't work out because it was a struggle. It wasn't just the fact that you need to be a really good entrepreneur and being able to sell your product and be really good at innovating product. It was also the fact that your customers were willing to take this risk, right?
00:10:46
Speaker
You know, the world of finance is incredibly conservative and it's incredibly hard to penetrate because there's all these rules that are set up already, right? So it's like really, really difficult and eventually, SEO didn't work out. But then, you know, the NFT part worked out really well for us.
00:11:01
Speaker
Just to give you some idea of how to diversify our NFT portfolios that we did, it wasn't just gaming, because we didn't know what NFT was going to be. We knew NFT itself was going to be an innovation, but we didn't know if NFT was going to be pure gaming, so we invested in things like NFT emojis.
00:11:20
Speaker
like NFT. That's great. The most random thing, every emoji is an NFT. And you can put a string of emojis together and that's one NFTs. And then we invested in companies that did NFT for artists, and then we did at the centralized peer-to-peer network using NFTs. A bunch of stuff, right? So gaming of course, gaming.
00:11:48
Speaker
It became very obvious at one point after a couple of years that NFT was gearing towards more of the game five stuff, a lot of the gaming stuff, metaverse stuff. But initially, no one knew what NFT was going to be. It was all this memes that was happening. Fast forward to today and last year, when we looked in the Bitcoin, we were like,
00:12:11
Speaker
We also have some understanding that this would be big because Bitcoin has a value at which is, if you move any NFT from Ethereum to Bitcoin, in that case, we call them Oronos, then every digital art on Bitcoin will hold all the properties of a blockchain.
00:12:31
Speaker
Whereas any NFTs previously, it's all basically stored in either a centralized server or a decentralized server
Strategic Investment Focus
00:12:41
Speaker
like IPFS. So it's a string, it's basically a string that leads to the asset.
00:12:48
Speaker
It's half big, right? And so when we saw Oronos, it's like, at least on digital arts that we're like, hey, this is quite interesting, right? And then they'll slowly, after a couple months, there was the discovery of a BRC-20, which is like enabling basically the fundable token of Bitcoin assets. And then after that, it was just, it blew up, you know, it got listed on Binance, and the rest is just basically a lot of new innovation around Bitcoin layer one, a lot of people going to Bitcoin layer two. It's a lot of this stuff happening, right?
00:13:18
Speaker
Our fund went from 25% as a mandate to invest in Bitcoin just a year ago to now telling our investors, hey, we're going to invest 7% of our asset into Bitcoin because we've built the momentum. We feel that the industry is mature enough for us to be investing in that category. But the most important part is that a lot of the audience in the Bitcoin world today recognize as one of the leaders in being very, very upfront
00:13:42
Speaker
about our value investing, about what we like about Bitcoin, what we don't like about Bitcoin, why we like it, why we don't like it. So it's not just like, hey, reinvest in the entire ecosystem around Bitcoin, but we're also very, very picky about what we invest and why we were very picky about that. So like, it's important as a fund manager, you're not only just fomoing because people are excited about stuff, but you also have to be rational. You also have to be logical.
00:14:05
Speaker
You also have to be not short sighted. You got to be visionary in terms of like you're betting on this because you feel that it's going to be value created on the decline blockchain. So like these are things that we feel very, very strongly as a fun manager. I mean, this is what we're hoping to sort of harness some of that visionary piece for our listeners, for our viewers to essentially say, what is it you're looking for? What are you going to say, Thomas?
00:14:34
Speaker
No, I was saying it's a thin line you're walking, I can imagine. And to your point, I think our list is...
00:14:42
Speaker
Like here, just probably they're like, holy shit, Jason is probably a superhero. But what I mean with that, because it's a very thin line, you got to do like, as you said before, you need to know everything about everything, making the right decision at the right time, I can imagine that there's a lot of one stress involved. And you're not always making the right decisions, right? Like, I assume that there's there's moments that you're like, shit.
00:15:05
Speaker
I could have done this differently. Or actually to foam out in when this started happening. And the other way, I think, oh, I went in, and this is where I lost capital. I assume there's those moments too. That's the dark side of the superhero, I guess.
00:15:23
Speaker
We were very, I guess, our fund is not big, right? Our fund too is only 50 million, which is like small compared to a lot of larger funds in the US, but there's benefit for being a small fund. Small funds also mean that you're catching early narrative. You're looking for things that have, you know, 50x return, 100x return, whereas larger funds, they don't really care too much about the 100x return. They want
00:15:47
Speaker
if, for example, you invest in 10 million USD into a deal, if it flipped to x, it's still 10 million, right? But for us, when we invest, we're putting in like,
00:15:56
Speaker
$250K, $500K check size. At most, we're probably putting $3 million into a deal. We're expecting like a 10X return, right? So even a 10X at $3 million, it's only $30 million, which is, you know, it's comparable to, you know, like it's different product means that you have different strategies. But for us, because we're small, it also means that we got to be very smart about like where we capture alpha. And initially, when we did our fund,
00:16:20
Speaker
It was 25% that coin and 25% decentralized science, which is another thing that is like relatively new. I'm not sure if you've heard of it. The short term is called the site. But the narrative is that it came out from different foundation.
00:16:35
Speaker
one of the guys who really is been pushing the side we imagine best in one of the second company from brian armstrong which is basically focus on the side of the idea of the side basically leveraging a lot of the applications of that that the bill in the past like and if he's the five.
00:16:55
Speaker
and then applying that into the world of science and research. And that was a narrative that we were extremely excited about. But out of these two narratives, it was very obvious that we captured a majority of our wins on
00:17:08
Speaker
and momentum on Bitcoin. And then quickly decide to like, okay, well, if this is the case, then we should probably pivot mostly on Bitcoin because it makes a lot of sense, right? If you've found momentum, you've found the pace and you've found your position in the industry, you just go for it, right? Whereas most people say, hey, you shouldn't put everything in your own, in one basket. I'll probably say like Web3 is one of those things that you're already considered to be a high risk product. And it goes with the history of Web3 bull market.
Adapting Fund Strategies
00:17:35
Speaker
They always capture one narrative. It doesn't capture most of it.
00:17:38
Speaker
Bitcoin price goes up, everything will go up, right? But there's always this one specific category that always gets 100X return. For example,
00:17:47
Speaker
the early days of ICO, right? 100x like crazy. The early days of DeFi, right? 100x like crazy. The early days of NFTs, 100x like crazy. You meant to like, the early days NFTs, right? Like 4A, you've been retired right now, right? So it's like, a lot of these things that in our industry is like, it's always targeting this one new narrative. And it's never the same narrative twice. And so like, when we looked at this, we're like, okay, we'll pick up a lot more momentum on Bitcoin.
00:18:13
Speaker
less double down on Bitcoin, right? And these side might come in later, but at least for this current product, no fun too. We think it makes a lot of sense to be investing in Bitcoin or those. And then maybe from three, we'll double down more on these side. These are some of the strategies, I think.
00:18:31
Speaker
a lot of fund managers when they start, it's like, okay, the mandate is 25, 25, 25, 25. But for us, it's like when we realize that there's something that's bigger than that, we should definitely pivot and then should kind of like focus on one thing that actually makes sense. It's a product market fit for the fund, like very, very specific. Yeah, very specific for sure.
00:18:51
Speaker
Yeah, and I mean, that's probably also why it works like it works, right? At least for Sora. And that's great. I mean, you know, we in our podcast talk a lot about product market fit over different industries. It's one of those things that are always very important for
00:19:08
Speaker
most of our guests found it right like you as well like okay but what are key factors for startups that you're looking at for product market fit like how can they validate their product market fit in these markets and in these narratives right because as you said like every bold narrative is different and
00:19:32
Speaker
I don't think that every startup should follow a bull narrative because obviously they want to grow past the bull. But how do you look at and how do you validate product market fit with these startups that you're looking at to invest, for instance?
Community and Token Holder Prioritization
00:19:45
Speaker
Yeah.
00:19:46
Speaker
So if you're a Web2 entrepreneur, a lot of times your product market fit comes from the user experience, from the user base. You want to grow your user base. But actually, in Web3, you don't need to actually grow your user base. You want to grow your community and token holders, which is very different from the users. The users are the people who use your product. The token holders are the people who want to speculate your product.
00:20:11
Speaker
And so the gun the best way to look at this is you know In any market in web 3 you should always be focusing on The community first and a product second and people will probably argue with like differently which is like especially in web 2 if you come from a web 2 perspective you're always like product is number one and the marketing is number 2 and left 3 is very very different and web 3 because
00:20:33
Speaker
the 100x, 1000x projects that actually do well, it's not because they built a really good product, it's because they've raised so much money, they have a lot of cash in hand, and they're listed on Binance, they're listed on OKX, they're listed on all the top of changes. They have so much money to burn, they're able to pivot and find that product market fit later on.
00:20:55
Speaker
So majority, actually, I'll probably argue 99% of our investments have all been through that phase where it's like, if you actually did well and you're able to build something today, it's not because you decide to do that on day one. It's always because you pivot it halfway in and then because you list on Binance, you have so much cash now that you focus on building products that actually make sense. If you actually just raise money to build product, majority of the time you're kind of screwed because you realize it's like,
00:21:22
Speaker
like no you build this product like no one knows about you right you build this one product but like no one's using you guys like there's so much distraction that's happening in our space there's so much like many things happening in our space like people have opportunity costs right most people in our industry even today are not here for utility they're here for a speculation
00:21:41
Speaker
Like I, I think the ratio, I think metallic a couple of years ago, um, like just five years ago, he'll probably say it's like utility is like 1%, 99% of the speculation. Now I think it's definitely like UTL has grown up a lot, but even those utility are, are driving forces to speculate. So it's like, no DeFi, for example, it's like they're using the DeFi products, but it's like to make money. Right. Gaming products. Yes. They use a product, but it's there to make money. Right. The to earn model. It's like, they're, you know, like step in, they they're running, but then they're running to make money.
00:22:10
Speaker
right? It's like everything that we do is ultimately boils down to making money. And so
00:22:17
Speaker
Fundamentally, that means in Web3, it's always going to be speculation. It's always going to be your token holders that it comes number one, and then your utility that comes number two. So that's a logic that's fundamentally very different from Web2 versus Web3. People don't understand that. We have a lot of Web2 entrepreneurs that come into this space. They're not degen enough. They don't understand this concept. They raise a bunch of money. They end up building this product. And then they spend zero on marketing. They spend zero on community development. They spend zero on talking to the community. And they spend zero on even identifying
00:22:48
Speaker
picking up on what's hot in the market, then a lot of times they're basically screwed. So it's important for us to even invest in entrepreneurs who are sharp in this space, who understand this space. And when the time comes, they pivot.
00:23:04
Speaker
are some of the best deals that we've done in our space are not the ones who start off with like doing this one thing and then they end up actually doing the one thing, even Binance, for example, like when Binance came out to do their ICO, you know, CC came out on the stage and pitching telling people like what Binance is gonna be, what BMD is gonna be.
00:23:22
Speaker
like half of the stuff that they've done in the BNB, it's like has totally irrelevant to what's happening in today, right? Totally irrelevant. The only thing that's actually made sense was the exchange business, right? Similarly with most of our investments, like some of them started us doing like pure, pure real estate and then end up doing pure, pure artists and
00:23:42
Speaker
It was the NFT boom that basically made 3050X for them, right? So it's like a lot of these things that we realized is that like, you know, investing in the team is way more important than investing in the product. And that is something that's like fundamentally very different from, from web two and web three. And so when you're looking for a product market fit, you shouldn't be looking from a user perspective. A user is also important, right? But, you know, depending majority of the product, again, majority of product in this industry is all driven by your token, token holders, like how many tokens or you have,
00:24:11
Speaker
how big your community, if you have a larger community, then a lot of times you mean you're also listed on top exchanges, exchanges want these community to be trading their token.
00:24:20
Speaker
And only then can you convert a portion of that into your product, which you end up being a lot of utility. Of course, there are exceptions to that statement, which is like, for example. I was going to ask Jason, just to dip in here, what would you say are the key KPIs that you're looking for? Like if they've got XYZ, like they've got, you know, great Indian web two times, great cost per acquisition, great conversion within the website.
00:24:47
Speaker
you're happy to put more ad spend in, in essence. Like one of the KPIs you're looking for for product market fit. Like if you see that green light, what's the next thing?
00:24:56
Speaker
Uh, to be honest, there's a lot of wash, like there's a lot of like fake data in our industry that is like pretty easy to produce.
Web3 KPI Metrics
00:25:04
Speaker
Um, so I, I generally feel that in, in the web two world, like KPI is, is actually a really important metric. Right. Um, like you, for example, you go to YC, they will always ask for like, at least you have like, you know, the a hundred care 10 K user base. Right.
00:25:18
Speaker
So you're going to hit a certain amount of users in order to even get money from, you know, accelerators. But the whole idea here is in Web3, it's totally different. It's totally different because you can spend money to get users. For example, you can just buy users and you can buy followers.
00:25:36
Speaker
You can buy engagement. You can also buy users in the sense that you create an earning model, for example, like Steppen. You get people to run, you get people to do something to earn the token, and then in the process, you create users. Is that a KPI that you think is worth
00:25:56
Speaker
because they hit like 100K or 500K downloads, is that something that you think is worth investing? In my opinion, in the Web 3 world, a lot of people will say yes, I'm sorry, in the Web 2 world, a lot of people will say yes, but in the Web 3 world, it really depends, right? So I wouldn't, whereas I love to answer a question where it's like, are there specific metrics for KPI? I'll probably say that it's probably more of other things like,
00:26:23
Speaker
Is it, uh, what, what narrative are you in? Right? Like if, for example, if you're in the Bitcoin narrative today, you're incredibly hot and we're probably going to get a lot of money from investors. Uh, whereas if you're like, uh, if you're in the, uh, let's say, uh, something that's not hot today's market, like STO, like you want to do like an STO today in today's market, uh, you're unlikely going to get any, any, any users, even though if you have KPIs.
00:26:48
Speaker
Even though you have really good KPIs, you're unlikely to even get any user base. And the reason for that is because you're betting into something that is not hot. And this is actually quite similar in the Web 2 space as well, which is like Web 2 money is a lot slower. It's a lot easier to predict. For example, in 2011, it was kind of the tech error.
00:27:07
Speaker
you know, people, if you did a tech in 2011, you could have easily gotten money from Silicon Valley. And nowadays, it's like, it's like AI, right? It's healthcare, it's Web3, right? It's like, there's always a trend. And the larger that narrative, the longer it takes, right? But in Web3, it's like really, really fast. It's like,
00:27:26
Speaker
a web 2 narrative, but everything on steroids. Everything is a lot faster, like four times more faster. If you go for one narrative that's hot, you probably have one or two years to a really fun race. The idea here is, I think going for the right narrative is more important than going for the right KPIs. Now, once you hit that
00:27:45
Speaker
narrative and it really depends on who your investors are, how legit your team is, how many holders you have, how big your community is. Yes, some of them will always have some fake elements to it. Most of them will probably
00:28:03
Speaker
have fake element to it. But our industry is mostly about fake until you make it. The big part of that is that's our industry. And so yes, it is why it's very hard as a VC to be making money in this industry for most VCs. There's only going to be a handful of really good VCs that will end up making money for their investors. A majority of the VCs don't even make money. So for example, we have friends who are running funds. Majority of the funds are not that great as an investment. And so we try to be the outlier.
00:28:33
Speaker
What we've learned is that if all the larger funds are not making money, then by copying them, you're mostly not going to make money as well.
Fundraising Resilience
00:28:41
Speaker
So it's very important for us to innovate and as a fund, tell your investors, we're not a generalist fund. So if you invest in us, you're not going to have exposure to a bit of everything, right? Because all the other funds out there is a bit of everything.
00:28:56
Speaker
that the end result is that they're not doing so great. But we're a special niche product where it's like, if you want Bitcoin exposure, that's us. If you don't want Bitcoin exposure, that's not us. There's hundreds of funds out there that you don't have to invest in us.
00:29:11
Speaker
Interesting, because you're like looking at competitive analysis for your fund. I mean, when you're looking at an investment, what do you focus on when you're evaluating a competitive landscape for a Web3 project? When you're looking at that, do you say, okay, you're a new entrant into a space that's been around for four years,
00:29:34
Speaker
There are some incumbents, but they're bigger and slower. However, they've got a bigger community in the following. Like, how do you sort of evaluate that landscape when you're looking at a web3 project? Yeah.
00:29:45
Speaker
I think the most important thing here is, regardless of what you're investing, there needs to be, again, you don't want to be investing when the market is, it's, it's full mowing. It's like incredibly hot. Well, most people would be like, Hey, it's hot. That's why I want to invest. As a VC, fine. We do the opposite, right? So it's like, when people, if things are like, for example, like the last bull market, while everyone was investing, we were exiting. And then when, when people were like struggling and like figuring out like, Oh shit, like,
00:30:15
Speaker
it's Bitcoin going to go into 12k and 9k. That's when we started investing. That's when we started investing, right? Um, so, uh, uh, because during the bear market, a lot of the entrepreneurs will, will have like the real entrepreneurs will come out and the market will naturally filter these, these, these entrepreneurs. And so, and so you're an entrepreneur raising in the bear market, it shows you have balls, right? And like that in our opinion, it's already like a competitive edge, uh,
00:30:41
Speaker
People will not agree that people will be like, Hey, you share a fundraise in a bear market. I can tell you that if you fundraise in a bear market and web free, it means you have balls and a lot of investors really like that. At least I will invest more aggressively in a bear market because of that. Right. Um, other thing, especially in the bull market, the bull market, I'm like,
00:31:00
Speaker
I'm very conservative in the bull market. And in the bull market, it's like, whenever everyone is investing, I'm doing post management surveys. And when it says peak exit, right? So it's like, we always do the opposite, right? And when people are not investing in that cat narrative, like no one's investing in Bitcoin, we're investing in Bitcoin, right? When people are not investing in like entertainment, they're like, we went for STOs, we're investing in entertainment, right?
00:31:23
Speaker
Um, so I, I, I, again, I'm not saying that you should do things that the opposite people are selling to buy. Um, but there is a lot of logic to why like this things out that we invest, right? Um, I can be, and that all has to do with timing. So whereas again, web two, there's a very, very clear framework to like, what are some of your KPIs, uh, what are some competitive edges, um, in, in web two, in web three, uh, because, you know, a lot of times it has to do with timing, it has to do with narrative.
00:31:52
Speaker
It has to do with your resources. But resources can be filled in quite easily with the right investors.
Resource Allocation and Collaboration
00:31:59
Speaker
For example, we invested in what we call Bitcoin layer 1. One of them is called TAP protocol.
00:32:07
Speaker
Because of us, we've basically got them to integrate with a lot of changes. We've brought in really good communities to build on top of their equal system because we have gotten a lot of value that we can add to the equal system, right? And these are things that these are people we've worked with a long time and these are resources that we know could add value to both parties. And so a part of my job is
00:32:31
Speaker
is allocating a lot of these resources among each other. So, for example, we have 30 plus portfolio companies in the Bitcoin layer one space. A lot of them will actually end up working together. And if they don't end up working together, we can make the intro and they end up talking to each other and they end up doing something together.
00:32:46
Speaker
Right. So that's the benefit where it's like, even though as a company by itself, it doesn't have like a lot of competitive edge, but just because you're working with the right investors, you're able to kind of fill in the gap for a lot of these things. And that is quite also unique in our space.
00:33:02
Speaker
So how important is team in that matter? Because when we talk about competitive analysis... Team is number two. Team is number two. Team composition is, from our side, when we start a project when it comes to development, we're a development consultancy.
00:33:21
Speaker
What we look first is like, hey, is this team actually capable of, okay, we can build it with them or for them, but are they actually capable of understanding what needs to be built, how it needs to be built, how they need to envision the next steps, right? Like for us, having a good CTO or
00:33:39
Speaker
having a very good non tech CEO that understands what he doesn't know is really important for us because that that's why we say okay, we measure that. When it comes to success, that's that's a big measurement for us from a development side. But, you know, I'm very curious about your your pieces when it comes to team composition. In
00:34:00
Speaker
projects that you're looking at, the companies that you're investing in, like you say it's number two, what are the things that you are looking at in a team and what kind of competences you're looking at for different roles, maybe even?
Team Composition and Skills
00:34:13
Speaker
Yeah, so team is number two because I think timing is number one. If you have the strongest team ever, but the market's going down, it's going down and all the stuff, Bitcoin's going down, everyone's going to crash. Your altcoin will crash as well. That's just like the fact, right? So it's like- Unfortunately. Unfortunately, right.
00:34:35
Speaker
Some of the best teams are like I said, the sharpest people who have some, you know, they're like in the 30s, 40s, ideally the 30s. The 30s are usually the best in my opinion because they've already seen, they're not like as new and green as a lot of the early entrepreneurs. They've done several startups before, the startup companies before. So they have a very good fundamental understanding of like company, like building companies.
00:35:00
Speaker
and that also has a technical or engineering background.
00:35:06
Speaker
So that maybe they don't go anymore, but then they have a very good understanding of the technology, of the innovation around blockchain. That's really, really important because some of the best CEOs, I would probably say, if they're very, very technical, usually they're also like the world's fair. Like if they're very technical, then it also means that you're not very BD focused. You don't have a very strong business sense, right? The world is so fair in that sense. It's just like very, very technical, like they suck at BD. And you're really, really good at BD, you suck at tech.
00:35:36
Speaker
Right. So some of the best, you know, entrepreneurs is about finding the middle ground. Like the CEO, you got to be good at both. Right.
00:35:47
Speaker
You're not specialized on either side, but then you understand both of them. In my opinion, that's the best. And then you have a CTO who's just all the way to the technical side, right? Who doesn't even need to meet any of your investors, right? And then the rest of the team. He comes out in a basement every now and then and say hi. He's like, yeah, my cell one is done. Okay, back to back. He goes offline for three days and he comes back and he's like, hey, I'm back, guys. I got this new update.
00:36:17
Speaker
Yeah, let's, let's, let's, let's, let's, let's, let's, let's, let's do something about it. And let's test it out. Right. It's like, like, that, in my opinion, is the best. And then of course, I think the CEO, in my opinion, needs to, needs to have really good experience in terms of working with third parties. So like exchanges, investors, I mean, one of the most important, like, parties in our industry is the exchanges. Yeah, the exchanges, unfortunately, they're
00:36:46
Speaker
they're like the most important component in our industry. And so like, if you get, if you get a chance to like you, then they'll, they'll, they'll list you. But if not, then, um, that is going to be a lot harder, a lot more work with investors. Um, the other part that we're seeing, like very interesting right now is like, uh, the,
00:37:05
Speaker
The changes also like to basically work with entrepreneurs who are flexible. In a sense, flexible, we're preferred to like, you know, they might want to like, hey, can we adjust some of your tokenomics? Can we adjust some of your vestings? You know, you might have CEOs like very, very firm and like very like does not want to be flexible.
00:37:28
Speaker
Like that's, there's a lot of CEOs that are like, they're like, Hey, we can't do that. We could then, then they lose opportunity, right? I mean, exchanges can, they have hundreds of deals, thousands of deals each day. They don't have to list you. They can list anything. They'll probably be a win for them anyways. Right. So it's like, um, then you just be left alone. So it's also important to invest in, um, entrepreneurs and CEOs who are flexible and they're willing to work with, with, with things like what's, what's, what's out there, utilizing your resources, your resources and your opportunity. Like that's really important. Like part of,
00:37:58
Speaker
being sharp is part of understanding that there's opportunity to be captured and that opportunity might be your next 100 eggs. And those who see it versus don't would just ignore it. Huge difference. Yeah. Okay.
Pitch Deck Essentials for Web3 Startups
00:38:10
Speaker
Yeah. In terms of web three, obviously, this is this is why both myself and Thomas are in the space. It's like, you got an incredibly fast industry. Yeah. In the early stages, so we're talking the kind of checks that you cut,
00:38:27
Speaker
what is it that web free startups in the early stages have to have in their pitch text for each of you to be interested, but also to demonstrate that growth and scalability potential to investors like yourself? And to add to that, like, are there any sort of milestones that indicate traction that you're looking for, where you're like, this is interesting?
00:38:49
Speaker
I think there's obviously in Web 2 and Web 3 are very, very different. In Web 2, I'll probably say like somewhere around like, you know, 100K to start. Or, you know, some people, depending on the accelerator, right? But, you know, generally you want 100K users. But in Web 3, because the onboarding process is a lot more complex, you know, it also depends on what you're doing. For example, if you're doing a 10K NFT project,
00:39:12
Speaker
You're looking like 10k within a 10k NFT project. You're looking generally looking around like 4,000 to 5,000 That's like the sweet spot. So you have like 4,000 or 5,000 users, right? if you're looking at like more of like a Product like a general web free product that has fungible tokens the address you usually want is somewhere between like, you know, like
00:39:32
Speaker
10k to 20k ideally. Some might have 4k, 5k because they're listed and all the tokens are all, all the holders all put their tokens in one address. For example, exchange address, then it will show 4k, 5k. But realistically, there's no exchanges at all. Then they're all separated and all distributed. Then you're looking at somewhere like 10k to 20k. Yeah.
00:39:57
Speaker
That's like the level where you start talking to VCs in general. So that's a starting point. That's a starting point, right. That's a starting point. If you have a couple hundred, it's not good enough. If you've raised already, let's say you've raised like half a mil to a million, and then you're on your way to, hopefully in web two terms, becoming a scale up, what kind of traction are you looking for there?
00:40:27
Speaker
Yeah. So, um, you're in a race already. Actually, to be honest, it's like most of these numbers won't even show up until like you actually completed all the race because the whole idea of web three is that you raise a bunch of money. Your token is not listed yet as your token is not even distributed yet. Right. Um, so, uh, you know, there's, there's not going to be a metric where it's like, you know, like let's see how many token holders your ads have first. And then.
00:40:52
Speaker
what will what will what will catch and open the money right it's usually the other way around first words is like. You raise the money first and then you had to talk initially from what's like we got to you right yeah token generation event yeah so realistically so that's.
00:41:09
Speaker
The number for that we're referring to what I mean by 10k to 20k, it's really realistically when you're talking to like exchanges, right? It's like you, you, you, you start talking to exchanges. Um, then you'd be like, Hey, how many address you want? I mean, from an exchange perspective, they always want more than like the more the merrier, right? So some of them will have you like, if you had like, you know, the, the a hundred K mark, then you're like really, really good.
00:41:30
Speaker
you hit like the 500k mark, like 500k address, that's like really, really, really good, right? So it's like, these are like some of the metrics, but like to entry, it's like, you know, like probably like 10k to 20k, right? Like from a VC perspective, it's, it's slightly different. Like I said, like the VC perspective, we look at other metrics, right? We look at things like the team, the tokenomics, tokenomics is really important too. It's like, um,
00:41:58
Speaker
tokenomics is it's one is like your understanding of the narrative in the industry like where we are we're at like for example, you don't want to be giving your tokens to your investor during a bear market. You get your tokens to the bear market, you're going to get it pretty wrecked, right? And it happens. It does happen. It happens all the time. It happens all the time, right?
00:42:21
Speaker
In 2018, investors got all their tokens in mid-2019. They all got wrecked, right? Yeah, exactly. So you asked me what are some metrics and how can we tell that this entrepreneur's experience or not? You look at tokenomics. You look at tokenomics, they're able to identify what's a good time to be giving a metrics.
00:42:45
Speaker
investors eventually will have to exit it's either now or like later down the road you might as well put up the time that it's like the market's full right so like like these are things that it's incredibly important for us as investors to identify if this is worth investing or not the second time like things are like you're investing how long is investing right and if your narrative is about launching yeah like your narrative is of the tokens versus your equity piece or
00:43:14
Speaker
or when you actually put money in, yeah.
Tokenomics and Engagement in Web3
00:43:17
Speaker
Yeah, yeah. So these are all things that we look at from a Metro perspective, like other things, like I said, with users, followers, you know, some people come up to me and be like, hey, Jason, we're incredibly interested in, you know, working with you guys. And look, our Twitter account has 200k followers. When I look at it, I could immediately know that there are a lot of the Twitters are bots or like their bot, like they went with a third party platform.
00:43:44
Speaker
That is pumping followers in or they're getting people there's like events going on and didn't give away like non-stop And so like there's people engaging on it. But is that a good metric? I mean
00:43:57
Speaker
If you're pitching to like, like, like web free investors, who just got into this space, they're new to this space, they'll be like, Oh, man, this is amazing. Like, we should totally invest, right? Um, but, and I've been in this space long enough. So I know like, this is, this is not like something that could get me excited. Because, you know, if I want to do that, I can, I can do the same. I could hire a third party company and a marketing company. And
00:44:18
Speaker
This is what I pay them to do. I'll get them 10k every month or 20k every month. And their job is just to make sure that my account is growing and getting a lot of engagement, whatever I post. So it'll be a 10x of whatever it's out there. Versus if we didn't use the marketing company. And they only need to do this for maybe five months or six months. Because in this period of time, they're using that
00:44:40
Speaker
golden cure to fundraise. So a lot of investors fall for that. It's like, this is why I feel like I don't, I don't necessarily suggest founders spending too much money on work.
00:44:53
Speaker
It'll work sometimes, like depends on on who you're talking, like the type of investors you're talking to too. Right. But, uh, people will do it regardless. And I think for most invest for most projects, if everyone's doing it, you can speak. I don't, I don't suggest, you know, pumping too much money into this, but I think, you know, putting this as like a small amount so that it's not like zero, right? You know, I would probably say like a Twitter account generally that I looked at, um, the amount that I like is somewhere about like 10 K to 20 K 30 K. And in my opinion, an eight.
00:45:22
Speaker
a 20k to like 80k, there's not much of a difference. And I could easily just spend like five minutes scrolling through a lot of stuff from, and I can have a pretty good, like you look at the comments too, it's a pretty good understanding. And then you click on the users, right? The quality of users is to do like a couple of times and you immediately know if these are real or not, right? You immediately know. So, you know, spend some money on marketing, but don't do it. Like don't overkill it. If you overkill it, then
00:45:52
Speaker
the VCs who do know what's up, they'll be like, why are you doing this? Are you trying to scam my money or something like that? You're making it too intentional, right? And that actually raised a red flag.
00:46:02
Speaker
Right. So quality over quality for that, for that point. Oh, for sure. For sure. For sure. Yeah. How significant is, so this is the last piece on traction metrics, really. Like how significant if you're, if you're evaluating a company set and then, you know, percentage wise, just for practicality. So how significant is user adoption versus that community engagement piece. So like we've got.
00:46:29
Speaker
You know, 20,000 people on our disco, 15,000 people on our Twitter. We've got five to 10K users versus partnerships. So we're teed up to work with, say, Polygon or someone like this. When you're looking at a company, how important, and it's really essentially defining where our founders, our viewers should spend their time.
00:46:51
Speaker
Yeah. Is it going to conferences and trying to try to drum up partnerships? Is it really diving into the community and answering every single question they have on your product? Or is it trying to build up official proof? Yeah, so my my word advice is always fundraise, spend the money so you get listed.
Balancing Development and Community
00:47:10
Speaker
on a good exchange. Don't spend all your money on building products because building product is, I mean, there's a saying is that you're never done, you'll never be done coding, right? You'll never be done like building.
00:47:24
Speaker
Um, if you're a developer by background, you're always like, there's always improvement. There's always things that can be built on top of your existing code base. So there's like a never ending job, basically. And so if you just keep spending money, you can basically call for 10 years, like nonstop until you basically run on money. Right. Um, so you shouldn't be spending like a hundred percent of your time.
00:47:45
Speaker
I would probably argue not even like 70% of your budget into coding and the building product. I think if you're spending a fair good amount of time so that you get the attention of the community, attention of the audience, attention of the exchanges, I think that's important in our space, specifically in Web3. And the idea here is, why do I think there's no point of over-killing and putting your Twitter account in 200K?
00:48:14
Speaker
it just it's just you do it too much then people will understand that you're just here really you're very short term right you're just yeah it's too obvious so you want to find out balance and i think that balance is usually like 20k 30k i think that's pretty good
00:48:30
Speaker
Um, if you, if you do over that, then just, it just means your, your, your, your, your BD is like 80% or 90%, which in my opinion, it means that you're never going to build a product. And once you get listed, you're going to dump your own token and then we're going to get right. Like our investors are going to get right. Um, so like, what is some of the best teams and best, the best entrepreneurs I looked at. It's like, it's definitely not the a hundred percent BD team. It's definitely not the a hundred percent type team. It's like a balance, right? Yeah.
00:48:57
Speaker
And the same thing you can kind of identify that through this how they engage and built their Twitter account.
00:49:03
Speaker
Uh, nothing. Yeah. So it's really interesting. It's like people don't realize that it's like your Twitter account, the way you build it. Is it really good? Uh, it's a really, really good. Uh, uh, uh, uh, I guess it was kind of like a foreshadow of how you want to build your, your, your, your, your, your token and your, your, your, um, when you get listed after TGE because, um, you know, if you're really strong on BD, then, you know, you're going to, you're definitely going to have a lot of shilling. You're going to have a lot of, uh, you know, partnerships, but even these partnerships can be really shady. Like.
00:49:38
Speaker
big connect, right? I want to say like, you know, there's like that early days on Ethereum, right? It's like, there was a Chinese Ethereum, there was Japanese Ethereum, you remember the Chinese Ethereum, it was like, it was Neo and Q7, right? And shares, right? That was like, oh man, that was early there. Yeah. And it was so early. I love Q7 on Neo, I did. I paved on Neo and that
00:49:57
Speaker
It remembered early, early days in 2017 and 2016.
00:50:04
Speaker
Yeah, that took a little bit off the back. That was the funniest thing ever. It's like, Neo was like, they made an announcement. It did look good. It's really smart. I mean, like the people who were like showing in Neo, it's insane, right? They said like Neo was working on the Chinese government or something like that. Yes, that was the narrative. Yes, yes, yes. The skyrockets are like 80 bucks or 90 bucks or something. Because I know at some point I got out.
00:50:32
Speaker
Like, but it went to 150, 150. Yeah. Yeah. So I, okay. I jumped at 70 because there was that announcement Jason just mentioned and it went to like 150 and then it just tanked to like 70. Yeah. Yeah. But this, I mean, this is a great transition to the next question and I, I'm going to push the narrative along cause I'm mindful of everyone's time. Um, so in, in terms of a fundraising strategy, so we would gearing here to try and give our viewers as much value as possible, like try and
00:51:03
Speaker
demystify this industry for them. Should you share some insights on an effective fundraising strategy? When is it optimal to raise funds? What should they aim to achieve before even thinking about trying to talk to someone like yourself, initiating a funding round?
Fundraising Strategies in Web3
00:51:22
Speaker
What's the way around this? What's the best, slickest way you've seen someone just coming into the room and just being like, hey, we've done all this stuff.
00:51:31
Speaker
You're like, shut up, save my money. And this might be a very hot question, because at least from the clients that I've been working with, we hear this very, very often. How do we raise strategically the best, right? And they're asking a development consultancy. I'm like, well, you should probably talk to somebody who knows more about this. So this is a really hot piece that we definitely know with, I think, a bull or a coming bull. I think that's a piece where
00:51:59
Speaker
People really would like to know this. Yeah. I mean, that's a great question. I think the answer is there's, I kind of break down with three parts, right? First of all, it's the timing part, which is like in any fundraising, it all boils down to timing of like, you know, like if the bull market, then obviously you fundraised a bear market, then you obviously try to avoid fundraise. But that's why I say like, I really, but then there's also the argument, which is like,
00:52:28
Speaker
Like I mentioned, I really like entrepreneurs who are fundraising during the bear market because it shows they have balls, right? But again, this is like for the general public, this is like for the average show, right? If this is one of fundraise, like definitely fundraiser in the bull market. This is majority, like you remember like FTX with the fundraiser in the bear market, but then of course like FTX is like a mixed level, right?
00:52:54
Speaker
And so like they have, they don't care about this bull market or bear market. They just do whatever they think is right because they have a lot of substance, right? But most entrepreneurs in this space will not have that level of substance to begin with. And so generally the idea here is, and you will see that trend very, very, very obvious, which is during the bull market, some of the very mediocre entrepreneurs will come in and start fundraising like crazy. The timing is important. The second part is the narrative, right? Which is, for example, like,
00:53:23
Speaker
Like I said, right now Bitcoin is hot. So Bitcoin people are doing Bitcoin layer two, Bitcoin layer one. These are some of the hottest thing in the industry. Some of the layer twos are worth a billion in valuation before even listing. Restaking is hot. All that stuff is hot because there's the added layer and the narrative that people can benchmark against. And so there's always going to be money that people are going to be chasing because the narrative is hot.
00:53:49
Speaker
And so that's really important. It's like, even if you don't end up doing something that is within this narrative, start with that narrative and then pivot later. Yes, exactly. And the third part here, which I think is really important is that
00:54:05
Speaker
When you're talking to a lot of exchanges, always make sure that there's a room for you guys to give some advantage to the exchanges.
Tactical Fundraising Allocation
00:54:20
Speaker
Exchanges regardless, I'll be very honest. Regardless, if you're talking to them early,
00:54:27
Speaker
or you're talking to the late, at the end of the day, and you end up listening to the topic changes, they're going to take a slice out of it. They're going to take some shady ass deal out of it. You know what I'm saying, right? It's like, you might as well just allocate X amount on that early so that you can give exchanges that early discount or whatever they want, right? And to that point, I think it's always, at least from what I've seen, it's always a bigger chunk than you think it will be.
00:54:56
Speaker
Oh, a hundred percent, right? A hundred percent. That is a very important thing to mention because people are like, oh yeah, no, it's like, it's like 500 grand. It's like, well, that might be more. It might also be less. It depends on the exchange. It depends on, but it's always more than you think. So allocate more and reserve more than you think, right?
00:55:15
Speaker
Yes. Yes. Uh, so, so these are kind of the three points that I think it's important when, when terms of fundraising is like, you always have to allocate a bit more than, than you want. Um, you know, because exchanges might, might want, might want some discount. Um, and if they're not going to get discount from the venture side, they're getting to get discount when you listen to exchange. So at the end of the day is you're still going to give exchanges that, that benefit. Um, it's just like a thing in their industry, right? A lot of people like are very like stubborn about it. Like, you know, like they don't want to do that, but it's like,
00:55:44
Speaker
Man, if you don't do that, then other people would just not work with you. So you might as well just be prepared to give out a bit more to exchanges rather than investors, like regular investors. I mean, this topic segues perfectly into the next question, which has been asked by our viewers is basically your tokenomics. How important at the front end when you're raising, are your tokenomics, the utility of the tokens,
00:56:14
Speaker
what are some of the common pitfalls? Like if you see a tokenomics model, and it causes a red flag and it causes everyone to run for the hills, like what are those things that people should avoid? How can we add value to the space and say, like, guys, this is at least the direction of travel you want to be traveling in when you're thinking about,
00:56:37
Speaker
and then further, like how do you evaluate those models? Like, do you actually go into the numbers? Is it, this makes sense, I've seen this before.
Tokenomics Evaluation Criteria
00:56:46
Speaker
I mean, I know suddenly when I was working in finance, it was this makes sense, we've seen this before, but I'm gonna throw analysts at it and make sure, right? And Web3 is at the pace, I just don't think that's feasible every single time. So it's, there's got to be some general trends where you're like, okay, here's a marker that shows this person's thought about it,
00:57:06
Speaker
They know what they're talking about. They have at least some business sense in terms of being able to put together a spreadsheet that actually functions. What are you looking for in that? Yeah, no great question.
00:57:20
Speaker
There's no fixed framework around tokenomics. Tokenomics is actually the third most important in my list. So like I said, timing's number one. The timing also kind of slash narrative, that's number one. Two is the team, and the third is tokenomics.
00:57:37
Speaker
And you'll be surprised, Ash, the last one is actually a product. Product is the least important, yeah. That's important. Well, it makes sense in this list, honestly. Because if you have a great product, but the rest is garbage, then it doesn't matter how great your product is, because actually your product will be garbage. There's no scalability to it. That's what we say. Like I said, we've invested- It's like you could have the best product in the world, but if it's come out at the wrong time and nobody knows about it,
00:58:05
Speaker
Doesn't matter. It's just a great product that no one uses. Yeah. I mean, I think the point here is, you know, um, a lot of people think important product is important, but it is important. But, uh, I think the point here is, do not be discouraged if your product is not popular and it's like, do not have to be discouraged if there's no users using your product. That's the point.
00:58:23
Speaker
Um, so in that sense, like product is not important in the sense that if you're, if you're people are not using your product, then you can always pivot and you can do something else. Right. That's the point here. Um, and which is very common in web three, but going back to your question about tokenomics. Um, uh, I think there's, there's, there's a couple of things that I think we look at when it, uh, when it, when it talks about like tokenomics, like one is, like I've mentioned before, like.
00:58:50
Speaker
Do they, are they actually offering clear tokenomics when we invest? Because a lot of projects, you don't even have tokenomics when we invest. And this is also a very common thing in our industry, which is like, they're doing that equity plus token warrant raise, and then they just don't have the tokenomics figure out.
00:59:05
Speaker
The question is in what situation do we, is that acceptable? And in my opinion, anything with a valuation lower than 30 mil. That's interesting. Interesting. Yeah. Okay. And this is, this is post seat. So they, this is like the first, this is like their first round or first one and a half round, like anything below 30 million. Again, anything below 30 million, because right now, if you look at majority of things, there's happening right now in our industry, everything starts at like 70 million, 80 million, a hundred million.
00:59:34
Speaker
So again, I'm referring to this current time. I mean, obviously at the bear market, then we might be going for like anything below 15 million, right? Very different times call for different metrics, right? But the whole point here is referring to the benchmark in today's world, then anything below 30 million we can accept with no tokenomics.
00:59:54
Speaker
because in our opinion that is it just means that they're early and by having a when you're early to point that you don't have tokenomics having tokenomics actually puts you in a spot where you can't you can't you'll be stuck because the whole point of tokenomics is that you want to be as close your tokenomics should be as close as to TGE as possible if you're designing a tokenomic that does not work with the time you launch that's gonna be an issue and that's basically the risk here right so a lot of people have like tokenomics and then
01:00:24
Speaker
Uh, they launched within a year and then they realized it's like shit like that doesn't even work out So that end up changing tokenomics you've seen that a lot in the past, right? Yeah, yeah, um, or just went go for it and then investors get right we've also seen a lot of that in the past Right. So the idea here is from an entrepreneur perspective It's like it's okay to not have tokenomics if you're super super early But okay, so the question now is when should you have tokenomics, right? Yeah, so I think anything above like 30 million 50 million you should have
01:00:53
Speaker
tokenomics. Evaluation. Yes, exactly. You should have very clear understanding of when do you TGE. You should have like how many, if you had any cliff, do you have any, like what's your vesting? What's your lockup? What's your distribution? It's a monthly basis, daily base. How do you achieve all this? Like is it done through airdrop or do the user have to mint it?
01:01:16
Speaker
if they minted, do they? They don't mint it, it's a state automatically, like stuff like that, right? And would that also include like the utility economics behind like the token, like how it's being used in the platform, all these kinds of things? You want to see that, yes, right. So that part of the utility and the tokenomics, we usually leave it out until even closer to TG.
01:01:41
Speaker
Yeah, so the way it works is like you always figure out the distribution for investors first. And then once you have that bit, I mean, usually it's like, there's like, like, for example, you have like a portion for, for investors, you have a portion for community, you have a portion for the actual product, and the actual product side, like, we will work with them after we invest, like, a lot of times they don't even have too much clarity on how that works. And so it's really, really, really, really hard to and challenging
01:02:10
Speaker
to build a good utility tokenomics, at least for people that we work with. There's not many people out there that can actually do it. You need to have a finance background. You need to understand how, I'd say, today's world works both in Web2 and Web3, depending on where you're launching it, right? Utility token is by far one of the hardest things to do. That's why people love meme tokens.
01:02:33
Speaker
Oh, yes. Meme coins are the best, right? Because you have no roadmap, you have nothing, you have no expectation. There's only upside, there's pure speculation. So Jason, to that point, because I think that there's two things here that are really important. One is tokenomics, I think the other part is utility.
01:02:56
Speaker
And then I think people sometimes mix that up. Right. And, and I know I've done it in the past as well. And I think it's really important to look at tokenomics, like as you said, before TGE and in the utility of, of the tokenomics comes kind of after. Yeah. But I think the hardest, like, how do you ensure that skills? Because so if we're looking at like so far, we talked about a lot about timing and narrative, right. And every time there is a different narrative, every let's say three, four years, there's a different, different narrative, right.
01:03:25
Speaker
having tokenomics scaling towards that narrative or towards what is
01:03:31
Speaker
that is important, or it's going to be important is really hard. So at some point, you will need to diverge from the narrative and the timing where you say, okay, well, but this is this is our utility, this is our perspective that we believe in is going to be doing well for our users, etc. It's like there is a Yeah, there's a critical point. And I think it's a really hard point to find, right?
Adapting Token Utility
01:03:51
Speaker
Not really, not really. Like, I think a lot of people care is find it hard because they're not able to
01:03:58
Speaker
drop the web to mindset. So like I said, if you build a product while figuring out, like building your, your token market cap and everything, it's going to be tough. It's going to be really tough. But if you just focus on one thing and then once you get listed and then you focus on building, like integrating a product into your token, you'll be a lot better, like so much better. Like I'll give you an example, right? So, um, um, you know, we, uh,
01:04:23
Speaker
We, we invested in this project and then initially when they were looking to launch a token, they wanted to do gaming. And then that was like initially the gaming element. And then after a while they realized like, oh, gaming is not a large enough narrative to get money. So then they have, they have to build on, they want to build like a layer two.
01:04:43
Speaker
Like basically their own blockchain, right? And then where you can scale a lot of gaming products on top of it, right? And so like that of itself, like again, if you same topic, which is token utility, but if you apply the gaming token into that actual game,
01:05:04
Speaker
There's no way like there will be worth billions today, right? The same exact same thing, same team, same token utility as if they actually apply that token into the entire network.
01:05:15
Speaker
because people can build on top of that network, then the token becomes like a mega city, right? And it becomes much more valuable, the narrative expands. And so in this situation, we've told them like, hey, look, it's actually okay to not have utility in your token because you haven't found your product fit yet. So just focus on building that narrative first.
01:05:36
Speaker
focus on building like, you know, the market cap if you need to focus on building a narrative first, and then after you build a narrative, then focus on launching the biggest narrative for your token, right? Which is, in my opinion, is your own blockchain, right? And that's what we've seen in this industry, which is like, if you are able to build your own blockchain, like that's why I'm so bullish on Bitcoin layer one, because all the Bitcoin layer ones are essentially the Solana, the Nier, the Avalanche, everything on Bitcoin.
01:06:04
Speaker
Whereas these sidechains, they're basically competing with a lot of shitcoin tokens and blockchains, which you need so much money. You need so much money to compete with each other. You're basically like an EVM, your own EVM, and you have to build everything from scratch.
01:06:27
Speaker
But if you're building on Bitcoin narrative, it's like it's non existent. It's like it's a low-hanging fruit. Like it there's it's it's entirely new and it's like basically the old like the early days of a fairy right there's a fairy em and there's a bunch of like protocols out there like
01:06:42
Speaker
you're basically in a market where it's like, you have a benchmark and then there's all these stuff that's happening under that. And so Bitcoin layer two is competitive because you're basically competing with like all the Ethereum like blockchains out there, which is a market that's been around for like, what, since 2017, right? But Bitcoin is entirely, Bitcoin layer one is entirely new. It's like, we just discovered Ethereum.
01:07:09
Speaker
And now let's try to do something like let's do a fork in Ethereum and then do something new. So again, reproducing the avalanche, reproducing the near, reproducing the Solana, reproducing the things that occur today into this industry, but benchmarking on something, which is in this case, we're benchmarking to Bitcoin. So to that example, I think that's really interesting. So let's say, you know, they're
01:07:33
Speaker
The narrative is chosen. The timing is set. In this case, blockchain bull tokenomics is set up. We have now raised. Where should those proceeds go? What is the use of all that cash that we just raised?
01:07:50
Speaker
Let's say that we, evaluation is above 30 million. So we have great utility. Where are we going to go? We don't have a product yet, right? How do we distribute those proceeds? Where are we strategically throwing money at? We already talked a little bit about it. You said like product last. So how does that look from a percentage perspective? Is it marketing 60%? What is your perspective on this?
01:08:18
Speaker
Yeah, it depends on the market. If it's like bull market, I'll probably say spend a bit more on our marketing. If it's bear market, I'll probably say spend zero on marketing. That's like zero completely. So where does that money go? Does it go to a product? Any marketing you do during a bear market, it's going to be completely wasted.
01:08:38
Speaker
Completely wasted. Yeah. I tend to agree, but where does that money go then? So let's say, I think we have two good examples, right? So let's maybe start with the bear market. So bear market, no marketing. So where does the money, like we raised in a bear market successfully, which is crazy, super
R&D Focus During Bear Markets
01:08:54
Speaker
happy. What are we going to do now? Not spending it on marketing. That's one. Yeah. Yeah. So if there's two ways to do it, right? If you have, you're in the bear market, you should be spending your money either in R and D or product development.
01:09:07
Speaker
And by R&D, what do you mean by R&D?
01:09:10
Speaker
R&D as opposed to like, for example, a lot of companies are spending their money on building infrastructure or researching around infrastructure, right? So not necessarily spending all the money on developing the infrastructure by spending the money to research and to figure out what the narrative. So more building like the decks, like the content, like the white paper,
01:09:39
Speaker
the stuff that you can, like the bull market comes, then you can like show this to investors and raise a bunch of money. Right. So like that type of stuff is much more, in my opinion, much more important. Like there are these, right?
01:09:51
Speaker
um, than the product development. Um, but if you already have a product, then you can obviously innovate on top of your product. Right. Um, like for example, like during the FTX, you know, FTX actually did build a really incredible product that solve a lot of, you know, the funds issues with the OTC and all that stuff. Right. So it's like, then you can innovate on that. But again, the whole point here is they were smart about it too, because, you know, during the bear market, they were also spending some time in RID and it's sad to launch FTT. Right. Um,
01:10:20
Speaker
Yeah, same thing with some of our pro-flow companies that did really, really well. It's like they were investing a lot of R&D into pivoting, into figuring out how to utilize NFTs. And so they spent a lot of time building content. And then when the bull market came, they pitched it to new investors, they pitched it to new partners, and people loved it. And it went like 30X. So it's like,
01:10:47
Speaker
These are some of the most under, like, I guess a lot of people don't usually do, but I think it's incredibly important. Even for us, like, you know, it's a fun, like when we're during the bull market, obviously we're quite active, but bigger bear market, we're spending a lot of money and time into R&D preparing for the bull market, for the next bull market. Right? So, and then that, yeah, sorry, go ahead. And then that ultimately led to our decision to invest in Oronos and Visa.
01:11:17
Speaker
So bear spend your money on research, do a lot of R&D, less product, no marketing, clear. So now the bull, right? So we raise the total money in the bull. Everybody's happy. Everybody throws money at everything. Where are we going to spend our money? Is it now marketing?
01:11:38
Speaker
And it's mostly marketing, yes.
Marketing During Bull Markets
01:11:40
Speaker
Marketing, a product, just enough products that they, you know, they changes like, you know, you guys have the capability and the tech and enough capacity to actually build something. Like this is, there's something that's really interesting about this industry. It's like, there's like a, you know, there's like a lot of scam, like there's a lot of scam and there's a lot of memes, right? And the way I define a scam is like, you tell people you can do this, but you can't actually do it. And the meme is like,
01:12:07
Speaker
You just tell people you'll never achieve this. You'll never have a roadmap. You'll never have any utility.
01:12:13
Speaker
And it's perfectly fine with it. And in my opinion, it's like memes are not scams, right? I think it's the utility tokens are mostly scams, right? It's like they tell you that, you know, they'll draw a picture. It's like, again, like the early days of ICO, right? It's like, you're basically selling a dish before the restaurant has been built. And at the end of the day, the customers will never even taste that dish, right? Well, yeah, memes are very transparent.
01:12:39
Speaker
nothing will come out of it. And if you're okay with that, you know exactly what's going to happen, right? That's, I think, the, call it the value of the meme, the tokens. Yes. But yeah, to answer your question, I think in the bull market, you're definitely spending a lot more money on marketing for exchanges to get listed. I'm spending a lot of building communities so that people get excited about your product.
01:13:06
Speaker
And again, like product, you can have like the worst product ever and you can still get a bunch of users involved because there's like a to earn like framework and model involved. Right. And that's like the unique part of, uh, of our industry, which is like people generally accept doing like things that are stupid and boring. But then at the end of the day, if they make money, they'll do it. Yeah. This is very true. And it's sometimes make my product heart bleed a little bit. I'm like, guys, there's such a nice product.
01:13:34
Speaker
No, we're degenerates because we can earn something from this. Yeah. Yeah. Yeah. I'm going to dip in here and rapid fire the last three of the 10 portion because there's just been so much good stuff coming out that I haven't wanted to interrupt and shove us along. But really the
01:13:54
Speaker
Um, the meat and where I'm really excited to get you is, is the brainstorming component. So I'm just going to rapid fire these bullet point them back at me and, and we'll jump into the brainstorming piece. Um, what, what is the question regarding them? Yeah. Yeah.
Evaluating Web3 Investors
01:14:10
Speaker
So there's, so there's three. So the, the investor of rally wads beyond the capital, what's a green flag for entrepreneurs? Uh, when you're looking at an investor and advisor for a web three startup, what, what are you,
01:14:24
Speaker
what are generally like the bullet points, the criteria is green flags for an investor. Yeah, so I think a good way to look at it is, you know, obviously this branding component, there's a lot of investors are also quite generally quite
01:14:38
Speaker
um, uh, equipped with the knowledge to build tokenomics. Um, a lot of investors, that's like the general kind of like, that's just general skillset, right? They'll be like, Hey, take our money because we have good brand. We can help you with tokenomics. Um, we can basically be the consultant or the advisor without actually, um, you know, uh, taking additional tokens or USD. Um, and so we're like, um, you know, we're the expert and finance and tokenomics, right? Um, and even if I'm raising, right?
01:15:07
Speaker
It's all that stuff. But beyond that, it's definitely the investors that can provide a lot of community, real organic growth in your product. I'll give an example. We invest in a lot of Bitcoin there at once. Part of our job is to get a lot of good developers, a lot of good projects built on top of that chain.
01:15:34
Speaker
And I'm not that proud protocol and or for them for the community to see that just alpha going on, right? It's like you're basically building alpha for the for the retailers for their community, right? That's important. I think that's important because
01:15:47
Speaker
There's no alpha on the protocol that people are not going to want to build. It's like a chicken and egg thing, right? It's like you got to have community users or followers first before you're able to kind of track more developers into the equal system. So that's what we do a lot. We try to, not just from a
01:16:06
Speaker
a product perspective, but more from an ecosystem perspective.
Building Community and Ecosystems
01:16:11
Speaker
And Bitcoin Layer 1 is so early right now. We don't even care if you're just building on BRC20 or TAP or RUNES or RINGS or whatever, right? As long as you're building on Bitcoin Layer 1 is a win for Sora Ventures. And so the way that we do it is we've hosted a conference. So last year we did a conference called Sora Summit in Type A, end of the year.
01:16:32
Speaker
And this year we're bringing it back again two days. We're flying in DJs. We're expecting more than 100 speakers just on the Bitcoin side. It will most likely be the largest Oronos conference in the world. So if you guys ever want something crazy where it's like everything Oronos and
01:16:50
Speaker
You can get Runestone and Stone everywhere. That is the conference to attend. It's going to be end of year. These are things that you know for a fact that it's tangible. It's there. It's real. When an investor is able to do something like that, it not only shows that they're willing and able to bring in a lot of resources for you,
01:17:11
Speaker
But more importantly, it's like they understand that they're not like this one individual who just are here to make money, but you also care about the ecosystem. And that is very important because every investment firm, almost every investment firm in our industry, in Web3, they're all called ABC.
Finding Genuine VCs
01:17:34
Speaker
Everyone's called ABC.
01:17:36
Speaker
Yeah, but it takes a very specific trait like a very positive a very unique trait and character To be a true BC, you know, like for example
01:17:47
Speaker
In the traditional finance, in the world of finance, there's VCs, there's PEs, they're hedge funds, right? Hedge funds look at numbers, right? PEs, they look at numbers, right? They look at a lot of attractions, they look at a lot of things. VCs is by far the ones who generally don't look at numbers the most out of the three, right? But in our industry, there are going to be VCs who only care about paper money, who doesn't even care about if you're going to make it or not. They just want to get the paper money, the 5x, 10x on paper.
01:18:17
Speaker
And from their perspective, they're okay with, you know, investing in higher valuations because they're able to get a 2x return, but it's going to be like a 10 million return, right? And there's going to be VCs like us who cares more about like the 100x return than the 50x return, right? And then just like, but then they're all called VCs, right? That's a funny thing. They're all both VCs, but then they have entirely different business models, right? And there's also VCs who are just like, we're just here to pump and dump, right? And there's like,
01:18:45
Speaker
a lot of that right and there's just only VCs there's also VCs who like during the bull market they're like we're in we're investing everything and then spray and pray right and then during the bear market they're like we're not even here right they're also called VCs right so it's like there's so many types of different investment firms out there they're called VCs but entrepreneurs do not realize like
01:19:06
Speaker
Like these VCs are not actually real VCs. Like most of these VCs are just here to make money. And so in order to be a real VC, you got to be a giver. You got to be a very genuine giver where you believe because the VC model is in order for you to make a dollar, your portfolio company will mostly have to make a hundred dollars.
01:19:26
Speaker
So you're only getting the X amount, a small amount of profit based on the overall success of your portfolio company. That's how the VC model works. In what business does it require anyone to be like, hey, you make 100X for your portfolio company and only get like 1%.
Sora Ventures' Commitment to Integrity
01:19:46
Speaker
So you have to be a true diver.
01:19:48
Speaker
you'd be a true you ever you really like genuinely you enjoy watching people succeed. And as a process, you make a bit of money to stay sustainable. But like that's how the VC model works. Not all people are like that in our in our industry. Absolutely not. I mean, this is one of the first times I hear the narrative of how I personally look at VCs so well explained by somebody in the in the industry, because it's very often the other way around.
01:20:13
Speaker
Oh, for sure. Yeah, for sure. That's the biggest... I always joke with Charlie and with some of my friends that are in the same industry is like, you know, VCs are necessarily evil. But they aren't if you're a true giver. Because now they become support, now they become help, right? But very often, they're necessarily evil because you need their money, but they will not add any value. Or they steer you actually in the wrong way.
01:20:40
Speaker
Especially in web three, you know, especially web three. Yes. Especially web three. Yeah. I tell my friends who are in this industry, they look at us as like, Oh, you guys make a lot of money. I'm like, you guys don't know, like how complicated and how complex and how shady this industry is, even after so many years, right? It's 99% scammers, regardless of your project or VC, and you're 1% the giver.
01:21:06
Speaker
Yeah, there's a lot of takers in this case. A lot of takers, 99% takers, right? A lot of takers. Some are takers, like extremely cost scammers, but generally they're like 99% takers, 1% giver. Yeah. And so it's really, really hard to look for species who are genuine about what they do, who are genuine about growing ecosystem, who actually enjoy watching people grow more than themselves.
01:21:32
Speaker
Yeah, very hard. By the way, sorry, sorry to say this, Charlie, and then I'll leave it to you. But that makes my heart as, again, development, super happy to hear this, that there are people out there that do this, right? Because that is something that, you know, I've seen my clients past and present and future clients.
01:21:52
Speaker
somehow getting rugged by their VC. And it's just really nice to hear that there's just people out there like you, like Sword that says, well, screw that. We're not like that. We're actually the complete opposite. And the whole stigma regarding our particular piece in the industry called VCs is really bad. And we are aware of that. And we're actually looking to change that because that's kind of what you're saying here. And I think that's beautiful. So that makes my heart like really happy here. Charlie, sorry.
01:22:20
Speaker
No worries. So question nine, post investment expectations. So what are the post investment expectations? What do you want to see? You've just put in a ticket, 250K, 500K into a business. What do you want to see? Is it reporting governance, strategic involvement in the startup? What's your expectation?
Investing in Media for Web3 Support
01:22:43
Speaker
I think it's important that they, well, it depends on what stage of the company is it, right? But like from our side, after like literally after they're done with fundraising, so our ventures have a bunch of media companies that will be invested. So for example, we're investors of Bitcoin Magazine, we're investors of Woo Blockchain, which is the most, the biggest like media company in Asia. We're investors of Cryptoslay, we're investors, and we were investors in The Block. A bunch of these media companies, we have about seven
01:23:11
Speaker
portfolio companies in the media space. And generally we don't make money from the media company. So it's equity. And if you're in the media business, you'll know very well, it's like, it's, it doesn't go a hundred X. It doesn't even go 10 X, right? It's like you make some money and you're able to sustain for this business for a long time. Generally when you invest in media, you're never going to get any form of returns. Um, and so like, it's like, it's never like a great business to invest, but we do it anyways because we're probably the one of the few funds ever in the industry that does that.
01:23:39
Speaker
where we can invest some money into media but because we feel that media is one of those business that is so important so so so important for the industry and you should be backing them because they play a very important role in the industry in the sense that they're the ones who provide a lot of news to providing a lot of education.
01:23:57
Speaker
a lot of content for people who are new to this industry and they like the bridge where like people just starting to learn about something and they want to get them right. This is important for us. This is why it's important. The second part is, you know, we also want to be working quite closely with the ones that we have a like law trust, like high trust, where for example, like we're not going to
01:24:18
Speaker
If we don't believe that this project is legit, then we're not going to obviously share it with our media portfolio company. But generally, when we do share it with them, they will always announce it. And they'll always announce it in advance. So these are value add, I think, where we will also help our portfolio company get more exposure. So these are some of the things that we do for portfolio companies. So it's like, if you get money from store ventures, you actually don't end up spending that much money. Or you don't even need to spend that much money on media and exposure, because we can do that for you for free.
01:24:47
Speaker
And that's kind of like our perk. Again, going back to being a giver, this is the most immediate giving opportunity where I think a lot of funds will might be like, hey, we can do this for you, but we'll want this. We'll want this leverage. But for us, it's almost a guarantee. If you take money from us, we'll do a lot of immediate exposure for you guys, regardless. It's just depending on the distribution and level of the quality of media platforms. But from the project's perspective, it's like,
01:25:16
Speaker
you know, once you have some media exposure out about the round, it's all, you know, usually it goes to the questions like, do you want to do another round? Do you want to do a follow-up round? Again, we, depends on the stage, but you know, generally when we invest, it's like we're investing in the pre-seed and they're kind of round one, round two. And so there's always going to be a follow-up round. And that's the question. It's like,
01:25:35
Speaker
We, they raised just enough money so that they can raise more money in the, in the following round. Right. And then once we hit rates and following the following route, it's usually about getting listed and working with changes. And so this is where we start, you know, making some intros of them about like working with like larger funds or exchanges. And you can start talking to them, right. And then if you're changing, are you interested in generally invest in working with them? Um, but regardless, they're, they're on the radar. Right. And that's, that's really important because like they can start tracking like the growth of this project. They start knowing like.
01:26:05
Speaker
It's not like, obviously there's always zero to one experience, like this growth, this entire, basically you want to have exposure so that they know what's going on. And so it's important that from the product perspective, they're always giving updates to exchanges. And these are something that we expect them to do.
01:26:23
Speaker
But on the product perspective, of course, I think it's going to have some upgrades, right? You can have no product before you even launch your, if you do your first round, you can almost have no products or have like a MPP, right? But once you finish a round, you should, at least in the next round, you should have some products that actually make sense. So users are trying it. There's ways where you can use it as value add to a community and all that makes sense, right? So I think I spent some more time in between
01:26:52
Speaker
kind of like the first round the second round to be building a product and then once you hit the second round you finish your second round closing that's when you scale your product right you try to scale your product if it works so a lot of times in the process there's always these these opportunities for retailers to get involved like again we'd like to invest in layer ones so like in between there's all these like
01:27:12
Speaker
like developers or other projects that are building on this layer one. And there's always this alpha that's happening, right? And the portfolio company that we're working with are either supporting them in the process and then while basically sharing alpha in a sense that, hey, you know, whatever you guys built on top of us, like,
01:27:30
Speaker
This is going to be the first phase of utility. And then once we do an upgrade on the protocol, then there's going to be more alpha being built on top of these existing utilities. So these are things that could get people excited and to learn more. And then they'll get their friends to join. They'll get their other communities to join. And then they'll be able to expand. And these are things that we definitely feel that it's important because you don't have to have an amazing product. In Bitcoin, for example, it's insanely
01:27:57
Speaker
It's insanely, I guess, simple because, you know, Bitcoin does not have a lot of the tools and the features just like Ethereum. Right. So it's like even like just air dropping is like
01:28:13
Speaker
cheap airdrop on Bitcoin. It's like a huge thing because one of the most problematic about Bitcoin is the fees are incredibly high. And so it's like if you're able to airdrop to a lot of users, but for a relatively cheap price, that is a feature people want. And if you can stake on your network on Bitcoin,
01:28:38
Speaker
that as a future people want, but staking on Ethereum is incredibly simple, right? But it's staking on EBM-based stuff, it's incredibly simple, but in Bitcoin's world, it's incredibly hard, it's unheard of, right? Nowadays, you want to stake, you're basically on a sidechain that's built on EBM, so it's not effectively a Bitcoin layer. They call it Bitcoin layer too, but it's effectively not Bitcoin at all. But that's how... I mean, to that point, actually, you're not talking about long-term vision and impact, right? Because we've been
01:29:08
Speaker
So far we've talked a lot about
Belief in Bitcoin's Long-term Potential
01:29:10
Speaker
like short term, like our shorter term, but this is kind of like specifically when we're talking about Bitcoin is like, you know, building a staking mechanism, building an air drop mechanism. Those are, those are long lasting impact. Oh, for sure. For sure. So, I mean, from that perspective,
01:29:30
Speaker
Like, how do you look at long-term vision and impact? Like, are you specifically, like, as a VC, or are you looking at these things? Because, you know, we talked about narrative and timing, but some of these things are lasting, right? Like, and these have a lot of impact both, I think, in the website community, but also, I think, in onboarding end users, right? So, how do you look at, and then I think there's a piece to tokenomics as well, utility that we discussed, like, you know, scaling your utility,
01:30:00
Speaker
over the years and over the narrative and over the timing, I think is really important thing as well. So how do you all tie that up and looking at a long-term vision of an impact of a startup, like how important is that for you and I think for the industry, right?
01:30:15
Speaker
Yeah. I think in terms of scaling of utility, it should only, uh, it will always be different in the sense that when you first started, it's always going to end up being different after like two or three years. And that's totally normal, right? This is like, uh, you know, like I like to say like, you're, you're really just finding product market fit as you grow, as you fill your, your, your product. And that's like a web free thing. It's like,
01:30:37
Speaker
You know, it's like you're basically always, you know, start raising when there's like nothing and then as you go you start to find product market fit. I think what's important here to note is that within this journey of building and look, you know, envisioning what's going to be valuable, there's always going to be case studies in our industry where you can benchmark and learn from. Like, for example, you can look at Ethereum.
01:31:01
Speaker
You can look at a lot of the existing EBM's and how they grew in. There's a lot of stuff that's happening within the EBM space. Even for Solana, for example. People ask us, what is the limitation for Solana? And I'll say, the limitation of Solana is equally the same as the limitation of Ethereum. There's no innovation on Ethereum. There's no innovation on Solana. And Solana will innovate when Ethereum innovates as well.
01:31:28
Speaker
They claim to be a better version of Ethereum, but realistically, in terms of the core features, like staking, a lot of these upgrades that's happening on EVM components. At the end of the day, they're just benchmarking Ethereum. There's innovation on Ethereum, there's innovation throughout the entire ecosystem. I think what's important, but then it's important, if you're building on Bitcoin, for example, then
01:31:52
Speaker
There are so many things on Bitcoin that is not even achievable today. That narrative is maybe three, four, five years. And that's why we're so bullish on Bitcoin. Bitcoin is basically an embryo. It's zero. Absolutely zero. And then we're going back to 2008. Probably going back to 2016, basically, out of Ethereum. So it's a long vision. If you want to say how long, I can probably say maybe 10 years, maybe 15 years, it's possible.
01:32:21
Speaker
That's something bad to make as well, by the way. Oh, for sure. I mean, the only bet I'll probably make today is Bitcoin. I mean, if Bitcoin goes down 50%, all your shitcoins could go down like 90%. So it's like, we're investing into the future of Bitcoin because the future of Bitcoin secures the future of about three.
01:32:43
Speaker
and
01:33:06
Speaker
Like there's activity on Bitcoin right a lot more than people expect there are so it's like these are genuine data that will can be scaled on to secure kind of the entire Bitcoin network which you know most like most mostly to secure kind of the probability of miners and then which will ultimately secure the probability of
01:33:24
Speaker
of the entire web3 industry. This has just been fantastic, Jason. So thank you for taking the time. We're going to bypass the brainstorming piece because I think we've basically done it in the 10 questions and I'm mindful of time. I would say this, Turley. Jason, I could talk for hours with you because your perspective on all these things so far,
01:33:46
Speaker
some of these things have been eye opening. I'm in this industry for the last six years as a builder, and as project manager, doing all these things, but talking to somebody that has such a, say, call it a peer view of what investing means and being a VC means in this industry, I think is, for me, it's been incredibly enjoyable to listen to. Yeah, I like it. A real pleasure.
01:34:12
Speaker
You know, likewise in a sense that I think it gives us the opportunity to see that there are VCs who are, you know, in the past, you know, when I started first investing, you know, for SOAR Ventures, I will always feel like it's important to FOMO, right? You're always important to capture what's hot in the market. Nowadays, I've been in the industry for like eight years where I've been like invested. You know, I've been running my company since 2018. Honestly, I've seen so much in this space and sometimes it's like,
01:34:39
Speaker
like the most, the most important thing you got to realize is like, there's always 100x opportunities, like 100x opportunities in our, in the web free market. And so that you never, you shift so more into something that you don't understand. Right. So nowadays, like even we, we have like, you know, meetings with my colleague and
01:34:56
Speaker
My colleagues will be knocking my door and be like, hey, we got to invest in this company. It's like, it's hot as hell. It's like, you know, all these big firms are investing. I'm like, what's the valuation? And within five minutes, I'll be like, this is not worth investing. I understand that this valuation is probably going to go up. I understand that this is backed by some of the top firms, some topic changes. But, you know, in my experience of investing, it's never about chasing that ultimately gets you to win.
01:35:25
Speaker
It's never like that. In fact, I think that will lead to a dead end because it means that you're not an independent thinker. You're not, you don't have your own thesis. You can get distracted easily. And one of the reasons why I live in Taiwan and why we moved to Taiwan over Singapore and the Muslim people in Asia, you moved to Singapore, right? Right. Because the same reason why Warren Buffett is not based in New York, distraction, right? You have a lot of distraction. You can't think independently.
01:35:51
Speaker
When you have a lot of noises around, news in general, you haven't defined this world long enough. News in general is one of the worst media out there for people who read news. It means like all these news has been out within people who were in this industry hours ago. And so when you're selling the news out there, it's already, it's secondary stuff, it's secondary data. You feed into the audience and they get wrecked.
01:36:17
Speaker
right so news is one of the worst data in my opinion to go for if you're actually like genuine about getting involved with finance right so like the same way in crypto crypto is the same way like the news comes out for something
01:36:30
Speaker
probably 10 hours ago, there's sort of been like the market where you kind of took in already a small amount of players already kind of like knew the news and there's only insight already going on, right? So it's like, it should not be like our niche, like if you're an investor, especially you want to independent you wouldn't be an independent thinker and then
01:36:47
Speaker
that have your momentum, you have your own style, it's important to not get FOMO in. Nowadays, we miss these opportunities on these, you know, big malaria too. We don't feel a thing. Like, we're actually quite, we see so much. We're so transparent, we know exactly what's going to happen. Even if it's a 10X for us, it's like, oh, that's nothing, because you can make a 10X on there. Like, we can make 10X on the big malaria one, you know, every week if we wanted to.
01:37:10
Speaker
Right? So it's like, it's like all the trees like that every week. So it's like, at the end of the day, you want to have your own style and investing, just like as an entrepreneur, regardless if you're running a VC fund, regardless if you're starting a new company and we have three, regardless if you're ready to pivot into to new narrative, you should have your own style.
01:37:30
Speaker
Yeah, that's big. It's one of the reasons why Charlie and I are doing this podcast together. Yeah, pretty much. Same reason, like carving your own road, carving your own style towards what we believe is right and what we believe is important rather than what the whole market says and what is being echoed on conferences.
Independent Thinking in Investing
01:37:49
Speaker
And I think that is so important. And also I think towards our listeners, towards our clients, having your own style and
01:37:58
Speaker
Being a bit stubborn in believing in what you're doing is not a bad thing. It's not. It really gives you an edge and the right people will see that too. I think that's a very important thing to mention as well because I think Jason, when you guys started
01:38:15
Speaker
People were probably also like, oh, you guys have a bunch of crazy ideas, right? But as you move forward, they also see the success because you carved your own path. And they're like, oh shit, yeah, that's actually, how did you do it? Well, by being a bit stubborn and by carving your own path and being brave, I think in the sense, right?
01:38:33
Speaker
I'm going to move on to the last segment of the pod. So this is called your desert island essentials. Something we came up with or came up with that basically says if you had no bags, you're starting again from scratch, beginning of your career, no bags, no black book of contacts, no reputation.
01:38:55
Speaker
what would be, but you keep the knowledge you have now, what would be the five things that you bring with you?
Essentials for Starting Over
01:39:02
Speaker
Program, book, course, tooling, something practical that you can share with our listeners that they should probably do. Yeah, I've heard a version of that before. I think, you know, like, generally speaking, if I go bankrupt tomorrow, I can definitely make it back. I think as long as you keep the knowledge, you keep the experience, like, the one thing I will need is give me my t-shirt, my underwear.
01:39:28
Speaker
You gave me that close and I think I'll make it back quite well. Okay. So, but again, we have four more pieces. So it's very clear you're close. That's an important thing. And to that point, I think everybody needs that, right? You know, there's a couple of books, I think if you're referring to like things that I think are
01:39:52
Speaker
are really, really good. And that, you know, at various different life, I guess, part of your station different in your entire life, it helps a lot. One of them is I'm a big fan of actually modern philosophy. So one of them is The Prince by Nicole Machiavelli. Right? Okay. Yeah. And I read that book a couple of times. And I read in high school, I read it, like,
01:40:19
Speaker
philosophy is interesting because philosophy answers a lot of questions that a lot of people cannot usually give a response to when, as, as you progress in the business world, there's, there's mentors they can talk to, but even sometimes mentors cannot give you a lot of the advice or proper advice. And so you go to books, but then of the, all the categories in books, it's generally, I think the most extreme case is religion, but you know, generally within religion,
01:40:44
Speaker
I think philosophy, especially modern philosophy, is a very practical approach to solving problems and perspective on life. And so a lot of problem solving and a lot of understanding of things that the book from The Prince talks about can be really applied to the business world a lot more than people expect. Yeah.
01:41:05
Speaker
It's like in the, in the East, there's like the R of war and the West, there's the Prince. Actually the irony is the, um, he himself actually wrote in the book called the R of war, which is exactly the same title. Um, but it's, uh, it's, it's, it's published a different time, timeframe, different year. If you didn't know that. Yeah. So, so that's your number two. What's your number three? I'm not going to make it as easy. My laptop, my laptop, my laptop.
Philosophy and Wealth
01:41:31
Speaker
You got to give me a laptop.
01:41:33
Speaker
Right. My laptop, my wifi, right. I love this. I don't like wifi. I think those are important, right? You gotta be connected to the world, right? You gotta be like, this is all about like making money. It's all about digital, like everything is digital in this world. So you gotta have laptop and all these things, communication, wifi. That's important. That's like, that has a two, right?
01:41:54
Speaker
Yeah. I say that because honestly, like I've asked myself this many times, like I'm in this business where I consider myself to be like high risk. Like if I do end up going bankrupt one day, can I make it back? And I'll say yes. Yeah. I feel very comfortable that if I, if you just give me my t-shirt and underwear and my jeans and I can easily make it back.
01:42:17
Speaker
So I'll count it as two, if you agree with me on environment, because you just mentioned, hey, we moved to Taipei instead of Singapore. And together with Wi-Fi, having a laptop. So no distractions, right? Yeah. So if we put you on a desert island with just Wi-Fi and an electricity outlet, Jason will be happy, right?
01:42:43
Speaker
Yes. Yes. No, no destructions. Yeah. Yeah. And, uh, it's every, every business person will have their own Bible, their version of the Bible. And that's for me is the Prince. So, so then we have one more man. Um, that's hard. I mean, I, I don't want to say like places, I don't want to say things like how, like a, like a shelter or anything or water like that, because that would be the most boring response. Um, yeah, but, um, you know, if anything, I think,
01:43:09
Speaker
I guess it's really hard to do this on an island, but one of the things I've always thought about the way I look at money is that money is really a tool that you're borrowing from society. And so whatever money, let's say you go to your island, you make your money back. So what do you do with money? It's useless on the island. So I guess on an island or without the island, I've always thought about this as at the end of the day, you don't need a lot of money in this life. And so whatever money I make,
01:43:39
Speaker
I do want to donate away to other people in society and to make good use of it. Actually, I've started donating to high schools already, like institutions. And it's like part of that is because
01:43:54
Speaker
Um, yeah, I mean, my, my understanding of money to me, it's just like, it's like, it's a temporary tool. It's a, when you die, there's like, it's, it's just, you're not going to be able to bring with you. And if you have kids, if they're legit, you can provide them with the best education from you from around the environment.
01:44:10
Speaker
But if they're not legit, even if you give them a lot of money, they just couldn't waste it. And if they're legit enough, they'll be able to make more than you can. And so you don't actually need a lot of money to start a family, to especially have kids who are really, really smart and very successful. In fact, some of the smartest people, I think, who entrepreneurs in the last 200 years
01:44:34
Speaker
come came from like really like medium like, like, basically like normal families, right? It used to be the fact that it like a lot of rich comes from their family. And that was like the old generation, right in Europe and in Asia.
01:44:48
Speaker
But even in Asia today, it's becoming less and less of a thing. And so my fifth item is that if there's a way that we can send out money out and distribute that money out, that would ultimately be used for existing. There will be meaningful purpose for making money.
01:45:09
Speaker
That's cool. I will say this, I think I've never heard that from somebody who runs a VC, like that take on money and I love it. No, I think it's great. Like Jason, I come from a lot of VC as part of this job. Like VC is just giving money, right? And so if you make more money, you can give more money away.
01:45:26
Speaker
Yeah, but this, well, this whole episode is a bit, bit about giving and supporting, which, which is, uh, I, I will say I've been very surprised because I would not have guessed that at the beginning of this episode, which I think is, you don't follow my Twitter then you don't follow my Twitter. No, no, I will need to, I will need, man. Yeah. Yeah. Yeah. If you follow my Twitter, you know, like, I like to give a lot of stuff away. I'll, I'll subscribe as soon as we can. Um, yeah. Yeah.
01:45:53
Speaker
So Jason, where can people find you? What would you ask? What's your call to action? Oh, you know, follow me on Twitter. I'm always active on Twitter. You know, people can find me on Twitter all the time. I'm very open to DMs. If I'm not checking, it's probably because I'm on the plane or somewhere, like most likely on the plane, right? But generally, I'm always checking my Twitter. Yeah, my Twitter is just Jason Sorrow, VC.
01:46:22
Speaker
Fantastic. Yeah. All right. Thank you very much for today's episode. I hope you guys got some value out of this. I mean, if you didn't, you're the problem. I know I had. I know I did too. And with that, we'll see you on the next episode. Thanks very much. Thank you. Goodbye.