Follow the Money: Where Are Crypto VCs Placing Their Bets in 2025

Transcript

further ado uh I welcome the VC panel on stage and their moderator Benedict Orban. Yeah, thank you very much. Uh I would love to welcome uh speakers of this last panel of the day is the VC panel. Super interesting. Uh in a moment my name is Benedict Orban. I'm board member of the crypto valley association and also with my other hat on head of ecosystem at CV Labs and CV VC. So today we have a stellar panel actually right above me. So I would like to ask our panelists to come in put your hands together please for us and uh we'll right away jump into Yeah. We try to position ourselves under

your pictures. Great. So, I'll start off with a little intro um introducing our panelists. Um well, I'll start off with uh probably ladies first. This is Diana Beck's partner at 1KX. Uh probably you all have know um as well as she's a board observer on various different companies here in Switzerland and abroad. He's associate fellow with seed uh business school University of Oxford in crypto since 2013 I heard and uh she believes in the power of art and culture for social change and she's a supporter of a very specific project called a field. So

this is Dana. I'll go further into discussing and introducing her. Next up we have on her left Max Schneider, investment manager at Block Wall. Uh Max cares deeply about ownership aspect of the crypto world. He is with the investment team of Block Wall German VC and is still passionate about the future of crypto as one uh as on day one. So outside of work, he most likely find him reading and cycling. Right, Max? Yeah.

Next up, we have here on my left in orange shirt, Alex Odaju, investment director of Easy Labs. If Easy Labs wouldn't say you too much, they are Binance Labs. They rebranded um in in the beginning of this year, right? So, and um and CZ personally is mentoring the portfolio companies in in in Easy Labs. We'll hear more about them. And last, but definitely not least, we have uh Dr. Steven Waterhouse, the founder and GP of Nazare Ventures, an early stage AI venture fund. Um, he's been active in building investing into tech in our tech web 3 and AI since 1997.

Pretty impressive. And uh, what I also found about out about Mr. Waterhouse that he loves cold waters uh, of the Pacific and the Atlantic West Coast. So let's make the deep dive into the cold waters of VCs. So um in my first question I would love to hear from you um about your funds its philosophy and maybe what what defines your fund if you would need to summarize it in two and a half three sentences. Maybe ladies first want to go first. Sure. Um so 1KX was founded back in 2018. We're a crypto native fund. Um we our overarching

thesis is around the cost of trust. So that blockchain really is a tool for replacing trust with uh math and code. We invest broadly across mainly three categories. So consumer that's gaming, social, um anything fun really. Uh middleware where we have wallet infrastructure staking um data and uh infra as well. So scalability um deepen is is another big focus uh and al also I would say some investments in in funds and Dows but mainly across those three categories. We've made over 120 investments across the space. Um typically we like to be a lead investor

and we're investing um sort of from from idea stage series A and then following on. Thank you. Um how about we jump to Max Yeah, I'm Max. I'm an an investment manager at Block Wall. We are we were founded in 2018 as well. We are based in Frankfurt, but our team is a little bit spread out. So, I'm living in uh in Berlin and we have someone in in Paris as well as in Munich. And um our focus is really on the early stages. So, we predominantly invest around preed seed stage and then we have a follow on strategy where we can follow on up until series A. And the core thesis of our fund is focused around the decentralization of the web and uh exclusively focused on using crypto and

web 3 for that because we really think it's important to take some of the power away from centralized entities who have grown too large these days and we think that crypto and web 3 is the right tool to get that done and um yeah that's kind of what we do. Okay Mr. Waterhouse. Stephen, you want to go? I just want to clarify. I wasn't investing in decentralized technology since 97. It was it was AI originally. Fair point. It was really early. Um I uh Nazare is focused on AI. Uh we're not a crypto fund. We're actually crypto is part of it. Um our thesis is focused on not apps and not hardware. So we're kind of looking at the infrastructure, the algorithmic model layer. Um, basically

our theory is is that the the current stack of AI um will be disrupted. One of those disruptions we think will be decentralized technologies and crypto is a subset of that. Thank you. Last but not least. Yeah. Hi everyone. My name is Alex. Um so Easy Labs formerly known as Binance Labs has been around since 2018. Uh we have a portfolio for 300 um investments. Uh we're very much flexible in terms of the vertical. So we've been investing in anything from base layer infrastructure, layer ones, layer twos, bridges, um you name it, you know, middleware analytics all the way to application layer, including DeFi, gaming. Um what

we're really focused on is on the impact and how we can apply the blockchain technology to make things better in the real world as well. So, um, for the most part, we're looking for sustainable long-term investments. We have investments that we've done since 2018 that we still haven't exited. We just keep holding them, never sell, you know, just diamond in hand all the way through. Um, in terms of the stage, so we're focused on as early as possible. Preed seed is our sweet spot. We've done some other later stage investments, series A and series B. Um as of late we're also extending um towards later stage. So we are taking a dumbbell approach where we could also

invest in live tokens um but with the same mindset as um as in the venture approach where we look at across cycles very long term especially that some of the um projects now decide to go with a fair launch so they might not actually raise uh from VCs altogether. Um, as a final point, we're also in have expanded our focus outside crypto as well. So, we do more traditional investments as well as biotech. Okay, thank you very much. So, jumping right into it. So, my next question is risk on or risk off? How do you feel?

How do you invest? How has 2025 been so far? And uh are you risk cautious or really just deploying um and going with the flow? So would love to hear maybe starting off right away with Alex uh now this time. Sure. So um we are as active as ever. We actually never stopped really. So again for in terms of the macro picture and uh the way we look at the high level um sort external factors that's not really uh something that decides our velocity of deploying capital. So uh we're as active as always. In fact, I I don't think there is um enough opportunities. There's enough capital. There's not enough

investable opportunities. So uh we're very much risk on. But that doesn't mean that we just invest uh you know in everything that comes across our desk. We're very thorough in terms of selection and as I mentioned we look at everything as a long-term partnership. Appreciate maybe Diana right later. Yeah. I would say like typically we are known and and how we typically are is for being counteryclical. Um we really like to invest in bare markets when um kind of everyone else has left and we feel like we can really um be the people in the corner, the ones like who believe when when everyone else doesn't. Um and we've had a lot of success with that. um where yeah there have been certain investments when in areas when where no

one else was was looking and um yeah we we really like that um we are actively investing though I would say we're always active I would say we probably write like one to two lead checks a month um maybe last month we even had four or five new investments announced so um yeah we're pretty like consistent um in terms of being uh active investors but yeah bare bare markets are actually our for it. Thanks. Yeah, for us it's very similar. We are also always risk on basically and that's mainly because our focus is really on the earliest stages preceded and Z and it just takes a lot of time to build something real. Usually it takes somewhere from three to five, six, seven, eight years until you might get a

liquidity event. In crypto, it's sometimes a bit earlier, especially if there's a token component to it. But since we don't do any liquid strategy and we also don't do deals where there's a very short-term token launch. Um so we really focus on partnering on the long term with founders and then it just takes time and there's always good founders who have great ideas and we just look for them and then we back them and that's our strategy. Uh yes, so we're investing in two bubbles at the same time. So um both crypto and AI. Uh so we're always risk on. Um uh I mean similar to what Max is just saying, we're trying to avoid things where it's a quick a quick flip. Um

because that quick flip is very hard to time. Um investing into crypto markets where you're seeing a TGE coming up and you think you've got a good unlock strategy, you know, it's like good luck. You might as well just invest in the liquid markets. Um so uh but primarily you know I'm very bullish on on AI in general. Um and then over time the the convergence of those things with crypto I think will be dramatic in terms of the outcomes. Can't wait to hear more about the angle. We have actually question prepared for that angle. Before we go into into sector focus uh I still have a question like have you made any shifts in terms of ticket size investment pace?

We already heard Diana a bit maybe with you last month. Maybe that might be a new trend or founder expectations based on macro or regulatory trends building up in 2025. Uh Stephen, you want to go right away and take? Yeah, sure. Um well, it sort of like two weird forces acting against each other. On the one hand, um it seems like we're going to get some regatory um maybe the storm is is clearing, but having said that, nothing's actually really changed. It's just that there's a perception that things are going to change. Um and the SEC is obviously a a little bit more friendly, but no new regulations have actually happened in the US yet. So just just beware um on that one. Uh but at the same time, um

the US macro stance is just leading to incredible uncertainty. So, uh, speaking from the LP position, um, we see people who are just, you know, waiting and waiting and waiting to deploy because they're just not quite sure what's going to happen next. Um, from the customer perspective and in the AI in the I sector too, we're starting to see, uh, wallets tightening because people are unsure what's going to happen next. Uh, so it's a it's a pretty uncertain period. Um, in terms of fundraising and investing on VC, uh, it's it's hard to say whether this is a bearish time or bullish time on that perspective. It's kind of like a combination of both things. Uh we see some teams rapidly raising and then other teams really struggling. So it's a it's you know it's

a mixed bag. Thank you. Thanks for sharing. Max, how about you at Blackwell? I don't think we've made any strong uh changes in our investment strategy. So for us it's always about having enough exposure to a certain deal that if it works out that it could potentially return the fund. And if you talk about equity at the early stages, that usually means you start by billing at least around 3% at preed stage and then you try to get it to at least 5% at the seed stage. And that's just you just need that to have that exposure in order to return the fund. And obviously that depends on kind of how large your fund is uh and how many investments you make.

And that's kind of what defines for us how we invest and that has stayed the same. So we always focused on having the ownership that works for a fund model. Great. Yeah, I would say for for us again, I mean, yeah, I would agree with Steve that it is um a mixed bag overall. Um it hasn't sort of changed our our outlook or what we're seeing or how we're approaching the um the market. And again, I think this is as like others on this panel share this as well, being like very long-term focused. So, um, yeah, again, like some of the projects, even we've had projects that have just, um, actually even just gone to market with their their token this year that we've been investing in,

um, yeah, since as far back as 2017, 2018 and and that we're still backing. So, um, it's really about the focus on the the project itself versus um, like what's what's happening in the the broader market environment. Thanks for sharing, Alex. Yeah, no major changes on our side, in terms of the investment strategy. One thing that we've um added though is um a new format of an incubation program which we've been running uh before and we kind of shifted after COVID to fully online and then recently we just restarted this fully offline again. So uh the first iteration of this relaunch is going to be in New York City. It's starting in

couple of weeks time. Um the format is very similar to what you've seen in web two like with Y combinator and similar programs like a 10-week program where we uh will have um like couple of dozen projects uh that will be very hands-on uh very early stage and we can have a lot of impact and um input into a lot of their decisions around starting from fundraising to to tokconomic design to go to market um and so on. So that's something new that we've added. We've um announced it I think a couple of months ago and we're actually kick kicking it off very soon. Okay. Thanks. Thanks for sharing. Super interesting. Um so finally we reached to the question where

we will be discussing where we are placing the bets right and um obviously the main question is which verticals or teams are most exciting to you right now. But I would also be interested and probably also interesting for the audience here that do you have a particular edge, a network, a team, geographical footprint that allows you to go deeper into these sectors which are interesting to you. Um maybe why don't we just Diana would you want to go take this first? Sure. Um so what makes us different? So our investment team is focused on specific um categories um and like the areas of investment. So, for example, we have Peter Pan, who was one

of the founders of of Meta Cartel, like one of the first Dows, who's, you know, been building games and super hands-on on the consumer side. Um, who's covering consumer along with he's got Jacob working with him, who was one of the founders of Social Graph Ventures, which did a lot of like the first checks into almost all of the consumer projects across crypto. Um then on the infra side we have our partner we die who's a PhD in cryptography and I I constantly get told by founders he's one of the most technical investors in the space. So um it's really amazing to have him. So we have these um people on our investment team that have that really deep knowledge in the areas that we're looking at and that allows them to skip over with founders don't need to be explaining the market but rather they're

going to be working and talking to people who really have like also built in the space and deeply understand it. I would also say that everyone on our team is former founders, builders um or develop technical developers as well. Um so yeah, I think every every single person on the team has has launched a company or been part of um like a growing startup themselves. So we have this um empathy with the founder journey um and are able to provide advice along the way. Then in addition to the investment team, we have the like a we have actually like a CTO and a tech team that then work hands-on with our portfolio companies on the technical side. Um I know that every VC of course says that that they're hands-on, but um

we we really do try to live and breathe it. I'm actually on the the post investment side as well. So working with projects on on go to market, on their token launches, on institutional adoption um and all those areas. So yeah, we are really like in the corner. I would say also we're like very online and very onchain like almost in an unhealthy way. But uh that's what you have to be in crypto. And if if I would ask you to like name two or three teams that like the teams specific are very uh excited and double clicking into uh what would be that like deep AI or or what is this the team which if I would need look into those specific teams with specific knowledge and experience uh you would

you would name what is that keeps you in 2025 or these teams moving? Okay. Like the the investment themes that Yeah. Yeah. So teams. Yeah. Um so yeah so I would say definitely on the infra side um a lot of like Z we have a lot of investments in ZK techch and also privacy that's like an area of specialty for for way um also looking deeply of course um at AI and and crypto I think we've been through like this first wave where we're looking at like bringing compute onchain and and kind of like agents and now it's really about like what unique capabilities or platforms can blockchain technology unlock for AI that you know isn't possible otherwise.

Um and DPIN is is also a big area of focus for us. We have our chief economist also Robert who who does a lot of research in this space. Um and we have quite a few investments from like compute storage across the board and I think that there be a lot more interesting um kind of like zero to one opportunities coming out of that area as well. Thank you Alex. How about easy easy labs? So first question I guess was what differentiates us? I think um we have a pretty wide network um and we can tap into this whole universe of different parts. You know we're very close to the BMBB chain team as has a very large active user base lots of TVL on it and

you know lot of DeFi activity. Um there's all sorts of different other uh parts of the the network that we have you know Trust Wallet Coin Market Cap. So we can tap into all of those resources which help with some of the go to market or integrations with some of the portfolio companies that are looking for that specific type of uh support. Um but also we're very fortunate to be you know in a place in a position that a lot of founders want to talk to us. So and we we get a lot of inbound interests which we're very fortunate and very grateful and we try to you know talk to everybody and across all of the time zones. So uh we have team representation

starting from you know where the time zone starts to all the way where it ends across all most of the continents. Uh so so that's helpful as well. We're connecting 247 I guess like everyone in crypto is. second uh part which was um no worries. So it was first was what are the verticals which we are interested in. Second was what is your competitive edge there? like so so on the vertical um I subscribe to a lot of what Dana mesh but something um in addition would be like RWA I think there's a fundamental shift and the uh regulatory uh side so there's a lot more open

openness to touch stuff which was highly risk even in the US you know for example tokenizing stocks which are authorized securities big push on that side we're seeing a lot of excitement very interesting uh projects are building that I think the tech on that side is not the main differentiator in fact I think that's pretty commoditized what it is interesting is the distribution the go to market channels all of the integrations that is enabling that and to some extent like the regulatory setup how this is achieved so I I think we've seen the RWA starting with like stable coins which are the first form of very like um initial primitive the RAA tokenizing like a bank account. Then we

moved on to the cash equivalent of Tibills. Moving a bit further out which is you know private credit funds, money market funds, um corporate bonds. Now we're seeing adoption of uh stocks and I think we're just going to chip away at it. We're getting to more illquid but a lot more interesting, more exciting uh type of RAAS. So very excited about that space. spending a lot of time meeting founders and understanding um the regulatory um yeah setup that is is going to change is changing already.

Understood. Stephen, where are you placing the bets obviously uh with your specific focus? Yeah, we're like all in on AI. Um but within that we like I like to define a thesis by the things we don't do which is like it's easier when you can say no to people. Um, so we don't do hardware, we don't do apps. We break those rules every so often, but those are primarily things. We're also not looking at um like yielding engines, DeFi, AI, these kind of like trying to build uh kind of automated hedge funds. That's also not an area for us. So, uh, what does that leave? Well, what I'm primarily looking for is, uh, companies, companies, not projects. I like to use

the word company because it makes sounds more serious. um that uh sorry guys um that are um where the token is not the product right so when someone comes to me and they start telling me about the network and the go to market plans and I go to market plans are basically how they're going to pump the token I'm just like listen tell me what the product market fit is and we'll have a conversation and they say what do you mean I was like well who are the customers who's your pilot client etc etc I want to build real companies where crypto is part of it but it's not all of it um so that's really The area we're looking at included in that is areas like decentralized training, inference, reinforcement learning. Um, you know, incentivized GPU architectures. Uh, we're looking at, um, a lot of stuff

around enterprise agents, uh, not the crypto versions, but how they coordinate, um, and communicate with one another, um, across different networks. And we think that will have some strong crypto integration eventually. But to be clear, we we invest in both sectors and we think there's a convergence coming. And so some of the deals we're doing, we're investing in things that start off as crypto and then and drop the crypto and just go AI and other ones we're doing AI investments that adopt crypto. So we're seeing this kind of convergence between these two areas over time. Thanks, Max. How about block wall? Yeah, I also think that finance is as a general term probably still one of the largest and most interesting aspects for crypto because it also just has if you look at the adoption, it has the most

adoption. It's also just philosophically the most obvious case for using crypto and obviously you have certain subsectors there. You have DeFi which is probably a little bit of a negative sentiment in general at the moment but I think there's still a lot of opportunities there especially around making it more simple and making it more usable. So this is an area that we're looking at and then IWAS have been mentioned already. So and that as an example for general or traditional assets that are being being uh being getting onchain at the moment. I think there's a lot of traction happening there and we do have a probably one of the best performing uh portfolio companies in that area specifically around tokeniz and treasuries and I think those are very interesting sectors and then obviously the payment space is

very large and if you look at generally how payment flows work right even if in one simple transaction there's often four five six different companies involved in one transaction and all of them make a cut and obviously it's still the question of where you can make the biggest money but this whole payments and crossber border payment sector and especially enabled by stable coins is extremely interesting as well and it's a very very large market and where you have very different ways to tackle the market and make money. Okay, super interesting. Um going forward regional dynamics and US dominance. Uh I just wanted to ask you actually all uh how do you see the regional differences in deal flow and opportunity while uh is the US still leading the charge in cryptov you

could say or are kind of new hubs emerging with real weights like outside of the US who would want to go first Stephen. Yeah. Um I feel like I'm never answering a question that you're asking but I I'll I'll try. We're having good time. So, so uh I so maybe counterintuitively um I think that the tech talent is fairly not evenly distributed but is distributed globally. Um so we have deals in Zurich, London, we have a deal pending in Singapore. Um yeah, we have we have stuff just all over the place. Um we're just only recently doing three deals in San Francisco which were sourced there and and started there. Um I I think that

in certain sectors like specifically AI there's only one place in the world that scales those companies properly and that scaling is done with business and marketing that is San Francisco. That is also true say if you're doing a finance startup maybe you want to scale in New York. So there's kind of like certain areas where the scaling happens in those regions. Um I'm I'm like largely bearish on distributed teams currently. the idea of like, you know, run your team like a Dow and everyone has to live in different places and you spend all this time like trying to figure out how to talk to each other. I think that trend is dying and I think we'll start to see companies start in one place, stay in one place, maybe have a few people distributed. Um, but regional distribution, sure I think one of the most more kind of following questions is

where do you put your company? So I'm currently I, you know, my family lives in Lisbon. Um, I don't know anyone starting companies in Lisbon that is in Lisbon. they put their companies in Switzerland or Delaware or you know one of the dodgy islands and those and I think that's more the interesting question is like where do you put your company as well once you once you once you start it up so yeah super interesting um Max I think in crypto teams are very often quite uh distributed so it's very hard to pick out specific hubs for teams because they might have people there and there um but I think probably the importance of the US is increasing again especially especially with the regulation they are becoming a bit more crypto friendly and we see that just if you look at where

events are happening so it's much more events moving now to the US because it is the largest market they have a very uh big pool of talent there as well and so a lot of stuff is happening there but I think in general crypto is still very distributed and you still have a lot of interesting hubs in Europe as well I mean crypto valley is one Zurich and uh but also in in Paris or like in Lisbon there are many company companies Berlin is a big part London is always a big part. So it's very spread out and obviously Asia is there as well. And there's always also different kind of strategies and different types of projects that are happening in different areas. So it really also makes a different of what you're building and where it makes sense to do that.

Yeah, we invest globally. Um our team is also decentralized and and spread out around the world. Um I would say that maybe on the sort of geography side we had since we invest in mainly token networks and and decentralized protocols we had a lot we have we do have a lot of investments in founders in the US and uh maybe they're more comfortable about actually being based there these days. So I think that's been been helpful. Um and yeah certainly it's the US is a fantastic market and hub for tech as well. I mean I think just today transfer wise I think it was announced that transfer wise will be IPOing in the US instead of London. So there is this kind of pull of of US um for for global

market. So yeah that that's a factor but um definitely like our our scope and the range of talent is global. Yeah I think the US is picking up steam uh big time especially with the new administration. Um there is various factors. I think it's undeniable that the capital markets in the US uh have a lot of weight. You know, most of the crypto industry is denominated in dollar. So, it eventually just distills back to the US dollar. Um talent wise, yeah, for sure like AI Bay Area again probably the largest hub, very hard to um you know to to displace that. Um with regards to the finance you know DeFi for example I think yeah New York has its

place but that's can be more um you can build you know crypto D5 projects pretty much anywhere. Um I think emerging markets especially the ones that have a very high like large degree of representation in payments like remittances are interesting. um there we're we're seeing a lot of uh use cases um and projects being built very close to those markets. So Latam, Africa, some parts of Southeast Asia as well. Um coming back to Max's point about payments very big industry remittances very interesting. um stable coins have if you look at you know networks like Tron most of the activity is actually

coming from those geographies and uh I think that is only going to increase so um there's the US Europe Asia plus all of the emerging markets that uh form a very interesting dynamics generally okay thanks thanks very much um so actually turning towards the last uh uh bunch of questions so If you would have like one honest advice which you could give to a founder sitting in the audience or online um what would it be? How shall they navigate in current 2025 fundraising landscape?

One advice each an honest one. Stephen, you want to start? Uh yeah, find product market fit. Fair one. Good. That that's valid forever, right? just now. But in general, like very few people do. Yeah. No specifics for 23 and five. Okay. Good. Yeah. I would say build something real and get traction with it, right? So have a very specific plan in mind of what you want to do and how to get there because I think in crypto people often just went for a token launch and use that as kind of the goal to get and I think that's not working out so good anymore. So build something real and get people to use it. So get

something real and get the traction. Much more numbers. Diana. Yeah. Kind of similarly, I would say uh it's game time. Um things are are real. So you it's it's time to move from sort of pilot to production. Um and to be really clear on what your unfair advantages are. Um whether that's sort of product and tech or like for consumer. I would say that would need to be like your go to market. Um and and how you're going to win in an increasingly competitive space. Thanks. Yeah. One simple phrase, never give up. So if you're building something, it doesn't work out, you can pivot. Um, you know, good investors will always be there for you. So we have

actually examples in our portfolio that have pivoted two, three times eventually bump product market fit, managed to scale, and they never gave up. A great one. So I hope we all listen to it. I would like with this thank to our panelists. Thanks for coming today and also thanks for staying around for the last panel of the day. We wish you a great time for networking in Apollo and once again thanks from my side. Put your hands together please. [Applause] That cracks.