Inside the Minds of Crypto VCs

Transcript

so let's bring them on and see if we can get into their minds a little bit and see what they have in store for us so let's welcome Mark and rest the panelists thank you very much [Applause] yeah good afternoon everybody it's a pleasure to be here thanks also for the organizers and thank you for being still here I don't know if there's beer yet otherwise maybe we would see a little bit less people here it's a big pleasure for me to host this panel similar to last year about investing in the space and I'm very happy to have some of the leading people behind Venture investing in crypto here

on stage and to hold to kick the whole thing off I would suggest maybe to start with a very brief introduction including also your investment thesis so ultimately what is driving you to invest in blockchain companies sure and thank you and it's wonderful to be here my name is Dave long I'm head of Investments at cvvc so crypto Valley venture capital uh some of you may be familiar with that some of you may also be familiar with our sister company which is CV lab so that runs our ecosystem at headquarters which is here in the heart of crypto Valley we also have offices in Berlin in Lisbon vaduz Cape Town and we're looking to expand to Southeast Asia this year as far as our our thesis we're pretty broad so if

there is blockchain technology that's within the the tech stack we invest across Industries but we are still early stage so through our first fund which we launched in 2020 we've made 59 Investments across 21 countries four continents and 12 different Industries so pretty early being we're investing from pre-seed to our acceleration program which is run by CV labs and up to series a and we write tickets anywhere from 135 000 out of our accelerator up to five hundred thousand that was a good picture perfect thanks um yeah I'm Dominic I'm based out of Germany that's where we founded block wall we're now based in mainly in Frankfurt but we have a partner in Paris

as well and someone in Munich but as Corona has shown us we're all about and everywhere at the same time we have started with the the first crypto Fund in Germany we started investing in 2018 out of that fund which is coming to an end now that was mainly focused on protocol Investments the up and coming projects at that time now we have closed the new funds last year which is mainly focused on Venture Capital Investments so mainly Equity investments in this space pre-seed and Seed also very general approach focused on web3 but we specifically look at the

service companies which are necessary for the ecosystem to thrive or at the technology as a sort of back-end Revolution so looking at where blockchain really makes sense to find new applications and yeah we're setting out to build a platform moving to fundo fund as well next year and also into late stage in the future hi I'm Diana partner at 1kx 1kx was founded in 2017 and was probably the first of the token funds so we are focused on investing in decentralized

token Networks with a thesis that really the aim of blockchain technology is to replace trust with math and code and and that's enabling the decentralized future essentially we have a portfolio now of more than 80 projects across the space and I continue to invest actively out of that single fund hi I'm Luke I'm your partner at exchange I am actually quite new to this side of the table the dark side of the force because for 10 years I was an entrepreneur I started a few companies the last one and date is called ariani which we started in late 2017

doing nfts for luxury brands for the first three years um we were told we're crazy uh and um for the last couple of years the business being booming nfts and luxury Brands all of a sudden make sense so today we raised 30 million euros with the with ariani work with over 80 Brands like Lacoste the Richmond group Breitling uh Montclair and many others so what happened last summer I abandoned my four co-founders and let them with the startup which is doing very well and decided to do something that I really felt was was lacking in uh in or where I think there is a shortcoming I think

probably agree on that there's a lack of funding in uh in Europe with DC funds and I really wanted to launch a a fund and and you know help the ecosystem uh exchange which is a 20 year old General Venture fund 650 million under management which has some experience in uh in crypto we have a one of the big thing we did was be the first one to invest in Ledger in 2014 which was a great investment but never really had a dedicated practice and so I imagine a smaller fund the 60 million euro fund that invest in early stage seed series a uh tickets between 500k and 5 million uh into projects mainly based in Europe we

are based between Paris and Berlin with also a presence in Munich and when it comes to our investment thesis um we of course like everybody love infrastructure uh but we also uh think that they are in needs some for applications real world assets and Defy is of course Something That We're passionate about and when it comes to to more web 3 applications things in the continuity of what we did at what I was doing at ariani meaning how do you use the online social graph to create new experiences between customers in there and and the brands um that produces the products they love hi everybody I'm Olivier I'm the GP at leisure digital Venture so laser digital

is the crypto arm of nomura global bank headquarter in Tokyo and uh laser digital has been set up really as the unit but we look after uh our strategy for the bank related to a crypto and digital assets we have free businesses there we have a trading and Market making arm we have an asset management vertical and the Venture and on the Venture we look uh at investments in early stage 2 Series and really projects that are trying to solve for the pain points related to institutional adoption because that's what we're going for ourselves so we do check size as low as a 250k as high as 20 million we have a large amount of flexibility given the fund currently is captive from the Mora we're going to bring in third party

Capital at some point and we invest globally we've done already 12 12 projects and before that we're investing out of numerous balance sheets in a lot of infrastructure type of projects yeah thanks a lot for the insights and I mean to follow up quite a few on stage here are in the space in several years so we saw many of the developments and I think something which is always interesting for also the audience here is to make the whole thing more tangible so can you maybe everybody of you give you the audience one concrete example of a company you're invested in which is also really solving a real world problem because I think that's always something many people are still missing in the

space I mean whoever want to go first um that we invested in a seed Stage Company uk-based entity however they're solving or the team is in Nigeria so their main focus is being a crypto exchange but offering also Innovative Financial products for the local community so be it lending be it other financial services and also remittancies and that was really interesting to see also in this crypto winter that there was no sign of lesser use rather the users have grown constantly revenues have grown constantly so they're roughly about 4

million in revenues at the moment above 500 000 users it's a pre-series a company and they're just expanding to Kenya and other markets they've now just entered and regained the licensed in Poland with the goal to bridge that remittancy gap between Europe and Africa and there you really see okay if if it's if it's needed if it's usable then the users will come automatically and it will be resistant to any downsides in the market yeah unrelated to the cycle yeah um very interesting that you guys are focused on Africa because that's a big topic or that you have that there is a

focus um in addition to everything else because that's a that's a big uh Focus for us as well um but one company that I think is quite interesting and I it's often it's a fun uh one-liner to use but uh just what many people may not know is that in the cars that we have today in the technology uh you're operating more lines of code than than a fighter pilot operates in a fighter jet and all the over-the-air updates to that software that exists in the vehicles and the technology in the cars today is done over the air and so how do you really secure that so one of the companies that we invested in I think back in 2019 even from Germany uh companies called Ashwin they use blockchain technology to make

sure that iot updates over the era done securely so that there is nothing that's tampered with and that's beyond just the example of a car use but for us it's it's been we've always said that we invest in utility over speculation and that's investing in companies that are using blockchain technology to solve Enterprise problems and create real world application interesting it's a good question actually the one you're asking so we have one company in the portfolio we invested in 2019 in the series based in Hong Kong we are the intersection of digital asset and green finance and so we do tokenization of um kind of project uh in in the Green Space such as uh solar farm or wind farm and by tokenizing the

um kind of the bond of the loan you can kind of you know have more distribution of the token front or broader investor base but also what was very interesting is that they are embedding a small piece of code in the smart meter of the iot device of a solar plant and through that you measure in real time vsg performance of the assets and then you can Flex the yield of a bond or create renewable energy certificate on the back of the performance of a green asset which hopefully helps solve for some of the main challenging green Finance which is the accuracy of data there's a lot of fake data floating around all via details have to come one year after and then report something that is a bit dated so for that we're hoping it provides a bit more real-time visibility on the performance of some of those

green assets well the green as well continue um we just made an investment in a company that tokenizes rights to pollute sort of carbon credits but the mandatory carbon credits uh when you hear about carbon credits today you mainly hear about the voluntary Market uh which is more of a nice to have but it's not really a liquid asset it's actually a not really something you can invest in it's more of a I'm making a contribution uh and I'm happy to to show it but it's not really an asset it can be traded the carbon Market is actually a localized Market the the right super loot is a mandatory Market that is localized in different locations the biggest one of

course is Europe but you have a big one in California in Massachusetts and actually a big one is being built now in China and the idea here is to use synchronization to give access to a bunch of people that actually want to invest in something that is a liquid asset that does contribute to reducing uh carbon by putting a higher price on this carbon and tokenization that aspect really helps giving access to a wider group of investors I always like this question because it makes me really think about my life and think am I online too much because what did I mean by real world because the real world really is the digital world to me so I'm not really sure is there an online world like isn't

everything connected today um but yeah well one example from our portfolio would be liquidy so you can put eat down and get out interest-free loans and we've seen people using that to buy cars essentially doing their own setup there for a car loan even for for mortgages I'm actually personally looking into using this now in order to get to be able to take out a mortgage by using eth on the platform because uh actually the the rates in the real world aren't great right now and you you can get liquidity through that platform also if you don't have a sort of standard job or tend to live in one country I think

it fits pretty well for people in our space then you can actually be banked through these crypto Solutions when the traditional Finance world just doesn't have anything to offer you right now which it continually surprising to me because even as someone you know who is a former senior director at at a financial institution to not actually be able to get access to a mortgage like that's a pretty uh first of all problem to have too and then you think of how much broader that use case can go and and actually how many people are affected by not being able to have access to traditional Financial Services even really basic offerings if there are certain things about their profiles that are atypical which I think is just sort

of one step and look into the breadth of potential that we really have with adding this additional transparency and access through a decentralized finance yeah and I think it's great to have these examples and unrelated to the definition of the real world right so maybe because the topic is inside the minds of blockchain VCS right I think something which is also interesting for the audience is the whole situation we're in right now right on the one side I mean you're investing but there's a fund GP or founder you're also getting money from investors I mean what would you say at the moment what's the sentiment say from both perspectives I mean as we

all know the valuations are in favor of people investing money but on the other side maybe we are again in a cycle where it's difficult to under explain in an understandable way to potentially invest is what you're really doing and they ask for these cases you just visualize so what would you say from your individual perspective in your mind at the moment I mean what's the cycle we're in right now sure uh so starting with the investors perspective first I think what's interesting is that the numbers when they came out for the totals that flowed into VC blockchain VC in 2022 was actually higher than 2021. however now we're seeing that the reality of what

has happened in the financial markets globally um we're not on par and there's about a it's on part at the end of this year we're going to be 60 down but the inflows that we have seen have been for a number of different reasons and if you look at the last five years there's been a lot that has changed in traditional Finance which caused these inflows to to go into uh private equity and venture capital um that 60 40 portfolio that institutions have run for for many many uh years now that simply didn't work you had issues with on in the credit markets you had issues with volatility um but as taking it back to raising funds um I mean it's definitely more challenging uh but you need to have a

niche there needs to be a specific Focus uh I mentioned that for us Africa has won because we think that blockchain technology is very powerful there which is getting a lot of the attention from LPS out there on the fundraising side for for founders the average or the media the median value of that is going into companies that is actually increased but the valuations of course decrease meaning Founders at an early stage can still raise funds but they are they have to be prepared that they're going to have to give up uh more Equity than they would have in the past which maybe safe notes or clas that might play in better depending on the situation that any Founders are in currently yeah I think you you always have to look

at the you basically have two types of customers one are uh your investors one are your Founders and the investor side it really depends on how professionally they build their own portfolio construction so some investors if they're highly professional they particularly choose you for a certain risk return profile for a certain vintage for a certain part of the market they want to cover so actually if you if you're not deploying in that certain vintages if you're not taking enough risk then you're not delivering to the promise to the investor who has specifically chosen you to cover a certain risk return aspect on the other side of course it doesn't make sense to

just deploy if the quality isn't there or the market is overpriced so what we're seeing on the deal side is that actually the more quality Founders are coming back to Market but we see lesser quantity of deal flow valuations have massively but also not yet fully accounted for in the reporting on The Late stage side it's funny that on the early stage side yes valuations have decreased but those really competitive rounds I have the feeling that valuation has even slightly increased choosing higher caps with clas and what what we always advise our Founders is

don't raise too much you were you were risked kind of ending up into a Down Round scenario maybe in the future race for enough Runway we like a absolute no-go it would be someone who raises less than 18 months in the current market environment even 24 months I would say should be the minimum just because you don't know when you're able to go back to Market take enough buffer there and and I would say that is the most important at the moment and another I think effect will be that because already startups have been raising for longer runways they will come back later

to Market and then showing even higher kpis at that next following step so the expectation of investors will be to have to have even higher kpis at series a for example which is was at 1 million is moving rather to 2 million ARR at the moment um so the competition will be even higher for those who start and I think the time is very literally closer funding and are already looking into the next founding round is maybe at least at this stage it's a little bit override yeah I would really Echo what Dominic said I think that that was all very spot on obviously also the your treasury management and how you can build out and focus for the long term becomes really

important but I think these periods in the market are actually the most interesting time in order to find both investors and the projects that are really aligned with you the vision and in it for the long term so I think it's it's very high signal and it's it's really for me personally I mean after almost a decade now these are kind of my favorite periods in the market because you know that the people are really in it for for really what they're building and and are able to have that focus and also for ones that are investing in you that they understand how the market can go and um are more prepared and usually have

like thought up and really are committed to the thesis uh yeah same thing the the fundraising on the yelpie side so when uh funds raise um for sure the the movement is difficult a lot of institutional investors have uh put things on hold and so I need to do my second close next year and definitely it's a much harder than it was last year and um so it's but the question is when is it going to start when it's actually going to to start again don't know what we see though compared to all the people I know in more like traditional alternation but generalist VCS is that it's actually easier for us

to raise with the specific strategy kind of a dedicated fund because of course A lot of people are are kind of on hold but people that really really want exposure to this specific asset class with this specific kind of projects are are looking for good funds and there is a lack in of funds dedicated to this this topic in Europe so it's actually somewhat easier for us on the other hand when it comes to investing in startups well so I'm gonna put my my 10 years of entrepreneur uh into entrepreneurship head back on the VC Market is it has kind of a sheep mentality uh and so when

everybody is excited about something everybody's excited and things kind of uh go off and valuations explode multiples explode and that's kind of what we had in 2021 2022 I mean obviously now all of a sudden everybody's kind of scared one of the reasons because LPS are also uh putting things on hold and feel like things have kind of gone too far and so everybody's kind of vlogged and of course whenever you're scared because it's a sheep mentality to a certain extent everybody gets scared I think we're kind of going Beyond this and there's still a lot of good deals and they I haven't seen a good project right now

that did not raise funds that you can raise money right now there's still money being deployed at sometimes valuation a bit lower but it's not on the seed level for instance I don't think valuations have gone that much later stage yes but on the seed level it's uh it's it's still about the same same kind of evaluations that you could get 18 months ago just a few smaller point to add so when we speak to LPS or like large institutional asset allocator one challenge that they have right now is that the composition of the portfolio between public and private is very imbalanced and you know the public

valuation have gone down a lot uh the private uh not so much because the markdowns from many of the Investments we made in PE or VC have not been completely registered and therefore very imbalanced so very cautious therefore to deploy into uh into another VC phone where that increase even further the kind of the breakdown of the speed between public and private so from large institutional LPS that's one concern um when you speak to family office and guys like that is very different here they look much more longer term but the absolute return but form like was kind of sovereign or pension phone or insurance companies the type of people we want to attract into vehicle system uh that's one of the pushback sometimes

we we get when it comes to deploying Capital um I think it's a fantastic time right now there's uh you know you don't need to rush in signing internships in 48 hours you have time to do property Jones Founders are a bit more realistic but I would Echo all the points around you know good project get funded and you know the ship mentality I completely agree I mean you have a good project and then suddenly everybody wants to invest and it's overallocated and that's where you start to see also one of the point I would say is um especially on early stage you start to have I think growth funds while realizing the valuations are you know still mispriced on the b or the C run and so we need to deploy and they're coming to early stage and

seriously but we have a lot of capital so certainly even right you know very big check and you know variation gets pumped up and us we are looking more early stage it's getting sometimes difficult to make a decision around that so yeah foreign I have to add to you like look I mean that's exactly what I also see right that you have these developments um that to a certain point I mean we have now European allocators here on stage and I don't think that there are hundreds of people doing similar stuff if you look into other markets or Industries you have dozens of funds literally doing the same so as you mentioned I think there's still the potential versus the money which is available to entrepreneurs and and

startups in the field is still I think far underserved and I think that's ultimately also maybe the reason why unrelated to the market all of you guys here have the opportunity to really take advantage of the next cycling maybe to dig a little bit deeper into that I mean referring to the happenings of last year right I mean I know you're not in the trading space and also more on the long term Venture side but what were the biggest changes maybe after you had F takes and some other of these bad happenings where at least in my view being in the space now since 11 years many came back and said I think that was it now I always thought you're doing the wrong thing right then now again you have like the mount gogs for the late

Commerce I mean did you see any let's say changes of the perception of allocators or business cases you see because some people really thought okay now it's again going to a point where some people think it's is going away and technology is maybe not really bringing some some value or I mean you made a good example of companies working without any influence from these happenings what's your view on that in general whoever wants to go first maybe ladies first ones sure well for us in decentralized networks it was really a doubling down on our thesis and the emphasis of really the reason behind

this technology and what we believe in here is to use it to replace this trust that you need in the centralized institutions so so for us yeah it was really that confirmation and we have in our portfolio for example safe formerly knows it's safe we co-led their series a last year and they are a multi-sig digital Asset Management platform custody self-custody saw huge inflows I mean now they're securing over 40 billion and that continues to grow I think it was obviously a big lesson to everyone firstly from the centralized exchanges in crypto and just how opaque those are and how certain actors are still sort of

using the name of crypto but essentially acting as one would which is just sort of basic fraud that also happens with the traditional system to really advocate for this is the reason why we need these transparent systems that are open source where you can actually audit the code and be able to build on them and to have that transparency and to remove that trust with this technology which is really at the heart of it so that was critical we saw that then later also even with the banks in the banking system in the U.S and so I think that was a second wake-up call where we thought okay this is sort of what's considered safe and secure um and regulated they also have plenty of issues there that we need to address

as well so it really sort of twice over doubling down on the thesis and the emphasis and just hope that through further education and actually use of the technology of public blockchains that that will become apparent to to Regulators to institutions of just how it enables exactly what they're looking for in terms of reporting transparency all in real time so it even helped you literally the whole bad happenings right I mean it did not help the space at all the attitudes changed across the board and we've seen things get a lot more difficult overall um but I think for for the long term it sort of put us back into

that understanding and Awakening and reminder of why we are using the technology and how we need to build it just to fully agree on the defy and it's a very uh positive 45 what has happened you know last year but I think on the C5 and more infrastructure side we're looking at a very interesting projects that are trying to solve the gaps exposed by FTA so for example we're backing a Clearinghouse for digital asset you know that reduced counterparty risk that will make the in case of the default of one of the member of the Clearing House you can mutualize the Rings by paying through the insurance funds so those type of projects I think are going also to pop up because you know Define and uh somebody is a digital site we're looking at it but it still is

fairly complex to enter as a regulated financial institution for many reasons and I think it will come but still to enter the space right now you need regulated centralized player and some of the ones that are popping up right now are also taking an approach that is a bit more like what you see in traffic for example we invested in a electronic communication networks that does only this it's matching buyer and server original custody there is no primary issuance and therefore all the conflicts of interest are removed and like you know some of the existing platform that went burst on on in 2022 and the other thing I would say is um a lot of the failures have happened in the US that makes I think the regulatory environment

in the very still fairly uncertain so right now we are a bit cautious around deploying capital in projects in the US for which we potential regulatory impact could be you know unclear at least you know at least for us yeah I think you can learn a lot of these last two years and and I've talked to one of the large investors in FTX at that point and who was regularly in contact with SPF and even four weeks before it happened there was no sign really in here changing his mindset or in anything else so there are Bad actors in The Market it was definitely a blow

for the industry and um and we were on a such good trajectory and you just think about okay how would have how would have you realized this situation how what if what could you have done and I think there it's very difficult to say in the end in in pre-seed seed if you invest the only thing you can really take care of is getting to know the founders reference calls kind of really looking into the minds also of of the founders um but and then it's about governance then it's about AML it's about really getting certain things done but I mean this is part of our job description is

taking risks and but also everywhere where there's a problem there is an opportunity in a Founder who wants to solve it and that's what is what makes it so exciting and to double down on what you said um definitely looking at the the real problems the why Founders are working on something not doing being the the copycat of the 10th exchange or solution but really solving for critical issues in the industry that is what we do and in terms of our investors what they expect is full transparency right the first thing we did when that happened is written a report to all APS yeah okay how where

how exposed were we or weren't we and I think that is the best thing you can do is be fully open fully transparent with with your abuser make sense but quickly on FTX so it was in 2022 was difficult and with the three arrows Celsius block five Luna I mean there were quite a few things FTX really hit different um especially because then we had some company portfolios that were impacted some very positively like Ledger who made their best sales uh right after FTX was announced some others that were very negatively impacted like coin house

which had an earned a earned product similar to uh to the one that um I mean that was provided by by Genesis and of course this would impact with the FTX failure so that was definitely an issue because we had to write to our LPS like before that we never really you know had to talk officially about uh Luna all those other issues in here FDX we had to actually say yeah there was an impact uh the so that kind of put it on the radar for El Pisa something that was not just something happening in another space but really something that was impacting us and that's why I think FDX really hit differently for us when it came to uh really raising money with those LPS uh the

I actually think it it same thing it was kind of twofold the people that were on the fence kind of like about to fomo kind of like oh no definitely not going to touch this that's once again the proof that we were wrong uh the people that are I think it would say much more uh connected to the industry were more like oh actually this is probably the sign that uh this industry is getting cleaned up uh and uh and we can consider an investment still an idea of let's wait another few months to see what happens but but still for some it was it was a positive thing it's like let's get back to more serious stuff um and uh and I think it also um showed what I mean it reinforced a lot of our investment strategies or our

thesis which is on real world assets uh things that are a bit more tangible for those LPS or everything that is non-speculative meaning like anything that has to do with um with nfts from corporates that are not traded bought and sold but more for customer loyalties or or other applications very quickly um something that that Luke that you said earlier uh when you were mentioning the sort of the sheep mentality there was a lot of projects or a lot of hype that was spinning around the market before some of the negative things happened but even with that um and I believe that for the long run even though there was a significant

amount of pain in the short term it's actually going to help our industry we're still seeing adoption that is increasing use create use cases are increasing um and I think that when it's uh our you know our parents that are using it on a daily basis but not understanding technically how it functions the same way that they would put down the internet and the use of email back in the late 90s or 90s and late 90s early 2000s I mean look at it today it functions in every aspect of our of our life so um I mean I have to we have to be bullish on it so I think that it cleaned up our space for the better the last question before we opening up to the audience I mean maybe briefly your perspective I mean Outlook um also from a let's say VC perspective

do you see any specific topics which are maybe not yet known to a happy party or some Fields where you think you want to double down or have a closer look at so what's happening let's say in the next few months in in the whole in the whole Space without knowing the future I know sure so I can say two two areas that we're really excited about and yeah seeing a lot of activity obviously ZK everything that's been happening for some time that it's a growing area of Interest we've just hired actually a new partner away Dai who is focused on that space PhD in cryptography made a recent investment into LaGrange Labs which is using CK

tech for interoperability so there's like a lot of new applications and potential also ZK ml so machine machine learning model inference using ZK is some recent research that we've just published so check that out and we'll be doing a ZK Hacker House at ECC a second one would be autonomous world so on-chain gaming one of our partners just led a weekend in Lisbon with 54 Founders Builders across on chain gaming this space is really exploding a lot of really fun and interesting things happening in a kind of new type of

primitive for gaming so good contrast from CK to gaming right shows the breadth of innovation happening yeah quickly I think that when we're seeing the areas that are adopting blockchain technology or web3 technology overall the fastest is Emerging Markets um I've mentioned a couple times but I I think that cbvc is quite excited about what we're going to see out of the emerging markets for blockchain technology um not as quickly as we will see it in the developed World simply because quality of life it doesn't require the Innovation as quickly as it does in some of these other areas right now we're quite bullish on real

water set tokenization and you know we've talked about that for five years and you know conferences in 2017 we're already excited about this as an industry but I think in 2023 we start to see high quality assets coming on chain and that's the difference I think the technology is actually not difficult rwa is you know 80 with two 20 web free it's all about finding good quality assets and you know the governance and the regulatory framework to support that and then on the back of this you build the data platform that is required to monitor that the credit scoring system via platform to provide the secondary market so we got excited around the full value chain link to RW to our second real world assets it's

still something we're extremely interested in um and and I also think that what we were missing five years ago was probably like the D5 Primitives that we now have uh this week I'll I'll add one that I'm that I love which is decentralized identity um I still think and and it it goes with with zero knowledge there's some great uh great projects like sis mode that uh use your knowledge to actually manage decentralized uh to Central's identity with Badges and other stuff we're convinced that in order to um to interact on online we will need to differentiate ourselves from you know our bots in artificial intelligence and and that comes with a need to be able to show kind of who you

are and build a Persona online um to be a bit more precise I'm mainly looking at very virtualized decentralized identity Solutions um kycaml for for D5 for instance is a big one that I'm very interested in another one is anything has to do with really your gaming profile uh on chain is um is another one that could be interesting but I'm extremely interested in any other virtualized application of the centralized identity and I think there are many opportunities if you have money to invest now um that is that is for sure great the latest investment we've done was in an Mev recovery business um for those who don't know a maximum extractable value

um is inefficiencies in platforms and I think that is has only started and there's a huge opportunity it's a very Niche opportunity but I think it will have a large impact if you can solve that and then a completely contrarian opportunity I think is interesting is to see how brands are really realizing okay we don't own we not only have customers but we really have communities we have to think about now and and there are many new engagement possibilities within web3 within gaming within um metaverse and nfts so the next Frontier of social engagement this is only starting to to frequent on

so I'm looking forward to seeing more projects in that space as well yeah thanks for the insights and I would say we use the remaining minutes for some questions for for the audience I don't know should I pick the guests or yeah so let's start with you whoever wants to go first lower valuations from our perspective um well at least receive a VC that hasn't

changed too much so there hasn't been anything abnormal that we have changed in our operation but I don't know about the rest of you so investing in clas or safes without a discount is I wouldn't even start discussing that because why would you take a risk as an investor today on a cap ending up potentially knowing that you'll raise less end up at the cap and then having taken the risk one one and a half years earlier and so we accept if the team is exceptional and we know okay they will most certainly hit those milestones and there's no way we can negotiate our way in otherwise we would never accept the term sheet without a discount

preferably looking at Price rounds anyway and then what we see I mean we haven't done that yet but what we see is that liquidation preferences have changed slightly and so what was in 1X liquidation preference before is going to maybe 1.5 now and I think that is a good question definitely because evaluation is only 50 percent of a deal term sheet the topics like liquidation preference and so are equally important yeah so I hear a lot of people tell me that structure there's a lot more structure now meaning liquidation preferences are more difficult I don't know for us and I guess it's the same

thing for you we don't look at it that much because the truth is those liquidation preferences are not really what make your performance in the end if you have to trigger a liquidation preference when you're doing early station if you have to trigger liquidation preference is that you've already kind of failed your investment and you're much more I mean 99 of your or 90 of your return comes from like the top 10 performers so I have to admit that like you we haven't seen any changes in how we operate I hear people say maybe probably in the early later stages because people want to maintain their valuation at the you know series C BC you probably have more structure but the seed denser is a same thing I don't

really see much much changes yeah maybe to the neighbor closer so I love the topic I've loved it for the last uh what eight years that I've discovered ethereum I'm also today quite disappointed in in all the application that we gives us to date it doesn't mean that I'm I'm I think it hasn't been proven yet unfortunately and like helium is a

beautiful example I like to quote I also like to not talk about the financials too much because it's about 300K worth of I mean their gsm network about 300K worth of Revenue last year and it's about 30 million of token emission so there's still big and it's you know at a seven-year-old project now so it I love the idea I don't feel it's quite mature yet but I'm of course I'm a VC I changed my mind all the time so uh I hold the ideas very strongly until I don't so of course I'd be happy to be prolonged and to find something that I'm like actually finally the time has come

yeah please is metaverse right now there are lots of exciting projects we're going to launch our kind of a brand in in the metaverse and so on but it's mostly for PR right now I feel and the actual number of users on a daily basis in the large meters platform is a fraction of what you see on you know any online game but you know teenagers are playing so I still think there is a a lot more that needs to be done to

convince a brand to build real experience in the metaverse at least for us we haven't done any deals in that space and we're still going to remain fairly cautious around the opportunity there important aspect if you look at building something in the metaverse um a roadmap right what is working today in one year in two years how can you monetize on that spaces and then what is the potential outcome in three four five and there's so many bottlenecks which you can't influence right it's Telco infrastructure it's devices you need it's so many different aspects so you have to think one setup at a time and if we see Founders who think that way who

can prove that they can build traction even on that development path then we're all up for it think looking at the time right we can we add one or two more questions okay please go ahead from your experience what are I guess the more prevalent sort of red flag now or what I think that you see startups not doing right and you're like only this thing was better maybe I would consider like easy mistakes that sounds can fix

I think still too many cases we see a very smart funders that take a very product view of what we're building but the go to market strategy remains fairly vague Beyond statements are on I'll build the community or build a network and make revenue on the back of it so we like to see as much as possible you know not necessarily a detailed business case it's hard in the seat but like some solid thoughts around the monetization well quickly I said that yesterday um as VCS we all love product I mean especially in the crypto industry where most of us I think all of us here are are passionate about this this industry and we love the the product uh so it's

something that we we we of course are passionate about uh however don't talk about it too much because the truth is our decision we even though we might love your product and think that wow this is the future we also know that we're not that smart and that ultimately the market is the one that decides and so what we'll be asking for is show me something that proves me that the market actually agrees with your your product what you're doing and that comes with the projections comes with talking with the with customers showing us that you actually have some interest for your product I mean that's what I would focus mainly in your pitches is show me there is some some interest from the market all right maybe last question

from one chain some others specifying different layers in the module modulus back I looking into as we see we see that technology if I the fight in this one well if you like looking at the web 3 stack um completely it makes sense to invest on on every layer something we think and that is maybe a question to combine here is something to avoid as well is this question token versus Equity right um on

on the pure infrastructure layer it's pretty clear okay it's decentralized you need a token but we've seen so many projects which have lost Focus just raising a token on where it's not necessary where you could have raised an equity so that's an easy mistake you can do and the higher you move towards probably the application layer a rule of thumb would be the less likely you'll need a token and um and maybe on on that way as well just to answer also that question um always be raising always be talking to investors and and really find a focus so try to find a product Market

fit where you build traction first before you switch on the growth button so that is a very common mistake I love this I don't know if you know this value hacking before growth hacking from Mike Maples if not then you should definitely look at it it's really not high reading thousands of sales people before you haven't really figured out what to focus on where the product marketer is did not so much answer your question maybe a little bit but modern is yours but yeah we invest alongside the entire stack yeah and so everybody got the book recommendation so thanks for that so please in Applause to the panel and looking forward to the

year [Applause]