Navigating Crypto as a Venture Fund

Transcript

all right this is an awesome panel a lot of friends on this panel um we're going to talk a lot about how to navigate crypto as a venture fund maybe to kick it off if you could have maybe one minute intro from all of you talk about who you are what fund you represent how long have you been investing in crypto personally or as a fun yeah I can start I I'm Dan I'm a partner at Sequoia Capital Sequoia is a VC firm that has been around for the last 50 years we invest in startups at all stages from seed to venture to growth we have 11 billion dollars across the

existing funds to invest in both web 2 and web 3 companies and earlier this year we launched a liquid token fund specifically for crypto this is a 500 million dollar funds some of our recent Marquee Investments have been FTX fire blocks and layer zero personally I got into crypto in 2014 joined another VC firm a16z and have been in crypto ever since hi my name is Lassa Klausen I'm a founding partner of 1kx we're only early stage token Network fund um we were as far as I know the first one to say we actually only invest in tokens so we don't touch anything like exchanges or wallets or any of the

normal sort of business models that are put on top of blockchain and we helped Founders bootstrap token Networks hello hey everyone I'm Paul vraditakit I'm a partner at Pantera Capital Pantera Capital has been investing into cryptocurrencies and blockchain since 2013. you know I think we were probably the First Institutional fund to be investing into Bitcoin when it was around 60 dollars since then you know I joined in 2014 I've been spearheading our early stage investment so we um you know we managed about five billion dollars we invest both on the equity side of things and also the token side of things I sit on the board of alchemy and um a few other companies uh blockfolio

we sold over to FTX but really excited about southeast Asia you know I'm Thai so try to find as many amazing entrepreneurs here as possible so on in the region you know we led the series a of Amber we also did uh bit Dao I know you guys also involved with bit Dao and same features in a few other companies so really excited about the region cool I'm uh Steve Qureshi I am the inventor of Litecoin uh uh I'm I'm a managing partner dragonfly Capital uh we're a global crypto Venture fund we invest uh across the world both in Asia and in the US we've been around since 2018 and uh We've made a bunch of investments into crypto just like these guys awesome so we have about 40 45 minutes today we will do is we'll maybe

half an hour of fumble questions you'll start really Broad and we'll get narrower over time and harder and harder questions over time and then maybe at the end we'll have 10 minutes off q a from the audience so please prepare your questions in advance so let's begin um let's talk to the broad question right so I began investing in crypto in 2016 personally in 2017 formally and there's a lot of myth about what investing crypto really means what in your opinion do most people get wrong about investing in crypto what do you think is a myth that actually turns out to be false maybe starting with any one of you guys yeah I think the first one is the differentiation between trading and investing I think uh you have you know

24 7 liquidity so it's extremely tempting to start trading and uh in our mind I still have to meet someone who actually trade successfully in crypto unless you're doing sort of Arbitrage or these kind of things um but if you think you're you know you're going to be able to trade a Fed decision or anything like this receive in Celsius you know it's pretty difficult um so I think the important thing we're investing really in crypto is that you have a three-year plus time Horizon and you really invest through multiple Cycles yeah I I want to second that at Sequoia we take the long-term view on company building we think that crypto is very early a lot of interest in crypto

is short-termism and this is exacerbated sorry exacerbated by the liquidity of tokens but we really like the founders and the funds that are in it for the long run we think that crypto again is very very early it's kind of similar to the beginning of the internets when you know in 1987 the Internet only had a million users and then it took a decade after that before Facebook or sorry Amazon and Google and then another decade after that before Twitter and Facebook so you know just take the long-term View so you know the four of us on this panel are crypto VCS

most VCS that look at crypto are not dedicated to the space the way that we are and when they look at the space the one thing I notice from from most regular VCS is that they think crypto is all about timing the market they think that okay when when prices are low and like the exact time of innovation is happening that's when you come in and right now after there's been a lot of damage and you know sentiment is super low most those guys are nowhere to be seen and so you'll notice you know all of us are looking at deals right now and um we don't see regular VCS looking at these deals anymore they used to like just six months ago they were all piling into the stuff but they're not looking at it now um and they will look at it again when

the market comes back when macro looks better they'll all come rushing back in and so the the number one thing that I have come to appreciate about investing into crypto is it's about being patient like crypto is fundamentally about building new things and when you're building new things in a totally open space there's going to be booms and busts there's going to be things people get excited about that end up not panning out uh and that results in this crazy volatility that is investing in the crypto as a crypto VC you you have to learn that like hey sometimes we're going to get it wrong sometimes we're going to have mess-ups but overall the direction of crypto has always been toward more Innovation getting more things right and creating more value um and so I think I think that's probably the biggest difference between the folks who you're seeing on stage

right now and the people who are investing crypto six months ago but aren't investing in crypto today yeah that's a really good point I mean I would probably expand on that and say like this is a great time to be really diligent about you know rounds are getting a little bit longer to being you know sort of like you know executed and done and both on the investor side but also on the entrepreneur side you get to really have a chance to figure out which investors are a good fit for you and as haseeb has mentioned I mean there's a lot of investors that come in during the bull market and go away during a bear market and that could be really tough for entrepreneurs especially when you're trying to build a business and you don't have investors that are aligned in terms of how to grow the company you may have

to take shortcuts or make money sooner rather than later you know you may you may put ads on a social network that isn't ready for a social network I mean things like that so you know really take a look at your investors and you know see see if they are aligned with you know being long-term and how you want to build your business I think the other thing that is you know sort of not really talked about is you know what can investors do for you you know you see a lot on the forums out there on hey you know we want to you know you guys are trying to get into Lido we were trying to get into Sushi Swap and a lot of the community is like yeah but these VCS like as you mentioned like they are investing schedules you know there are

people that aren't going to sort of dump along the way the people that actually want to build businesses and I know a lot of us are focusing on you know how we can build our firms and our platforms to really service the entrepreneurs um whether they're a little bit more General and providing a lot of you know access to vendors but you know things around recruiting things around building communities Global communities I know you guys do a lot of cross-border stuff you guys all do a lot of traveling and have different arms at light speed and Sequoia and I think the other thing that at least Pantera has really been leaning on is really being vocal about governance I know there's been a lot of talk about whether firms should be be vocal about governance especially as you know these are sort of open boards and

there's a lot of things that kind of go into that structurally but I think for pantero we know that you know we have a role in the community we have a role as early investors and significant investors so that's one of the things that we've been really kind of pushing forward is really trying to you know direct people in in ways that we feel is is right for the protocol yeah but a lot of interesting themes around creating mentality versus building mentality long term versus short-term mentality force-fitting a business model that may not be ready for crypto today but because it works elsewhere maybe it'll work here that kind of ideology I feel like we're going to touch upon a lot of these topics as we go forward but maybe just staying still staying broad I'm curious to sort of hear and they

probably are new investors people are coming into crypto now and it's the perfect time to get into crypto in a bear cycle because I'll just go up from here but when I began investing in crypto one of the common mistakes that I made personally was that I there is a value attached to founder confidence and VCS attached a lot of a lot of weightage to a Founder's confidence the inbound fundamental confidence and in crypto I realized after making a bunch of mistakes that confidence comes from two things one is having built something of value having understood a market really deeply having a very sharp point of view in your business or Money in the Bank and crypto a lot of people have money in the bank but haven't built something of

value yet right and that thing was it took a while to really understand the separation of the two Founders so I'm curious as you begin investing in crypto what were the common mistakes you made what do you think are the gotchas that people you know should be aware of as they begin their first investment into crypto I think if you in the bull market you did a large round and you as an entrepreneur and you optimized for valuation you should be really really scared right now yeah because you you know money really changes people and if you have too much money in the bank account it really is a problem and there is there is data that really shows us that these projects are overrased they just deliver less and they become less successful in the in the long run don't

move Dan can you grab my water yeah there we go um so really there's data that shows that uh above a certain amount raised um you know you will perform worse so I think that's really you know one of the big challenges especially in crypto because you also might have liquidity much earlier on your tokens right so if you're if you're a venturing a normal uh web 2 entrepreneur really takes you five to ten years to IPO and this is what you get meaningful sort of liquidity on on the fruit of your labor whereas we've seen this a lot of times you have two years vesting schedules and you know you have tokens instead of an IPO at the end here you have liquidity like an IPO

maybe at an a stage route and which means that probably by the time it's sort of a b stage it doesn't mean that the business or the project has been successful yet but the founders if they only had a two-year wrestling schedule they pretty much can sort of check out like an entrepreneur of the 10-year IPO so I think that's you know raise a little bit more money than you really need but not much more I think that's one of the most important things yeah right yeah I think that's exactly right um another point that I wanted to bring up was something that you alluded to a month which is not mixing fake traction with real traction at the end of the day as a Founder as an entrepreneur you are looking to solve a market problem and it is very easy to trick yourself into thinking that you

have traction when you don't actually have traction because the price is going up the entire Market is going up but then as soon as there is a market correction all the interest kind of goes away as a Founder what you really need to do is to find product Market fit find real adoption and that's something that a lot of crypto Founders are are coming to terms with right now I think another thing from the investor side is to uh not over rotate on market conditions I think all of us are human we have a tendency to do this so when the market is going up and to the right everything is looked at with rose-colored glasses when the market is starting to go down

when we're in a bear Market we start to lose the kind of ideas of why we got excited about crypto in the first place is at Sequoia we've been through several markets Cycles now not just crypto Market Cycles but Global macro Market cycles and one of the main takeaways through all of that is to just be very consistent when you're evaluating companies the one thing the one thing I would say is that um you know when you're when you're in a bull market as an investor generally speaking a simple strategy that usually works is see what's working and throw money at it right so it's like okay open C is growing through money at Open Seas a lot is growing through money

at Solana and in a bear Market that stops working because in a bear Market you know nothing's growing everything's either treading water or it's going down and so um I think a lot of entrepreneurs also don't really key into this because in a bull market it's very easy to raise money for a very incremental idea so you know here's like a here's a slightly different nft marketplace where here is a something something metaverse and great you can raise money you can do a seed round you can get some cool investors on your cap table um in a bear Market those things just become much much harder to to get to raise capital for um and really what that's pushing you towards or what it should be pushing you towards is to actually be more ambitious and to try to solve a bigger problem and in a bear Market is exactly the time

when you want to try to take a swing at the biggest possible problem that you can imagine um you know if you think about the really amazing successes of the last cycle they were you know Solana openc uniswap all of them were founded in the bear market and all of them were trying to solve a really massive problem that at that time people didn't really fully believe that there there was even a there right like at the time that open sea launched it was after cryptic kitties had already collapsed nobody cared about nfts back then you know when Universal first launched the term D5 hadn't even been coined yet and D5 traded less than a million dollars a day like the the ambition Behind these projects was that we are going to totally reinvent this space and they got it right not everybody gets it right

um but that to me is what I want to see more entrepreneurs doing right now um and I think also investors respond to that I think a lot of entrepreneurs believe in a bear Market that investors want to see them doing very safe things and it's actually the opposite investors want to see entrepreneurs taking more risks and going after something bigger than they otherwise might imagine really well said yeah I would I would say it really depends I like what you're saying but I would say it really depends on I guess the background of the entrepreneurs and and you know sort of the space that they're in because I was gonna say that like in a bear Market it also is pretty good to just solve one thing and solve it really well and be focused especially if

you don't have a lot of Runway you know I mean if you're able to you got a great background you're able to raise from you know uh some of the bigger funds out there you know 30 40 million dollar rounds you kind of go after the big ideas but if you're only able to raise a seed round I think it makes sense to I'll give an example like maybe maybe you know maybe it's like a chain analysis you want to solve a problem around forensics maybe it's like nose maybe it's staking and then later on you got to go into selling data you go into other sort of services but I think you have to sort of you know figure out a way that that makes sense to sort of get to making money gets profitability in a bear Market but you know if you have the

opportunity to swing big I mean man just well here's what I'd say I push back on that because we talked earlier about how there's such a there's been in the last Market oversupply of capital right lots and lots of money invested into these projects if you look at again so going back to those three examples right open C uh you know they raise a tiny tiny seed round back in 2019 basically built the whole thing before they got any of the money right they got all their money basically last year and the product I mean the product is not that different than what it was last year um uniswap literally got a grant that's what the original unisol was built on top of and um and Solana you mean you you remember you were there with me when yeah fellana was going on trying to

raise it around and like nobody was biting back that time and so I think what the reality is a lot of crypto companies can raise a lot of money especially in a bull market people get really excited but it doesn't take that much Capital to build things in crypto right that's why crypto's so beautiful is that issues it doesn't require that much because it's all software yeah so yeah I I think yeah that's right at the end of the day I mean if you build a great product and you can do so and and especially around D5 you can really get out the market and then from there like it'll make it a lot easier getting traction is just you know but uh outside of that I mean I think the other tips that I would say is yeah go to market is really important in this space I think a

lot of people say just build a product build a technology it'll come I would advise Founders to both start early in building your community and do a lot of things around content marketing and whatnot that don't cost a lot of money and then also think about liquidity too because at the end of the day you want tokens to be able to get to a larger community so some people think about like getting on exchanges or getting on you know dexes or you know so IO is like a bit too late I'd say start thinking about that process really early on and then on the investor side of things you know what I would say is like get aligned with your entrepreneurs um if you're gonna create a structure around a deal it's kind it's kind of nice to know that the entrepreneur is going to build

a suite of games that has tokens for each one of these games and you want to make sure that your instruction and a way to get alignment all around so I think just making sure you see the vision of where these companies are going to go and make sure that you have the value accrual around sort of how you're structuring these rounds to be appropriate yeah makes a lot of sense I mean building and selling it seems to be that's the common theme across all VCS and what we look for in Founders coming to the point about you know this being a global market and anybody can build from anywhere anybody can get investments from anywhere maybe a question for you I see I mean you're one of the funds that I thought was very unique in the sense that you are Global from day one right

and people think of venture capital as a local market you have local access you understand local nuances is you build for local population and so on and you get successfully local what do you think given you have been investing in Founders from the west and Founders from the East and I'm calling it West and East not to ignore the other markets but they seem to be the two big epicenters of crypto for now what do you think Founders from the West could learn from the founders that you might have seen the founder archetypes from the East and what do you think the East could learn from the West here that's a good question I mean I think the reality about crypto is that you know crypto's been Global from the very beginning and you know within within a week of the Bitcoin white paper being

published on slash Dot it was translated in Chinese and Bitcoin started getting traded in China and so this the interconnected Global nature of crypto has always been there but it's not sometimes it's opaque right sometimes you don't notice that when a D5 project goes live it has customers and users and developers who are in totally different languages in different language communities and different apps than the ones that the developers might be using um I think what I would have noticed over time one is that um there's certainly more convergence between those two communities they were more fractured before I think covid really changed a lot of things because in the air of covet we all had to really just live online and crypto always kind of lived online but it lived online even more postcode and that makes it a lot easier for communities that uh don't live in

the anglophone market to be able to access all the conversations and materials and thinking of folks who are who are you know in the western side um the obvious thing in Asia is that the biggest companies in the world in crypto are all Asia right so like binance is Asia and okx is Asian bitmain is Asian um and it's not just they're Asian Founders but I think also the DNA of these Founders a lot of these guys were built in the o2o era in in China where they're extremely operationally efficient there's just kind of Ruthless um you know Obsession about margins and you don't get a lot of that in the US because the U.S traditionally especially in Silicon Valley it's a place where capital is very cheap it's a place where it's like grow grow don't really worry too much about along the way when you're

really really big then you can worry about profitability and China especially in crypto crypto in China like grew up in an environment where there was no Capital markets there were no there was no external funding so you needed to be profitable immediately and so the the founders that you see in China they tend to be or not you know in China necessarily obviously most of them are there's a broad diaspora into places like Singapore into Hong Kong into Dubai and these different places now but the founders that were that cut their teeth there they just have much much more efficiency and rigor you know you look at coinbase right coinbase infamously obviously very Silicon Valley company grew really really big now they have thousands of people and Incredibly unprofitable which is exactly the opposite thing you'd

expect by the time the company goes public and now we figure out what worked we're going to stop doing all these crazy experiments and we're going to be lean um you know binance okx these companies have been like that from day one so that to me feels like probably the biggest distinction but on the western side you know it's it's just hard not to notice that most of the technological innovations have come from the west and I think a lot of this um I don't think it's the case that you know people in Asia or people in the East are not smart enough or not creative enough to do it but a lot of it's because they've been really stymied by their own governments so you know I I like to remind people like Stanford had a blockchain class in like 2014.

I mean not everyone was teaching blockchain back then but Stanford was uh China got its first blockchain class of 2019 when Xi Jinping announced the blockchain plus initiative and then a year and a half later that class was canceled when China banned crypto so in that kind of environment it's just much harder to build the intellectual infrastructure that you need for real you know intellectual research or innovation to take place and so that that's where I think the East is still playing catch-up but in the long run I think they're they're still going to get there because all this stuff lives online yeah love that answer this is great um maybe staying on the global theme for now maybe a question Philosophy for you you are token only just two tokens and that's the first thing that comes to mind when you think of you can launch

from anywhere you can get customers from anywhere you can build a brand anywhere but tokenization in the early days almost feels like when you have a token event almost feels like you've gone IPO and in the in you know in in the traditional world you build a product you build a brand you build a community you have 10 7 10 not even longer than that you have 10 years of bake period and then you go to public markets and crypto seems like you can go public pretty much Day Zero sometimes even before you have launched anything and that adds additional pressure it adds pressure from your customers pressures from your investors your employees your token prices go up and down

what do you think Founders need to do now especially going into the bear Market what do you think are the common mistakes people make that we should be aware of and what is your strategy to sort of really put people on the path of success as they tokenize yeah so I think the first thing you have to understand that you have startups of were very very hard crypto projects are even harder because you have all the challenges on early stage software startup and your publicly traded company you know probably at your seat or a stage right and being a publicly traded company with a very broad investor base is has a lot of problems a lot of retail investors are very very short-term uh most of them don't understand how

difficult it is to build software they're impatient right so they sort of maybe participate or get your token and constantly keep nagging sort of you know can you do something when is something going to happen so I think you know it's it's at least twice as hard I think to do crypto projects but if you do you know for the infrastructure that we invest into um you know decentralization really is most of the product the part that this is not controlled by three guys in a board room that can do whatever they want to you know people who use the technology but really that it is um a network that's controlled by the users and the suppliers

um that is part of the product and this is why it actually is valuable and so you need that process usually very early on at the very least you need to have thought about it mapped out your stakeholders and probably run run agent-based simulations Etc on things on token distributions and how those could pan out um and so I think that's just really what what what what we see you will it will be much much harder than doing a SAS business and it will be even much harder than doing another exchange that maybe has lower fees that trades crypto these token networks at least the way we invest in them the decentralization is one of the main features of the product and it's incredibly complex because you

also the founder type is very different if you have a web 2 company you basically need you know three Alpha guys you know that are just sort of benevolent dictators and whip everyone forward and they say what's happening and whatnot um in in web 3 it's very different you need someone like a vitalik you basically need someone who inspires a lot of ideally Developers to uh you know to adopt a bill to innovate Etc on your network but you're not directly controlling people anymore so it's very very different to the typical VC funded you know web 2 entrepreneur web3 entrepreneur is more than inspirational figure I would say right at the early days they can lead the direction and you want Progressive decentralization right you don't want I mean maker Dow was basically

decentralized from day one and you have 20 000 people deciding on product features that's probably also the wrong way what we're sort of learning is that you have this concept of progressive decentralization where yes in the early days it's a team that ships most of the code very centrally but they do so in a completely open format they do take the right amount of community input that's also in the early days it doesn't matter you can't just do anything your community wants you to do because again they really understand software the complexity of us Etc and is there is there is there a Founder that you would advise against tokenization at all like sorry is it a company that you would say you should not tokenize you should not have a token launch yeah I think generally you have to focus on product Market fit even and then keep

the token and the distribution of your network in mind from day one as well but the most important thing is still product Market fit but it is come back to the challenge in the bull market it can look like you have product Market fit by just issuing a token so I think and this is actually where the SEC I think has been helpful is that they've pushed the space to you have a live Network you have an actual function of the token then it's okay to sort of publicly traded whereas you know in the early days um you would someone you know basically sold a token that was immediately tradable and said with this money I'm going to build something that in two years maybe has functionality and then you can use a token and I'm very glad that we you know we went away from that

largely thanks to actually to the SEC um so the main thing is still you sh you know build something that people want that's the most important thing but you do have to understand and like really project and simulate already that how this is really going to decentralize so yeah yeah very helpful question for Dan I mean we we have actually a very similar background right I mean we've been Founders before you are far more successful and founder than I ever was we have done operator roles before we were at a16z before I'm curious I mean as a fun light speed and Sequoia they compete we collaborate quite a lot we've been investing in crypto for a long long time I'm curious how has your approach to investing changed or not changed

as you look at crypto yeah first off you're far too humble and far too kind I do want to say that across my experience at a16z and also as a Founder I mean a quartz headache at the funds was you want to put Founders first and when you actually live the founder lifestyle and you experience firsthand the ups and the Downs that really cements that in your minds and that transfers over when you move to the other side of the table and become an investor and there are so many companies countless companies that were knocking

at death store my company included where it wasn't except for the strength of the founder that they were able to pull through the other ends and eventually you know succeed and one of the things that we really look for at Sequoia is we look for outlier Founders Founders that we believe that we can partner with that we want to grow with in the long term so I would say you know number one just be founder Centric I think a secondary maybe slightly smaller points is crypto we've been through several Cycles now you know got in uh in 2014 at a16z and then started my own company in 2017

and a lot of ideas are tried many times over and over many times just reskin slightly different ux but one of the things that we end up looking for is you know net new UniQue Ideas novel insights uh and Founders who have them yeah I was I was on Dan's board when he was a founder and CEO so I can I can speak to how smart and resilient he is and yeah those are the type of Founders that you want right there I'm blushing wow Paul question for you um I mean you guys are the ogs I mean I mean we've been interacting and working together since 2013 as light speed and

Pantera so thank you for the partnership the friendship over the last decade or so you've been through you've been deep in the middle of two bare Cycles really like the middle of it right it happened in front of your eyes and I'm curious what did the water cooler conversations look like when you were going through the first cycle which was right after you I think you began deploying uh into crypto right in 2014 and then in 2017 and how does this cycle look different or same from the ones you have seen before yeah no I mean first and foremost you know this is the best time to be building in a in a bear Market as an entrepreneur but also as an investor and so you know entrepreneurs

we talked about this uh right before us at the stage but entrepreneurs do remember investors that grind through the bear market and what they do you know I think for us um you know 2014 was was very early in our fun life cycle it took us three years to raise 25 million dollars for our first fund and the entrepreneurship landscape was really just investing into a bunch of sea stage companies and likely not not even having a choice whether to lead or not because no one else is willing to go up to the plate and actually put some terms in there even though we're a small seed fund and so we kind of went in there and you know went with the thesis of really investing into local infrastructure so investing into

brokerages and exchanges all around the world so it's been really helpful to kind of get that Global Perspective not only in Asia but also um you know Latin America Africa et cetera but it was it was tough you know institutional investors weren't interested at the time it was mostly hiding with individuals and then you know fast forward to 2017 2018 right before the 18 bear Market really you know it's exactly what happened more recently where you started to see a lot of uh Capital coming into the space and then a lot of entrepreneurs coming into the space um you know from there really started to see some of the pain points that really needed to be solved especially around scalability so you know post you know that last Market you know I remember we

were investing into a lot of layer ones and they've done very well we started to see you know during the the last bull market some layer ones actually started reaching some of their potential starting to reach some scalability and then you know this last bull market I mean we really started to see a lot more institutional Capital come in I think all of our funds and sort of say we have a bit of institutional Capital probably different Pockets here and well you you guys are different they don't count they don't count you guys are just educating your institutional Capital we're starting to see institutional Capital come in I bet it's the endowments and Pension funds and other corporations all around the world and then a lot of new seed funds created um what does that mean that means that we have Capital now to actually fund you

know entrepreneurs entrepreneurs can come in and feel comfortable that they can have Capital but also the right Partners involved and so you know what's also sort of unique is that like the capital isn't going into just equity which you would imagine you know our last Venture fund was a fund that had as equity and tokens so you know as we were talking to institutional Capital we're saying hey you know we'll give you equity and like no actually we want tokens too you know we actually we we're starting to see what's going on with decentralized Finance we're starting to see you know how this could be applicable to well you know what I'm doing with with our financial and asset management firm and so that was the big shift for us to sort of see that there was an interest both in equity and tokens and now you see entrepreneurs

that are coming in and building not only on the equity side of things during the bear Market but also on the token side of things so that's been a a huge shift you know if it wasn't for what's going on in the global macro environment I wouldn't think that we'd have such a big drop on the liquid side of things um you know especially with all this Capital that came in you know we sort of imagined the next bear Market to be not a bear Market but just like many bear markets along the way but obviously we have a something else that's been kind of coming into this but I also think what's going to be different this time around is you know during the LA the previous bear Market it's mostly been a huge shift towards innovation in the U.S I really do feel that now that we're

starting to move over to a little bit more of the application layer side of things you know there's an opportunity in Southeast Asia for gaining for nfts and so you know it may not seem like it but if you guys are building this space and you guys are looking long term it's a great opportunity to stand out stand out with a lot of the institutional Capital like the lightspeed Indians that are willing to actually look for strong entrepreneurs that are building use cases that you know are going to be tangible and really matter so I think I think it's a great opportunity right now for Asia to really differ from in the past and really actually just be Builders during this Market yeah yeah I mean when we did our work on when we sort of started investing in India and Southeast Asia one of the things

that really surprised me was in 2021 2020 we had about 200 blockchain developer job postings on LinkedIn in India and a year later we had ten thousand and compare that to us if you do the same search not that it's all Apples to Apples it's 30 000. so the growth has been pretty massive and then when so many smart people come together I feel like this it's very it's it's really dumb to bet against it usually usually it's been the dumpback so now looking forward from here right let's talk about maybe a question starting with you haseeb we have gone through the Ico wave the D5 wave the nft wave what green shoots what green shoots

are you seeing and observing now what is exciting for the next five ten years of build phase that we are entering now I see yeah that's it's a great question I was I was saying earlier how you know a bear Market is a time when you want to work on big problems and um one of the projects we back recently actually I'm really excited about it's uh I'm sure most people have heard of uh Aptos so Aptos is this blockchain that is basically spun out of DM uh or Libra as this formerly called and they end up building their own layer one blockchain and we end up making a big Strategic investment into them and a lot of the the impetus behind why I'm so excited about it is that if you look at the last cycle there's been there's so much investment into scalability but it's

very very clear that even after going through this massive growth spurt and all these new blockchains that have come out and layer twos and all the stuff we still don't have enough scalability to to handle all of the demand and that there is for Block space and in order to really get there we have to be much more Innovative from the ground up and one of the things that's so impressive about you know the the Libra ecosystem is that you know Facebook basically put four years of r d into that Tech stack and it is now quite possibly one of the most uh you know pound-for-pound like robust software Stacks that we have that is in blockchain land and the movie ecosystem is completely re-architected from the ground up it's tough to start a new ecosystem right especially now when you know it's it's a bear Market I think it's a little

bit quieter but the team behind Aptos has just been really impressive in the way they've been managed to build community build excitement build momentum um so it's it's you know something like Aptos is exactly what I want to see people working on right now is trying to go and solve the biggest problems in crypto there's always a chance it fails I mean crypto crypto is is all about taking big risks and trying to solve massive problems uh and so that's the kind of thing that I'm excited about right now got it yeah unfortunately the last bull market they came a little bit too early because all that investment into scalability in ls2s they weren't quite ready yet right you just had the first one sort of optimism arbitrum they just recently came live so most of the bull market activity really still happened on ethereum L1 which is

insanity right and you've had you know 85 dollars to transfer a token and you've had Solana but Solana at that point was a 0.8 right it wasn't production software so it had issues so unfortunately that you know all that sort of 2018-2019 investment into scalability isn't actually quite there yet we have ZK sync which is a portfolio project that will launch in like 30 40 days with l2s so you're now actually only now are starting to have infrastructure to do you know more end consumer applications so again it's a fantastic time for you know consumer entrepreneurs to come in and build applications start building applications on l2s and then possibly l3s because you will have I would say within a year you

actually have the infrastructure to do for example first time actually payments on blockchain until now Whoever has been promising you that blockchains are good for payments they have not been they will start maybe in a year you start getting to the point where normal retail payments on blockchain will start making sense you will then start getting to a point where games on blockchain chain actually start making sense so that's sort of what we see that we're going to see an explosion of uh consumer applications in about a year or two because you can actually only you only have the underlying scalable infrastructure maybe starting in six months one year yeah I I do want to emphasize the payments space because that is something that has

been under emphasized probably since 2016 when web3 became the primary Narrative of crypto before that when it was primarily Bitcoin payments was the killer app and what we're seeing now is a combination of three things one massively more crypto adoption than we had eight years ago two l2's scalability solutions starting to come online three we have the proliferation adoption of stable coins which was missing when Bitcoin was the primary asset that was transacted from one party to another so that is a space that I think holds a lot of promise and may come online faster

than we think um agree with everything my fellow panelists have said and I think a final area that is maybe a little bit uh understated but also very widely explored right now is identity as the missing layer between you know your wallets as the core primitive for you to interact with web3 so specifically a way to connect your off chain and on-chain identities yeah Paul and then we'll go to a couple of audience questions after about 12.

yeah yeah I I agree with what everyone else said I mean I think on the on the scalability side I think it is really important I mean I really do feel like consumer is going to be huge especially outside the U.S and I think nfts are going to be um you know a path for for that especially in Asia I mean I feel like there's a lot of brand equity for individuals and also for companies and so you can't have nfts actually be anything more than speculative you can't have them be utility unless you actually reduce the transaction cost to actually make that happen but I do think like for us I mean we're interested in seeing how nft evolved but then also like you know

we're investing into the infrastructure around nfts too so we invested recently into a company called optic which is like sort of like chain analysis for nfts providing technology using computer vision and AI to really kind of figure out both for as a consumer tool but also as an Enterprise tool you know they work with open see right now to basically just help you know instantly figure out whether an nft is real or fake and do it at scale so I think you know whether it's on the infrastructure side or whether it's companies themselves issuing or you know uh providing tools to you know have companies access nfts I think that's really fascinating and the last thing that I'll mention because we do have some unique Insight because we're investors in pin two which is coinbase to Southeast Asia bitso is the coinbase of Latin

America is you know what talking to all of these exchanges and brokerages in the uh outside the United States there is a huge you know push for the adoption of stable coins right now there is a push for using cryptocurrencies whether they are stable coins or not as forms of remittances and I think that's going to get even larger so bitso has reported that nine percent of the remittances between us and Mexico is actually being done you know through their platform with cryptocurrencies underneath no one needs to know that cryptocurrency is being used for cross-border payments we know that MoneyGram we know that Western Union has used cryptocurrencies as one of their rails so it's just gonna get bigger and bigger and especially gonna as more and more consumers have cryptocurrencies natively they're going

to actually do it themselves versus actually going through some of these Services where they don't know that crypto is being used very interesting so we probably have just maybe a couple of minutes so we can maybe take one or two audience questions if there are any I would recommend maybe one of you just pick it up and answer that so uh could maybe could we maybe get the um microphone over there Gentleman on the blue shot please the one in the middle yes go ahead uh just yeah can you wait can you speak up yeah so I have a question regarding making uh decisions when uh you're looking for Investments what should be a more important factor to consider should it be the technical Innovation behind a

product or should it be the adoption Matrix so like what would you compare crypto industry to the tech industry like Facebook Google or SpaceX or Tesla where the tech matters more than adoption it may be a really good concept for any one of you want to pick it up is what's more important technical Innovation as you look at Founders and companies in crypto or is it more about adoption and scale I mean the answer is always all of these things right there's no unfortunately you know it's like asking what do you look for in a partner somebody's trustworthy somebody's nice somebody who's attractive it's like well I kind of I kind of care about all these things um it really depends on what it is you're building as to what's going to take more weight if you're building something that's consumer oriented I

don't really care what the technological innovation is I want to know if consumers like it if you're trying to solve a deep technological problem I might not care so much about your background as whether or not you have a stroke of insight that's actually going to solve the underlying problem so I think it depends on the circumstance of what it is building I think we're going to get control of the stage now so I want to thank Paul Lassie Dan for your time and thank you for the audience for for for hearing us thank you [Applause]