Why crypto industry needs venture capital: Q&A with veteran investor

Traditional financing in crypto space was once thought to be useless. After all, the industry itself is a variety of controversial, controversial, initial coin offerings (ICOs), initial exchange offerings (IEOs), and current beloved products for funding projects. We offer an Initial Coin Offering (DEX) offering with a lunch pad.

But as the industry matures and more start-ups seek mentorship to build practical and valuable products, not just capital, venture capital has emerged as one of the most attractive options. .. Cointelegraph told SevenX’s founding partner Li Rongbin why venture capital funding is the next biggest thing for crypto startups and entrepreneurs.

Please tell us about your funds.

Our Seven X Ventures is a relatively young brand since it was launched in early 2020. However, all three of our founding partners have about 6 years of experience in crypto VCs. We are one of the earliest VCs to invest in DeFi and NFT in China. We have supported DeFi projects such as Dodo, Zelion, Debank, Furucombo, Daomaker and Vega, as well as NFT related projects such as YGG, Alchemy NFT, Rangers and Whale.

Prior to SevenX, he had separate crypto venture funds based in Beijing and Shanghai. These were early investors in several excellent projects such as Huobi, Tron and NEO. We really want to gather our experience and knowledge to provide better value to our portfolio, so we decided to integrate it into one.

For example, why do you think the crypto industry needs a corporate investment when there are many options for funding projects like ICOs and IDOs?

We believe in decentralization and we really think that decentralized financing methods are cool and useful. This type of funding brings users, promotions and communities. However, VCs are experienced, have excellent connectivity and resources in the industry, and are suitable for bootstraps.

There is debate over whether to hire VC funds as an entrepreneur. Sometimes these companies give little help, and they are also the fastest to abandon projects in the bear market. But I think the problem is how to handle the communication and use of what VC offers in the most efficient way.

What kind of company are you investing in? How do you conduct research and due diligence?

We love innovation. We are looking for something innovative enough to change the current paradigm of cryptography, and we are not afraid to take risks.

More specifically, we are investing in projects with logical reasoning capabilities and founders who have a clear idea of ​​where they are heading. We like imaginations, but those bold imaginations should be based on logical reasoning and analysis. We now believe that the entire industry is in a very early stage, as it was during the Uncharted Waters.

We want to be an ambitious “captain” supporter. I met many captains before, and since I was also a captain, I would like to support “sailing” with “gear such as compass, tool box, knowledge”. Not yet from an investment perspective).

We provide the necessary capital for voyage, safety, and sometimes as a crew. But we need to help entrepreneurs who know what they are doing. And we only invest in captains who really want to find a new continent, not in captains who just want to another island and return some discover goods.

For research, we constantly map specific markets to form architect structures. For example, what is the foundation of DeFi’s overall direction, and how many pillars should it actually have? Next, analyze the driving force or impact factor behind it. There is a so-called “get-BTC” model for analyzing products from six different aspects: governance, economy, teams, business models, technology and communities.

What is the most important thing when investing in a crypto company? Is it a product or a team?

I think the team is the most important because the product can evolve over time at an early stage. But it’s hard to change people. We are also interested in investing in teams that have previously failed.

But at a later stage, the product is of paramount importance, as many things can affect results and lead to failure in this ever-changing market.

What is the hardest part of investing in a crypto company or product? What are the risks involved?

The most difficult thing is that there is too much happening every day in the space. I often sleep only 6 hours a day to keep up with the innovations that are happening around the world. Sometimes we need to slow down a bit and think rather than act fast.

The risk is that we have to realize that we are participating in a great experiment in a whole new world. And it’s definitely not risk-resilient. But how do you change the world without experimenting?

What is the most promising direction in the industry today? Why?

But we are looking at potentially interesting directions like the arweave ecosystem. We believe this is the backbone of a new paradigm for Web 3.0, NFT infrastructure, and NFT utilities. Other potentially interesting developments include DID, credit lending, community decentralized autonomy (DAO), and any type of technology that has the potential to adopt a large amount of cryptography.

What kind of support do you provide to the companies you invest in?

Compass, toolkit, supply station. We provide support throughout the entire product development process, from building tokennomics, designing marketing strategies, setting up business development, to providing recruitment and emotional support.

Have you ever had an unfortunate experience with a project?

So far, it’s been very good for the last two years.

What is the future of crypto investment? Do you think more institutional investment companies will flow in?

Competition between traditional Web 2.0 giant investors and small teams of two or three people deeply rooted in the ecosystem will occur at the same time.

Disclaimer. Cointelegraph does not endorse the content or products on this page. Although intended to provide all important information available, readers should conduct their own research and take full responsibility for their decisions before taking any action related to the company. Nor can this article be considered investment advice.

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