At first glance, Token Fund and encrypted VC institutions seem to be the same thing, both are the titles of blockchain investment institutions, but behind the two different titles, they represent the changes in the two eras of domestic institutional blockchain investment.
Author| Tao Hu
01
The bleak past of Token Fund
Since the end of 2017, as the wealth effect of Bitcoin and other cryptocurrencies has quickly become apparent, "Token Fund" is especially popular in the domestic blockchain investment industry. Many institutions and individuals have begun to raise funds to establish Funds, specializing in investment in blockchain projects. Token attempts to replicate the success of the Internet venture capital field over the past decade. It may be to highlight the characteristics of Token. Funds that invest in blockchain (including Token and equity) are generally collectively referred to as "Token Fund" in the industry.
By the end of 2018, at least a hundred Token Funds of all shapes and sizes have emerged in the cryptocurrency market, such as Node Capital, Coin Capital, Creation Capital, Eight-Dimensional Capital, LD Capital, PreAngel, etc., and multiple investment returns are not uncommon. The investment dynamics of the Ministry of Token Fund has once become the market's investment vane, attracting the attention of many investors and researchers.
But after more than half a year of prosperity, the industry situation has taken a turn for the worse, and the myth of Token Fund has shattered. In a report published by Chain Catcher in September 2018, due to serious price inversions in the primary and secondary markets, a large number of Token Funds are facing the dilemma of "investment is quilt" and "investment is loss". Since June and July of that year, The investment speed of most Token Funds has been greatly slowed down and even afraid to make investments. Many Funds have suspended investment and plan to transform, and many well-known Funds have even entered a vacation state.
Due to the delay in the expected bull market, the situation for Token Fund has become more severe since then. According to a media interview with a well-known person in the currency circle and the founder of Qianfang Fund in December 2018, the fund has invested in about 30-40 projects and has already lost 800 million yuan relative to its highest net worth. "The main reason is that Ethereum has fallen sharply, and there is no time to sell; the liquidation loss is very small, about 20 bitcoins." Dianfu Datou said. Afterwards, under the huge pressure of investors to defend their rights, the Qianfang Fund team was disbanded, and the big head paid by the company also moved abroad and rarely spoke out.
Du Jun, the founder of Node Capital, also stated at the end of 18 that the standard floating loss of the fifth phase of Node Capital's financial report was as high as 65%. After that, he even said that he stopped Token investment and only made equity investment. "The sickle of institutions you think, including FBG, LinkVC, Node Capital, Time Stamp Capital, DFund and other investment institutions for the elderly in the currency circle are all dying leeks." Du Jun released in June this year In a circle of friends, the bleakness of the industry is further exposed in the form of naming.
In addition to the continued downturn in the external market, the reason why Token Funds have fallen into such a situation is largely due to their crude investment style and mechanism. " At that time, most of the Token Funds in the market were established after the Spring Festival in 2018, and the entry time was relatively short, and they had not yet formed an independent investment view and their own core capabilities. " Yang Linyuan said. Some investors also said that many Fund management teams are from agency investment, without risk management awareness, and have not experienced the market cycle, and there are serious problems with investment strategies.
Another reason is the poor performance of the project. On the one hand, the implementation of public chain applications is slow, and on the other hand, the quality of entrepreneurs is uneven. "In 17 or 18 years, many people were doing projects for the purpose of collecting money. They were very speculative. In fact, they didn't understand the industry and technology at all." Fundemental Lab partner Howard said that many traditional VCs who came in to invest in projects at the time also left the market bleakly. Up.
Shata Fund partner Jiang Tao further stated that investors and the founding team have been in a game in many situations in the past, and the interests of both parties are inconsistent. Many projects will set up complex unlocking clauses and currency price systems, and the team and investors will be separated from each other.
According to the chain catcher, due to long-term bleak market conditions and investment performance, most Token Funds had ceased operations or transformed other businesses before the end of 19, such as mining, staking, lending, etc., and rarely engaged in investment business.
At the same time, the term "Token Fund" itself has become a symbol of chaos and immaturity, gradually disappearing in the cryptocurrency industry, but this does not mean that the cryptocurrency investment market is heading for decline.
The more cruel market conditions are, the more reliable the investment strategy can be verified. The shuttle market cycle is the biggest test for investment institutions. After experiencing the bleak market in the past few years, a group of encrypted VCs, with their outstanding investment results in the DeFi field, began to appear in the cryptocurrency industry with a more advanced look and posture.
02
The rise of encrypted VC
Although the essential functions of encrypted VC institutions and Token Fund are the same, as representatives of the two different periods of the industry, they still present different characteristics at the level of investment strategy. The most significant difference lies in the change of investment strategy.
The first is the shift in preference for investment types, from infrastructure-based to vertical applications, from full track coverage to DeFi track priority. In the past, many Token Funds gave priority to investing in public chain and other industry infrastructures, while covering games, exchanges, media, mining, DeFi and other tracks. However, due to the saturation of public chain track competition and the poor implementation of most applications, many Tokens Fund’s past investment strategies have been misjudgmental.
" We originally thought that the prospects for the landing of games and social applications were good, but as time went by, their landing pace was far from expected. " Jiang Tao said.
Therefore, in the recent wave of market emergence in the investment layout of leading encryption VC institutions, we can see the obvious vertical track layout strategy. Since 19 years, large-scale investment in DeFi projects has also played an important role in the development of DeFi ecology. The role has established today's industry status.
The second is the shift in regional preferences, from domestic investment to foreign investment. Nowadays, most of the projects that have performed well in the market are projects led by foreign communities. The market performance of domestic projects is mostly dominated by skyrocketing and slumping, and they are even labelled as "Tugou" projects and are despised. In the past, many Token Fund projects To a certain extent, the desolation is due to the heavy storage of domestic projects, and those encrypted VC institutions that took the lead in turning their investment tentacles to foreign projects enjoy more development dividends.
In addition to the cognitive level, this differentiation is also attributed to the organization's own overseas channel expansion capabilities. Due to the severe fragmentation of domestic and foreign information and high communication barriers, this is a huge test for the professionalization and team ability of the institution. Encrypted VC institutions such as Hashkey and Fenbushi Capital will set up offices in important overseas markets such as the United States and focus on local areas. Discover high-quality projects in the market. " Domestic project investment is often short and flat, similar to a game of seeing who runs fast. " Howard told the chain catcher, "We have always invested more foreign projects, and the return on investment will be relatively higher."
Third, there are more and more research-driven investments. Many encryption VC institutions have dedicated research institutions to assist investment teams in making investment decisions. In this regard, the recently popular Qianfeng Capital is represented by many industry research reports. The cause of widespread industry dissemination is behind the institution’s long-term accumulated research methodology.
Investment research represents the professionalization trend of VC institutions. "In the past, many Token Funds were composed of a few people, without a legal entity, and developed extensively. However, VCs will show the characteristics of institutionalization, specialization, and scale, and the 28th phenomenon will become more and more prominent." Howard said .
The specialization of encrypted VC institutions is also reflected in the source of funds. During the Token Fund period, most of the fundraising sources of funds were relatively singular, mainly from people in the currency circle, but now the fundraising sources of encrypted VC institutions are more diversified, and the roles of family offices and high-net-worth individuals in traditional industries are important sources. .
Under the influence of various factors, many leading crypto VC institutions have emerged and become the vane of the cryptocurrency investment industry. The Block released a research report on December 15th that by analyzing a total of 873 blockchain-related investment transactions in 2020, the 10 most active crypto investment institutions in 2020 are Alameda Research and Coinbase Ventures. , CoinFund, ConsenSys Labs, Digital Currency Group, Dragonfly Capital, Hashkey Capital, NGC Ventures, Pantera Capital and Polychain Capital.
"Encrypted VCs are playing an increasingly important role in promoting ecological innovation and rational allocation of resources." Jiang Tao said, "However, compared with traditional VC institutions, in terms of capital management scale, social visibility, and transformational power to society, it is still There is a big gap."
Of course, this embarrassing situation cannot be solved unilaterally by crypto VC institutions. It also depends on the development of the blockchain industry. With the good performance of the cryptocurrency market this year, the mainstreaming of crypto VC institutions may also Further accelerate the pace.
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