Multicoin Capital: 4 major investment focuses and 11 investment directions in the future

Multicoin Capital

21-05-13 17:06

Read this article in 12 Minutes

AI summary

View the summary

Original title: "Announcing Venture Fund II"

Original source: MULTICOIN CAPITAL

Original translation: Chain Catcher

In early May, Multicoin Capital announced the completion of the fundraising of the second phase of the $100 million venture fund. At the same time, the official also released the next investment strategy and thinking on the hot track.

How Multicoin Capital invests

In general, we prefer to support entrepreneurs at an early stage and work with them. If hedge fund funds are included, we can invest as little as $500,000 in early-stage transactions or as much as $100 million in a single transaction. We are investors who look at long-term value and will help investors at all stages of the project's development, from the start-up stage to the mature public market.

Once we decide to invest in a project, we will be unwaveringly optimistic about it and actively participate in its construction. As mentioned in our previous articles, the best way to capture Alpha is to participate in its construction.

The project that received the largest single investment from our first fund was Helium, which accounted for about 12% of the total fund size. We are still looking for similar opportunities. We are willing to work closely with entrepreneurial teams to build deep consensus and achieve results. Not only that, we can also use larger hedge funds to invest in project tokens in the secondary market, which is somewhat different from traditional VC.

The next wave of crypto innovation

In recent years, investment in the crypto industry has mainly focused on technology and infrastructure construction, including Layer1 and Layer2, zero-knowledge proof systems, key management solutions, indexing and query solutions, storage solutions, ASIC manufacturers, mining, custodians, brokers, exchanges, and billions of dollars of investment. We provided seed funding for many of these projects very early on, including The graph, Solana, Torus, StarkWare, etc., which were all invested in our first fund.

After the core infrastructure of the industry was very mature, innovation began to explore and move forward.

At the superstructure level, crypto research reports guide our investment strategy, and we look for new opportunities based on this. In the next few years, open finance and Web3 and new crypto-enabled infrastructure and applications will set off an incredible wave of innovation. Because the basic infrastructure has reached a sufficient level of maturity, it provides the soil for the wave to come. In the next few years, we plan to invest a lot of money in the second fund.

I. Embracing Open Finance

1. DeFi Underlying Applications

We have been an active DeFi investor in the industry over the past two years, including Aave, Alpha, Oxygen, Perpetual Protocol, Saffron, Serum, Swivel, and Thorchain. We will continue to invest in the DeFi stack in Fund II. Although we have invested in many DeFi underlying applications, there is still a lot of room for development, and we hope to invest in more underlying assets in the future.

2. Mainstreaming DeFi

As DeFi protocols mature, there will be thousands of entrepreneurs who will localize the DeFi experience. We want to support entrepreneurs who are accelerating the adoption of DeFi. Based on this, we invested in MathWallet, LUNA, and the fast-growing Mirror.

3. DeFi Projects on Solana

Solana is the product we are most proud of since our first investment in May 2018, and we are also one of the first institutions to invest in Serum. Recently, a number of Solana + Serum hackathons have been held. It is clear that Solana will use Rust as the native programming language to go to an emerging DeFi ecosystem, and with the help of Solana's performance, it will be plugged into Serum's composable on-chain order book, and will support the best entrepreneurs to build scalable DeFi applications on Solana.

II. Web3.0

1. Web3.0 Infrastructure

We have written about Web3, which is one of our Crypto Mega papers, especially the Web3 stack. We have made several investments from Fund 1 at some of the most strategic levels. While the Web3 stack has come a long way, it is still in its infancy. We will continue to invest in core infrastructure in the stack, such as Arweave, The Graph, and Torus. 2. A fan token issuance platform for creators
With the rise of the creator economy on Instagram, YouTube, TikTok, and SubStack over the past few years, it is not difficult to find that creators are looking for new ways to interact with fans and monetize their works. We believe that cryptocurrency will unlock new profit mechanisms for creators. There are already a few companies experimenting in this field, including Mirror, Audius, and Aimi, and we believe that this industry will flourish in the next few years.

III. Infrastructure and Applications Using Crypto Technology

1. Industry Applications with Crypto Native Incentive Models

In addition to consumer and creator-focused applications, we are also looking for applications that use the characteristics of crypto native incentive models to solve industry and social problems. We believe this category will set off a wave of non-native crypto innovation.

Helium This is an inspiring example from our portfolio in the wireless networking field. Helium's advantage is that it can create new business models for deploying and managing wireless networks. This can only be achieved by using the economic model that comes with cryptocurrency to incentivize people around the world to deploy hotspots.

We have worked closely with the Helium team over the past two years and have learned a lot from them. But the most important thing we found is that crypto technology can be used to incentivize people to build social infrastructure distributed around the world. We think this is a great idea and it makes a lot of sense in areas such as data collection, such as weather, logistics data. In addition to Helium, there will be trillions of dollars in opportunities for companies like this, and we are in a leading position in the world to lead this type of investment.

2. Social applications injected into the financial system

Crypto has made investing easier than ever. We want to invest in new social applications that embed crypto finance in ways that traditional financial paths cannot achieve. eToro is the first mainstream traditional financial product example. The opportunity to build social financial applications on the cryptocurrency path is 10 to 100 times larger.

3. Crypto-native gaming platforms

The first wave of native crypto games focused on having assets (e.g., cards) that gave players special powers. We are looking to invest in games that have implementations that are only possible in crypto. This could include metaverses like Decentraland or Axie Infinity, or entirely new games that leverage crypto-native concepts like staking. We don’t have firm beliefs about the importance of specific mechanics. But we will seek support from game developers who can design new mechanics that are not yet widely understood using native cryptocurrencies.

IV. NFT and Digital Collectibles

1. Digital Collectibles

NFT has flourished over the past year, providing people with the basic technology to digitize real-world collectibles. The design space related to NFT is very large, and we are very happy to attract the most cutting-edge entrepreneurs in this field.

2. Social Tokens

Based on the focus on digital collectibles, we believe that crypto technology creates new opportunities for people to directly monetize their personal brands and share them with the public. The first manifestation is the income distribution agreement (ISA). But when using crypto mechanisms, the development space is far greater than the debt + equity range in the traditional capital stack.

3. Building the Metaverse

While it is not clear whether the Metaverse is coming, it will be a huge opportunity, and the Metaverse will continue to be massively scalable using trusted middleware technology. We are looking to invest in all forms of infrastructure and local applications that can build the Metaverse, as well as market expansion.