On June 30, the encryption venture capital company OP Crypto announced that it will launch a fund of funds called "OP Fund of Funds I", which is dedicated to supporting encryption focused on blockchain infrastructure, DeFi, NFT, Metaverse, games and other fields. Monetary fund management company. FTX's investment subsidiaries, LedgerPrime and FJ Labs, are contributors to the fund. For a while, there were heated discussions in the industry.
Recently, Cointelegraph Chinese CEO Tracy Zhang met OP Crypto founder David Gan in New York, USA, and conducted an exclusive interview with him.
Tracy: Entering May and June 2022, under the impact of the macro market, the entire encryption market has entered a bear market. Why did you choose to launch this FoF at this time?
David Gan: Many funds in the market hold a large number of positions in the secondary market, some even as high as 80%. However, OP’s FoF will only choose to invest in funds that focus on the primary market. Many of the projects invested by these funds are under development and may not be launched to the market until two or three years later, and by then we may have ushered in a new round of bull market. Now is a very good time to lay out the primary market.
Due to limitations in manpower and capital, a fund cannot obtain all outstanding projects in the market. Through FoF, OP will invest in 10 to 15 primary market funds in the future, so as to recruit more high-quality projects. At the same time, FoF also diversifies investment and makes investors more at ease.
On the other hand, in terms of FoF, I have more than 4 years of relevant work experience. When I was working at Huobi, I invested in funds such as Multicoin and 1kx in the relatively early stage. At the same time, there are almost no special fund products on the market to invest in funds, and the FoF market is a blue ocean. So, I think, now is a good time to do FoF.
Tracy: In fact, OP FOF I is the second fund of OP Crypto. The first fund, OP Ventures Funds I, was launched in June last year, focusing on investing in early projects in the Web3.0 field. In terms of project investment, what direction does the OP mainly focus on?
David Gan: We like to invest in applications with more network effects. We are very concerned about game platforms, NFT markets, and Web3.0 social platforms. These three aspects still need some breakthroughs in the underlying technology and underlying framework.
In fact, we can take a look at the current largest user platforms of Web2.0. These platforms are very centralized and are bound by interests. It is necessary to decentralize the real creators to have greater motivation and incentives to do originality.
It should be noted that in the transformation from Web2.0 to Web3.0, many things cannot be directly transformed, and the project party itself needs to have the native property of cryptocurrency. But at the same time, the project party also needs to dig out the excellent points in Web2.0, such as Web2.0 products and user experience, which are very worth learning from Web3.0. On the whole, we should also pay attention to the mining of native elements of cryptocurrency, and distribute greater benefits to real users and communities. The combination of multiple aspects can create a more cutting-edge and innovative Web3.0 product.
Tracy: In Web2.0, VCs invest in equity. In Web3.0, there are both tokens and equity. How do you view equity investment and token investment?
David Gan: If investors can't change their thinking and switch to the Web3.0 model, he can easily be eliminated in this industry. Perhaps starting this year, there will be no more equity investments in Web3.0 projects. There are several problems with equity. First, it is inconvenient to transfer transactions. At the same time, equity investment is also very easy to be diluted. Token does not have these problems, and, for Token, users, content creators, and platforms can all own it. Holders can also freely distribute Tokens to others. In contrast, in equity investment, sometimes it is difficult for us to motivate others to cooperate with us. After all, not all partners can get equity. In many cases, the project party may raise a round of equity in the first round of financing, allowing investors to occupy a good position, and may still have to switch to Token in the future.
Tracy: How do you see the relationship between the Web3.0 industry and regulation?
David Gan: In Web3, many things are too new, and there is no existing regulatory framework. After all, innovation is always ahead of regulation. As an investor, our framework and operations are compliant and legal, but in the end, it is more the project side that promotes industry compliance.
Tracy: Web3 is a very global concept. What is the current development situation around the world?
David Gan: Our fund has no base, and our teams are distributed all over the world, including Latin America, Southeast Asia, China, and the United States. In the past few months, I have stayed in Africa, Latin America, and Europe for a month.
In Latin America and Africa, the bear market is not felt at all. The encryption industry has just emerged in the local area, and users are not so sensitive to currency prices. They still hope to use cryptocurrencies for payments or micropayments, and use cryptocurrencies to replace the functions of banks.
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