Once upon a time, traditional finance in the cryptosphere was considered useless. After all, the industry itself offers different, but nonetheless, controversial ways to fund a project – Initial Coin Offering (ICO), Initial Exchange Offer (IEO) and current favorites – Launch Ramp and Decentralized Core Exchange (DEX). suggestions.
But as the industry matures and more and more startups need not only capital but also direction to create an efficient and valuable product, venture capital has become one of the most attractive options. Cointelegraph spoke with Li Rongbin, founder of SevenX, about why venture capital funding is the next big thing for crypto startups and entrepreneurs.
Tell us about your organization.
Our company SevenX Ventures was launched at the beginning of 2020, so we are a relatively young brand. But all three of our founding partners have about six years of experience dealing with VCs. We are among the first venture capitalists to invest in DeFi and NFT in China. We’ve supported DeFi projects such as Dodo, Zerion, Debank, Furucombo, Daomaker, Vega, and more, as well as projects related to NFT, including YGG, Alchemy NFT, Rangers and Whale, and more.
Before SevenX, we separately had our own crypto funds in Beijing and Shanghai, which were early investors in some great projects including Huobi, Tron, NEO, and others. We decided to merge into one because we really want to combine our experience and knowledge to add value to our portfolios.
Why do you think the cryptocurrency industry needs institutional investment, given that there are so many options for funding projects like ICOs and IDOs?
We believe in decentralization and really believe that decentralized way of raising money is great and beneficial. This form of fundraising will provide users, publicity and the community. But venture capitalists have good industry experience, connections and resources, which is a good thing to boot.
There is debate about whether or not to treat venture capital funds as an entrepreneur. Sometimes these companies don’t do much to help, and they are also the quickest to dump a project into a bear market. But I think the real problem is how to communicate and use what venture capital has to offer in the most effective way.
What companies do you invest in? How do you conduct your research and due diligence?
We love innovation. We are looking for anything innovative enough to change the current crypto paradigm and we are not afraid to take risks.
In particular, we invest in well-thought-out projects and in entrepreneurs who clearly know where to go. We love imagination, but bold imagination should be based on logical reasoning and analysis. We think the entire industry is in a very early stage right now, as it is at the time of exploration.
We want to be the advocates of aspiring “captains”, we want to support them in “swimming” with “equipment like a compass, a set of tools and knowledge”, because we have seen many captains before and were captains ourselves (we are still from an investment point of view).
We will provide capital for travel, security, and sometimes even as crew members. But we must support entrepreneurs who know what they are doing. And we only invest in captains who really want to find a new continent, not in those who just want to open another island and ship some goods again.
For research, we always map a specific market to form an architectural framework, such as what underpins the entire DeFi trend or how many pillars does it really have to have? Then we analyze the driving forces or influencing factors. We have a so-called “Get BTC” model for analyzing a product from six different perspectives, including management, finance, team, business model, technology, and society.