Interview with He Yi: Binance Labs, which manages $7.5 billion, prefers these three types of Web3 projects
Compilation of the original text: Deep Tide TechFlow
Compilation of the original text: Deep Tide TechFlow
He Yi, who manages a multi-billion dollar portfolio at Binance Labs, is looking to invest in Web 3.0 projects ranging from infrastructure, applications, data to analytics and security.
He Yi, who co-founded the Binance cryptocurrency exchange with Changpeng Zhao in 2017 and now manages the company's venture capital arm, sees a sluggish market and difficult economic conditions as the right time to invest in potential projects.
In an interview with Forkast, Ho, who was named head of the incubator and investment arm Binance Labs last month, said she has aggressive plans for the business, which is part of the world's largest cryptocurrency exchange and manages 75 Billion US dollars, holding more than 200 projects.
Ms Ho, 35, said she was looking for early-stage projects that would bring long-term benefits to the industry, and she believed the current bear market conditions would create once-in-a-lifetime opportunities, but declined to give specifics. She added that it is imperative to filter out those who catch traffic trends in order to make a quick buck."Copycat"project. Such projects lack a solid business model and won't last, she said.
Binance Labs revealed last month that it had achieved a return of 2,100 percent since its founding in 2018, with investments including Axie Infinity, Polygon, The Sandbox and STEPN.
In June, Binance Labs announced the completion of the raising of a US$500 million investment fund, with investors including Internet investment companies DST Global Partners, Breyer Capital, private equity funds, some family offices, and some enterprises.
The following is a transcript of the interview, which has been edited for brevity.
Timmy Shen: What is your investment strategy? How is it different from venture capital (VC) investments in the Internet industry or Web 2.0?
He Yi:We all know that a bear market is a good investment opportunity, because many teams who just want to make some quick money will be forced out of this industry. Now is a great time to support those who really want to stay in business and believe in this industry.
A key difference between Web 3.0 and Web 2.0 funding is that:Web3 projects don't necessarily need to raise funds through venture capital firms, they might as well issue tokens directly and sell them to users.
In this case, instead of providing money, venture capital companies should provide guidance, which is more effective and valuable. These recommendations could include guidance on technology, security aspects or token models. This is important because users and corresponding communities are at the heart of Web3 projects.
Timmy Shen: You said that now is a good time to invest. I would like to know what impact does a bear market or a bull market have on your venture capital investment?
He Yi:In general, whether in a bull market or a bear market, we have to figure out what we really want. In a bear market, I think we should be investing more aggressively, but not investing for investment's sake.
Within the investment industry, bandwagon trends are evident, with many funds concerned that they may miss out on a four- or five-year investment cycle. Some of our LPs also suggested to invest in more projects, and the investment speed is accelerated. But I've told them not to rush.
Timmy Shen: What types of projects are your investment preferences?
He Yi:There are three types of projects we are looking at:
The first category is those projects that build infrastructure.
The industry is still in its early stages. In the future, I envision people should be able to use blockchain-native products almost everywhere, just like we have become accustomed to using office software and social media. However, there are still technical bottlenecks. So, infrastructure is an area where we're still going to invest, whether you're layer 1 or a cross-chain protocol.
The second category of projects are those running various blockchain applications.
Now there are more and more projects appearing with huge user base, such as those adopting P2E or M2E mode. We are paying close attention to those products with innovative use cases.
For these projects, we ask questions similar to what you would ask a Web2 company: What is your business model? What problem or problem did you solve? What's new? These are typical questions we ask.
The third category is those projects that provide blockchain-related services to support better development of the industry, such as data security.
It's rare to see Internet (Web2) companies being hacked, but it happens all the time in the Web3 industry.
People in the Web3 industry have been repeating a sentence for a long time:"code is law". If your code isn't good enough, it's your fault that something went wrong. I agree, but if we want wider adoption, then you have to make your product easy to use to serve more people.
Also, I prefer projects that have their own innovative approach to copycats.
If you tell me you're just like some hot project with a similar user base and making some quick money, I'm not a fan of that.
Binance does not invest in projects to make quick money, we value"Long-termism"。
There are still some founders and entrepreneurs who think that raising money in Web3 is easy and start to lay flat in this space.
What these founders don’t realize is that once you as the founder make a promise to the user, then you have to deliver. You can't just put users' money in your pocket and think you're now financially free so you can lay flat.
However, many in the industry are still exploring different ways to be successful,We hope to find people who value the long-term approach over short-term gains.
Timmy Shen: Before you took over Binance Labs, it invested in X-to-earn projects such as Axie Infinity and STEPN. What are your thoughts on the X-to-earn model?
He Yi:Projects operating in X-to-earn mode need to recognize that"earn"not the point,"X "is.
A typical example is P2E games. If users join only because they want to make money, then once the pump is over, the game is basically over, the number of users will shrink, and the token price will drop.
Fundamental to this model is: Is the game still appealing if there is no revenue? Are enough people willing to pay?
Timmy Shen: Binance said in February that it would invest $200 million in Forbes, but CEO Changpeng Zhao said in June that this could change after the SPAC deal fell through. Can you give us an update on that and your media investment strategy?
He Yi:We're still looking at the Forbes investment, which is related to an IPO via a backdoor listing, but it seems to be having some difficulty, so they're adjusting. Maybe some of their shareholders might want to dilute their holdings.
In terms of media investments, when Elon Musk said he wanted to buy Twitter, we thought it was a good opportunity because Twitter has a huge user base and is good for Web3 education.
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