recently,NGCrecently,Ventures Founding PartnerGu TaoNGCSystematic elaborationNGCThe first fund, NGC Ventures Fund I, was established in November 2017, and has invested in more than 50 foreign projects.bitcoinbitcoin

The overall return after 18 months of denomination (or denomination in USDT/US dollars) is about 7-8 times (as of Q1 2019).July 4th at 19:00, Founding Partner of NGC Venturesto be a guestBlog Chain Finance《Blog Chain FinanceBull and Bear Apocalypse

》In the eighth VIP guest interview, we had a more in-depth chat about "the all-weather investment strategy of cryptocurrency".In the past 20 years,He has been engaged in 6 different industries in at least 5 countries around the world, including telecommunications, Internet, tourism and catering, education and investment. Known as 2010bitcoinAn "atypical investor", he believes that if you want to obtain excess returns, you need to be curious and open to everything.

Core point of view:

Core point of view:

"High frequency beats low frequency", the cycle speed of digital currency is 3-5 times that of traditional industries;

The key to crossing bulls and bears is to judge the cycle and allocate corresponding assets according to the progress of the cycle;

All-weather investment strategy of cryptocurrency: allocate assets according to the cycle, and seize the big opportunity of "paradigm shift" at the same time;

Behind wealth growth: cycle theory is gradual, and technological development is leaping;

bitcoinbitcoin

Currently the digital currency industrybull marketbig

bigbull marketbull market

It is expected to be related to the halving of Bitcoin production in 2021-2022;

In the next few years, more attention will be paid to the implementation of blockchain technology.The following is the eighth issue of ""Interview record:

Blog Chain FinanceBlog Chain Finance

: As a professional PE fund and M&A fund partner before, what opportunity did you get in touch with and enter the blockchain (Bitcoin) industry? How do you understand the "species" of Bitcoin?

Gu Tao: Let me introduce my background first, so that everyone can understand my angle of thinking.

In the past 20 years, I have worked in 6 different industries in at least 5 countries around the world, including telecommunications, Internet, tourism, catering, education, investment, etc., and have worked with people of various races/classes/cultures. I have acquired more than 20 banks and financial institutions around the world, and I have also worked as a programmer and written code.

When I started my own business, I also distributed leaflets on the street for sales. Professional managers have also done it, serving as executives in several Fortune 500 companies.

When investing, these experiences from all walks of life are very useful to me, allowing me to think across industries/regions/cultures, and summarize some experience beyond projects and industries—a bit similar to the "dimension reduction" that the Internet industry says attack". This is also an important tool for me to obtain excess returns in traditional financial markets.

One of the lessons is to be curious and open to everything. So don’t talk about Bitcoin, if you tell me today that there are aliens, as long as you have enough evidence and clear logic, I will believe it, or at least I won’t reject it.

The first time I came into contact with Bitcoin was in 2010. It seems that I read a related article in a business weekly in the United States. At that time, I thought this matter was very interesting and planned to buy a mining machine to mine it.

Because when I was studying for a Master in 2003, I studied distributed computing. At that time, there was a very hot concept called Grid Computing (Grid Computing). At that time, I thought it would be cool to use computers from all over the world to solve a scientific problem, such as DNA sequencing.

Bitcoin is actually a simplified version of Grid Computing, but with an economic mechanism added. At that time, I was working on my first entrepreneurial project, and I was too busy to forget about it.

The real entry was in 2017. I remember that I was in Seoul preparing to acquire an educational project. While negotiating the investment agreement, I bought some bitcoins during my lunch break. The price was about 17,000 yuan ($2,430).

Why buy is also very simple, just to participate in ICO. At that time, my classmate of Tsinghua EMBA was investing in ICOs, and I mentioned it to me, and I followed suit. Didn't make any money that time because it was just in time for 9/4.

But this financing model similar to the traditional capital market "tier one and a half" impressed me deeply. I spent three months researching the entire industry. At that time, I felt that this matter was very close to money, and there was a lack of professional investment institutions. For me, both are positives.

In my opinion, Bitcoin (including other virtual currencies) has multiple attributes and is a typical "thousands of people and thousands of faces".

Blog Chain FinanceBlog Chain Finance

: For most people in the traditional financial circle, when they first came into contact with the blockchain (Bitcoin), they would more or less question this thing. You also came from the traditional financial industry (investment bank). What is your attitude? Has perception changed in the past few years?

Gu Tao: Just now (in the group), a friend of Shanda Games added me as a friend. I am also a shareholder of Shanda Games (now called Century Huatong). It seems that more and more friends in traditional industries pay attention to blockchain.

As mentioned above, I am not a particularly pure traditional financial practitioner. My multi-industry background actually made it easy for me to understand Bitcoin.

But the wealth effect of Bitcoin is something I didn't expect in 2010. In other words, my recognition of Bitcoin at the time was more about its underlying technical concept, but I ignored its wealth effect.

In 2017, I had a deeper understanding of the wealth effect of the entire cryptocurrency industry, which is a fundamental change. But having said that, according to my years of experience, the wealth effect is directly proportional to the degree of doubt.

From not accepting to accepting is an opportunity. Recent wealth hotspots including marijuana and artificial meat, such as Beyond Meat (NASDAQ:BYND), all have similar characteristics.

After that, what are their thoughts on digital currencies?

Gu Tao: Actually, I also participated in the management of two traditional equity investment funds at the same time. One is a RMB fund for biomedicine; the other is a US dollar fund for consumption. It’s just that the teams of the other two funds are very mature. I’m basically only involved in the investment committee, and not too involved in daily operations.

In the past 18 months, my energy has been mainly focused on NGC, which is a new industry after all.

In fact, practitioners in the traditional financial primary market are quite interested in digital currency. why? In fact, it is very simple, just one word: fast. I calculated that the cycle speed of the digital currency industry is 3-5 times that of the traditional industry. To take an Internet jargon, it is "high frequency beats low frequency".

The industry makes mistakes quickly, but also corrects quickly. Losing money is fast, but making money is also fast. I'll show you a picture.

As for cattlebear marketbear market

But how to obtain profits in this market, they will not enter the market until they think about it. But once they enter the market, the market structure will change. This is also what we have seen since May this year.

secondary title

Bolian Finance: All fields with financial and volatility attributes will have cycles. In the past more than a year, digital currencies have experienced a "tragic" bigbear marketbear marketcycle. Our column is called "Bull and Bear Apocalypse

", Slogan is "Spiritual dialogue with those who cross the bull and bear", what do you think is the most important point of "crossing the bull and bear"? As a representative of those who cross the bull and bear markets, what kind of bull and bear markets have you experienced, how do you "make money" in the bull market, and how do you "survive" the bear market?

Gu Tao: This is actually the main topic of my "All-Weather Investment Strategy for Cryptocurrency".

Before answering this question, everyone knows that there are bulls and bears in the traditional economy and finance. How to cross the bull and bear is a topic that has been studied by economists and financial practitioners.

This is a very popular book last year called "Debt Crisis", written by Ray Dalio, the founder of Bridgewater Fund (by the way, Bridgewater Fund's flagship product is also called All Weather Fund). This book examines in detail the principles of prosperity and crisis.

In fact, it can be summed up in two words: cycle. No matter which industry you are in, the key to crossing bulls and bears is to be able to judge the cycle and allocate corresponding assets according to the progress of the cycle.

NGC was established at the end of 2017. It has been 18 months now. It has experienced a complete bull-bear cycle and achieved an 8-fold return. This is a relatively good case.

However, NGC does not only look at the cycle of bulls and bears. The bulls and bears are actually the capital aspect, and it also depends on the fundamentals of the industry.

The emergence of the cycle is due to the disconnection between the development of capital and fundamentals, which is the same as the disconnection between the inflation factor and the GDP development factor of traditional finance.

Out of touch will produce structured investment opportunities, and these structured opportunities are the secret to generating income across bulls and bears.

For example, when we judged to enter a bear market (more precisely, stagflation to recession) in mid-2018, most of NGC's assets were converted into cash.

At the same time, NGC exclusively invested in a lending company (PayPal Finance) that specializes in lending to miners. As a result, the business volume increased by more than 20 times within 10 months.

At that time, PayPal Finance talked with almost all digital currency funds. In the end, only NGC dared to invest, and invested a lot. It is because our research on the cycle is more in-depth.

Blog Chain Finance: Human beings have been looking for the universal law of wealth growth. Is this law definite or evolving?

Gu Tao: This question is Billion Dollar Question, but it happened to be mentioned in my article again.

In fact, there are two laws of wealth growth. One is based on the law of past experience, cycle theory is a typical example, it is gradual; the other is based on the law of technological development, the Internet is a typical example, it is leaping.

The existence of these two laws is certain, but their actual performance and application are constantly evolving. Therefore, laws can only be used as guiding principles, not as the only basis for investment decisions.

Why keep evolving? The rules based on experience are actually affected by the game. Its change is actually due to the change of the counterparty. This is what Chairman Mao meant when he said, "Fighting with others is endless fun."

The law based on the development of science and technology itself is jumping, and the last technological progress has nothing to do with the next one.

From an investment perspective, it is important to track the progress of disruptive technologies.

Blog Chain Finance: You wrote an article before called "An all-weather investment strategy for cryptocurrencies". Combined with the "Merrill Lynch Clock" profit strategy that can go through various cycles, can you briefly introduce the core investment logic of this strategy? Under what circumstances will this investment strategy fail?

Gu Tao: In fact, the previous questions are all related to the logic of this strategy.

To put it simply, it is to allocate assets according to the cycle of the cryptocurrency industry, and at the same time seize the great opportunity of "paradigm shift". The logical deduction inside will not be discussed here, and a few core conclusions are listed here:

1) In this rapidly changing market, investment income mainly comes from the β of the market, not the α of a certain institution, so grasping the macro structure of the market is more important than investing in several top projects;

2) The cycle rotation logic of the cryptocurrency market is not fundamentally different from that of the traditional capital market, but the coordinate system and direction of movement need to be corrected;

4) The allocation of cryptocurrency assets should not be divorced from traditional asset management/asset allocationasset allocation

framework, which should be integrated into and enhance the performance of the overall asset portfolio;

5) The lack of fundamentals also means that the boundaries of the industry are unstable. The analysis framework and premise can undergo major changes at any time. Past successes are often the foreshadowing of future failures.

You can refer to the picture of the cryptocurrency clock (this is NGC original):

This theory comes from the Merrill clock. It will also fail in the case of market games. But it doesn't work for everyone. More professional institutions will always win the game, just like the traditional financial system.

Broadchain Finance: It is said that investment is an art of regret. In the past few years, what was NGC's most satisfying investment, and what was the most regrettable investment?

Gu Tao: There are actually many investments that we are satisfied with. Let me give two representative examples here.

The first is Zilliqa, which is NGC's first investment. We perfectly captured the entire rising cycle from investment to exit, enjoyed dividends, and obtained a 30-fold return.

There are also many regrettable investments, and I will not mention the names of specific projects. But to sum up, it is the team that has done a good job in the traditional Internet, but can't find the rhythm in the blockchain industry. This also shows that the investment logic of the cryptocurrency industry is very different from the traditional primary market investment.

Bolian Finance: The first phase of NGC Ventures Fund I, which uses its own funds as LP, has made a lot of money. The principal plus income has reached 8 times. Next, a new phase of fund with larger self-owned funds can be launched. Why accept funds from external investors and launch a new fund?

Gu Tao: In fact, many friends wanted to join in the first issue. But because we had no idea about the first fund, we all rejected it and only invested with our own funds.

In addition, the second fund actually accounts for 30% to 40% of our own funds (depending on the final fundraising amount), so it is essentially our idea of ​​managing our own funds, but we also help friends invest.

Broadchain Finance: What will be the changes in the investment logic behind the Fund with its own funds and the Fund with external investors? What are the different layouts and gameplays of the new NGC Foundation?

Gu Tao: Our mentality is similar to managing our own funds, that is, we manage friends’ money as if it were our own.

Strive for maximum financial return and minimize risk.

The investment logic of NGC Phase II Fund will actually keep pace with the times. As I said above, the nature of this industry is high frequency. Including the investment clock concept mentioned above, it may become invalid after 6 months. But we hope to always be the first in the market to find effective investment logic.

As I said in the first question, stay curious and keep an open mind. We will try any logic that can bring excess returns, as long as it is reasonable and legal.

But objectively speaking, the second fund is still different from the first one. The most important thing is that we are not starting from scratch now.

The first fund has invested in more than 50 leading projects around the world, forming a complete ecological layout, which we call NGC Family. As shown below.

This ecological matrix means two things. First, they will bring more sources of high-quality projects to NGC; second, the projects invested by the NGC Phase II Fund can get help from the NGC Family, increasing the chances of project success.

The style of play may be more like Tencent's strategic investment department, rather than a pure financial fund.

Bolian Finance: In the stock market, we often say "ten-year ten-fold stock", in the currency market, everyone is chasing "hundred-fold currency", but compared with the top ten currencies in the last wave of bull market, it seems that only 3, in your opinion, if the next big bull market comes, which of the current top ten currencies will remain?

Gu Tao: I actually answered this question when I was interviewed by Bloomberg last year.

The most inoffensive statement is as follows:

But who's going to stay is clear to me, and that's Bitcoin.

secondary title

Bitcoin Is More Like a Commodity, Not 'Digital Gold' Yet

Bolian Finance: Many people think that this wave of Bitcoin’s rise is due to risk aversion. Can Bitcoin be understood as a safe-haven asset?

Gu Tao: We think Bitcoin is more like a commodity. There are many commodities, but only gold is a safe-haven asset. why? Because the value of gold exists beyond national sovereignty, this is a global consensus.

From this perspective, if everyone has this expectation, then Bitcoin will behave more and more like a safe-haven asset in the future.

Blog Chain Finance: How to understand the rise of Bitcoin and digital currencies in the past few months? Is it a bull market?

How to allocate assets can refer to the investment clock above.

secondary title

The big bull market is expected to be in 2021-2022, which is related to the halving of Bitcoin production

Bolian Finance: If there is a big bull market in the future, under what conditions will it be born, and when will it come?

Gu Tao: According to the cycle, there will be a big bull market about every 4 years, which is often related to the halving of Bitcoin production.

Now it seems that it may be 2021-2022, but everyone should pay attention to changes in the market structure.

Institutions predict the market, take action, and react to the market. This is a variable.

Broadchain Finance: In the next 1-2 years, what new trends and opportunities in the blockchain industry do you think deserve our attention?

Gu Tao: The implementation of blockchain technology in the next few years is worthy of attention.

Disruptive technologies are generally difficult to land, but once they land, they develop quickly, so you have to be patient.

Here is a list of the various industries that NGC has studied:

Obviously, infrastructure and financial applications are currently dominant, and this may remain the case in the next 1-2 years, but the progress of other industries cannot be ignored.

Column introduction:

Talk to the big guys about the way of investment, and have a heart-to-heart dialogue with those who have crossed the bulls and bears!