Demystifying Electric Capital: Start a ten-year fund plan and be a long-term investor
Author: Nian Qing, Chain Catcher
Author: Nian Qing, Chain Catcher
Recently, the encryption venture capital firm Electric Capital raised a total of US$1 billion for two new encryption funds, of which US$400 million fund invested in equity and tokens, and a US$600 million fund invested only in tokens and stablecoins.
Electric Capital did not name the new fund's backers, other than to say that it is almost exclusively made up of university endowments, large nonprofits and foundations. Previously, on August 4, 2020, when Electric Capital launched an encrypted venture capital fund with a scale of 110 million US dollars, its supporters were mainly world-renowned university endowment funds and charitable foundations.The two large funds will be locked for 10 years.
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Investment strategy and layout
Since Electric Capital founded its first fund in 2018, it has taken becoming a long-term investor as its goal.
Electric Capital and its founders have invested in well-known cryptocurrency companies and projects such as Anchorage, Bitwise, Celo, Coda, Derivadex, Elrond, Mobilecoin, Oasis, and NEAR.One of Electric's best investments so far is Near Protocol. Since its founding in 2017, Near has developed rapidly and has become the third largest crypto ecosystem in 2021, attracting more than 100 full-time developers. Electric invested $500,000 in Near in 2018 and continued to invest in the following years.
And the initial "bet" of $500,000 has now multiplied a hundredfold and is worth more than $60 million.Electric's recent investment direction is mostlyEncryption infrastructure and some utility projects
Mainly.
According to Electric Capital’s official blog, the five investment trends of this $1 billion fund mainly include: DAO, NFT, DeFi, decentralized infrastructure, and projects that enhance accessible user experience.
In the specific explanation, the reasons listed by Electric are as follows:
The DAO will enable the global community to allocate resources to initiatives large and small;
NFT will form the asset layer of Web3 and the cornerstone of new financial instruments;
DeFi will democratize the use of global financial products;
The infrastructure will allow engineers to build next-generation applications without central points of failure or control;
An accessible, user-friendly experience will attract more users to Web3.(Electric wrote an article on its official blog to explain the specific investment research thinking of each of the above investment trends,。）
Click here for detailsCo-founders Curtis Spencer and Avichal Garg emphasized that although these types of investments appear to be broad, they are。
Will focus on projects with strong community focus and fair token distributioncommunity intensiveof.
of.
In addition, good economic incentives will encourage token holders to do the right thing for the network, and long-term holding will lead to higher returns, which provides more opportunities for long-term investors.
The founder of Electric also revealed that in the investment, they strive for less than 10% of the project token supply at most, and tend to own 1%-5% of the project investment network.Electric also touts a co-creative approach to "new paradigm investing" and new types of partnerships.
In Electric's team, engineers account for the vast majority. Among Electric's more than ten employees, 8 are software developers and 2 are product UI designers. This feature also sets Electric apart from other crypto investment funds.
At present, Electric has invested in more than 100 encryption technology start-up companies, with a current cumulative market value of more than 50 billion US dollars, and has traded billions of dollars in derivatives. Its investment landscape is as follows:
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The team is mainly composed of engineers, using technical knowledge to influence investment decisions
Avichal Garg started his entrepreneurial career as a high school student in 2001, co-founding an education technology startup. After that, Garg went on to major in computer science at Stanford University and later worked as a product manager at Google. He has since co-founded Spool with Curtis Spencer, a mobile content caching startup that lets consumers save articles and videos on their phones. Facebook acquired Spool in 2012, and the two have continued at Facebook since then. In 2018, he decided to enter the encryption field and founded Electric Capital.
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Electric Capital co-founders Curtis Spencer (left) and Avichal Garg
The two founders can be regarded as serial entrepreneurs. They have founded eight companies before and sold six of them. They have also invested in Airtable, Boom Supersonic, Color Genomics, Cruise, Figma, Newfront Insurance, Notion, Threads and other non-crypto companies.
As mentioned earlier, engineers accounted for the vast majority of the Electric team. Founder Garg believes that "engineers will eventually dominate all the largest companies," even in venture capital and capital markets. For example, Paradigm and Hack VC, an encryption fund that recently raised $200 million, also have engineering teams.Most of the software engineers and designers in Electric have a background in "big factories" and prestigious schools, and most of them come from Facebook, Microsoft, Google, YouTube, etc.
