Dialogue with the founder of Avant Blockchain Capital: Why did you leave Sequoia China to create a Web3 fund?
Guest: Jin Wenji, Founder of Avant Blockchain Capital
Interview: flowie, ChainCatcher
What about the next big opportunity after the Internet? has always beenAvant Blockchain CapitalQuestions that founder Jin Wenji needs to think about.
From joining a start-up company in Silicon Valley in 1997 to participate in project operations, then joining Legend Capital as an investor in 2007, and joining Sequoia Capital China as the managing director of the fund in 2019, Jin Wenji has almost experienced the development of Web1, Web2, and Web3 and replacement. And during his more than ten years of TMT investment career, Jin Wenji has been deeply involved in the growth of some well-known Internet companies, and has invested in listed companies or unicorn companies such as Bilibili, Ucloud, Mobile Legend, and Musical.ly.
However, after more than 20 years of Internet development, growth bottlenecks have emerged, and Web2 giants have also spawned many structural problems due to monopoly. Jin Wenji began to think about the next step in the development of the Internet. In 2017, due to an accidental opportunity, Jin Wenji became acquainted with encryption through Bitcoin. More than ten years of investment experience in TMT (Technology, Media and Telecom) made him realize that when the Internet has been basically popularized around the world, Crypto's advocacy of allowing users to truly own their own data or rights is an important evolution after the Internet.
So in 2018, Jin Wenji took advantage of the trend to create the first encryption fund to initially try encryption investment, and recently founded the second encryption fund, Avant Blockchain Capital. At present, Avant Blockchain Capital has disclosed that it has participated in investing in Taiko, EthStorage, Beachglass Labs, D 3 NS, CREDARB and other projects.
From traditional Web2 investment to encryption investment, how does Jin Wenji build Avant Blockchain Capital, and what investment strategies does he have? How do you view the narrative of the current investment cycle? Focusing on these issues, Jin Wenji, founder of Avant Blockchain Capital, recently accepted an interview with ChainCatcher.
1. ChainCatcher: What was the first opportunity to enter the Crypto world, and how did you understand Crypto at that time?
Jin Wenji: I entered the Crypto world in November 2017. The cryptocurrency world was still a small market at that time.The price of Bitcoin is also around $1,000, but it occupies 80% of the entire encryption market. I feel that Bitcoin seems to be a very magical power, so I started to study its white paper and gradually became interested in Crypto.
2. ChainCatcher: Why did you decide to leave Sequoia China and create a Web3 fund? What is the background of Avant Blockchain Capital?
Jin Wenji:The establishment of Avant Blockchain Capital, an encryption fund, also followed the trend. Before investing in TMT in traditional Web2 funds, we have always needed to pay attention to what the next big opportunity after the Internet is. My judgment at the time was that the rights of users to own their own data would be an evolution of Web2.
This judgment first has a big premise that the Internet penetration rate is very high. Now there are about seven or eight billion people in the world, and most of them have access to the Internet. Many developing countries have skipped the PC era to the mobile Internet era. Everyone can own their own data and rights because of the Internet.
Secondly, the computing power has been greatly improved. Crypto uses codes to build trust, and many consensuses require a lot of calculations to complete, which requires a lot of computing power. In the past few years, while the computing power has increased, the cost has also been greatly reduced, which provides a high possibility for the operation of Crypto.
In addition, Web2 Internet companies are gradually moving towards monopoly. After the monopoly, there will be various political and economic problems, and a solution is urgently needed. Crypto's decentralization concept and so on can provide some solutions.
And we have previously invested in many projects like cloud technology architecture in the traditional Web2 fund. In the Web2 era, it was open source and attracted developers from all over the world to participate. However, it used to be a centralized cloud infrastructure, but now it tends to be more decentralized. We are more familiar with developers in the encryption field.
Our fund is a top-down research institution, which will focus on infrastructure and other fields. The research and investment team also has a global layout, currently in the United States, Europe, and Southeast Asia.
3. ChainCatcher: When it comes to Web2 Internet, your career has almost run through the entire cycle of Internet development. You have participated in and invested in listed companies such as Bilibili. What's the difference?
Jin Wenji:It’s actually not clear yet, the concept of the blockchain itself is decentralized, but you will find that the products at the head of the blockchain, such as the public chain, may have a higher degree of concentration than Web2.
The chain itself is going to be decentralized, but its consensus such as the POS mechanism is centralized, so I think it is more likely to be a decentralization of ideas and values. This kind of decentralization is a dynamic rather than a static process. For example, if a public chain is too centralized, or its discourse power and economic interests are too much in the hands of a few people, everyone may choose to leave it to form other public chains Or ecology, to break this centralization. On the contrary, if it can maintain the values of the community, it can exist for a long time.
Values in the encryption field are very important, and many leading products cannot be called giants. For example, Ethereum is not a company or an economic entity, but should be called an ecology. This is a very new thing, and it cannot be copied with traditional Web2 thinking.
4. ChainCatcher: The official website of Avant Blockchain Capital disclosed four invested projects, including Taiko and EthStorage, which are basically infrastructure. What is your current investment strategy?
Jin Wenji:First of all, we focus on investing in infrastructure that improves the efficiency of the blockchain. We believe that if the entire blockchain wants to become a World Computer, its efficiency must be improved, otherwise it will not be able to carry or provide the possibility for the emergence of large-scale applications. Similar to the Web2 era, if there is no transition from 3G to 4G, short videos will not appear at all, and if smartphones do not drop to the thousand-yuan level, the mobile Internet will not rise.
At present, we have invested in the Layer 2 project Taiko and the storage project EthStorage in this part of the infrastructure. EthStorage is also the first place in the EDCON of the Ethereum Montenegro Conference. Layer 2 is actually more computing-oriented to ensure the improvement of computing efficiency and cost reduction in large-scale applications in the future. In addition, if the blockchain wants to become a world computer, it needs to have data storage capabilities, so it also invests in storage projects.
Second, we also invest in infrastructure that facilitates user access to cryptocurrencies. At present, the barriers to entry of cryptocurrencies are very high, and they have certain professionalism. For example, different chains have different wallets, and wallets need mnemonic words, anti-theft and privacy protection, etc. We are also optimistic about the mature infrastructure of this kind of user interface. . In this field, we have invested in D 3 NS, a DID track project, whose founder was previously from the background of the Ethereum Foundation.
In the third, we will look at the direction of the combination of AI and Crypto. After the emergence of ChatGPT, it will have a great collision with Crypto, and it is also a new topic for us.
5. ChainCatcher: Can you talk about how you think about the possibility of combining AI and Crypto?
Jin Wenji:AI’s current large models are very concentrated, mainly in the hands of several large models such as ChatGPT. Whether these large models can be combined with Crypto we cannot make a decision, it depends on ChatGPT’s planning.
But we see that in another direction, there are many open source models. The training of these models consumes a lot of computing power. So in the operation of the model, some decentralized computing power can be provided through Crypto, similar to what is provided in mining. Storage, some provide bandwidth.
In addition, everyone is more concerned about the protection of data. The data is used by the large model. Is there a way to protect the user's data? At present, zk is a very popular direction, and we are also exploring investment opportunities in these fields.
6. ChainCatcher: The competition in Layer 2 is very exciting. What do you think of the short-term and mid-to-long term competition pattern?
Jin Wenji:First of all, we are still biased towards Ethereum. We believe that Ethereum may still be in a dominant position in the long run. Then on the basis of Ethereum, we choose to look at zk, because the op is already very mature, leaving limited space for innovation, and our first-level investment needs to invest in innovative companies.
7. ChainCatcher: In addition to the directions mentioned above, what narrative or vertical subdivision tracks will you pay attention to?
Jin Wenji:We think there are still great opportunities on the financial side. There are many deficiencies in traditional financial mechanisms such as banks and fiat currency. For example, cross-border payment involves a lot of fiat currency, but due to the fragmented financial and banking system, the retention of funds is long and the efficiency is not high. Crypto can provide some solutions train of thought.
8. ChainCatcher: The hot narrative of Web3 is changing rapidly. Recently, new concepts such as the Bitcoin ecology have emerged. Are there some markets that are hot but you are not very optimistic about?
Jin Wenji:We take a normal view of market hotspots, and we often go back to some hot events and innovative attempts. But you must know that not all innovations will arouse strong attention. As an institution, what you need to study is the reason behind it.
9. ChainCatcher: Most of the Web3 investment stage is in the early stage of the project, and the "investment" in early projects is very important. What judgment logic do you have for whether Web3 entrepreneurs are worth investing in?
Jin Wenji:First of all, we still prefer value-oriented founding teams. We need to judge whether they are long-term. In addition, entrepreneurs with a good educational background and entrepreneurial experience in large factories are preferred. Of course, some very thoughtful and energetic young teams are not excluded.
10. ChainCatcher: From traditional Web2 investment to encryption investment, what are the changes in investment methods? What are the obvious differences between the operation of encrypted VC and traditional VC?
Jin Wenji:Encrypted investment is more global, and you can get in touch with many foreign entrepreneurs. On the one hand, it is a challenge and on the other hand, it is also an opportunity. Secondly, the exit method of encryption investment is very different from that of traditional Web2 investment. In addition, listing cryptocurrencies on exchanges is different from listing on Nasdaq. Many new investment methods have been spawned here, such as providing liquidity, staking, etc. in exchange for income.
11. ChainCatcher: There are many opinions that the encryption primary market and the secondary market have been seriously decoupled in the past two years. The "value investment" in the primary market is not popular after the secondary market. What do you think of this phenomenon?
Jin Wenji:Ethereum had a peak of 4,700 US dollars, and now it has fallen to more than 1,000 US dollars. This kind of ups and downs is very common in the cryptocurrency market. As an investor, the most important thing is that you have to know which part of the money you earn. The essence of finance is the same. Whether it is in the traditional field or the encrypted field, the most taboo thing is that investment is both necessary and necessary, and you may not earn anything in the end.
12. ChainCatcher: The Hong Kong Securities Regulatory Commission officially released policies related to virtual asset transactions this week, which has aroused a lot of discussion. What do you think of the impact of Hong Kong policies on Chinese crypto entrepreneurs or investors?
Jin Wenji:This is a very positive signal, which means that Hong Kong has become a new hub, and it will enter the compliance stage relatively quickly, which is a good progress for the promotion of cryptocurrencies. But regulation and cryptocurrency itself will take a long time to adjust.
13. ChainCatcher: You just mentioned that you have been in the encryption field for 6 years and have gone through some cycles. Do you think the current cycle is a good time to invest?
Jin Wenji:I think yes, now it is between bulls and bears, and this period between bulls and bears may be longer than before, because this time there are some uncertainties in the general environment, such as interest rate hikes and uncertainties in the global economy . So in this case, the test for the project side is higher, which will lead to a batch of more high-quality entrepreneurial projects with low valuations. For investors, as long as they have patience and long-term philosophy, they can invest in high cost performance s project.
