Multicoin Capital: 4 Key Investment Priorities and 11 Investment Directions for the Future

Multicoin Capital completed its second fundraising round some time ago, so let’s see what they are going to do next.

Multicoin Capital: 4 Key Investment Priorities and 11 Investment Directions for the Future

Original Source: MULTICOIN CAPITAL

In early May, Multicoin Capital announced the completion of the second phase of its $100 million venture fund, and also released its next investment strategy and thoughts on hot tracks.

How Multicoin Capital invests
In general, we prefer to start supporting entrepreneurs at an early stage and work with them. We can invest as little as $500,000 in an early stage deal or as much as $100 million in a single deal, when hedge fund capital is included. We are a medium to long-term value investor and will help investors at all stages of project development, from startup to mature public markets.

Once we decide to invest in a project, we are unwaveringly bullish on it and actively involved in building it. As mentioned in our previous postings, the best way to capture Alpha is to participate in building it.

The project that received the largest single investment from our Phase I fund was Helium, roughly 12% of the total fund size. We are still looking for similar opportunities, and we are willing to work closely with startup teams to build deep consensus and achieve results. Not only that, but we can also leverage larger hedge funds to invest in project tokens in the secondary market, which is a bit different from traditional VC.

The next wave of crypto innovation
In the last few years, investments in the crypto industry have been geared towards the technology and infrastructure building levels, including Layer1 and Layer2, zero-knowledge proof systems, key management solutions, indexing and query solutions, storage solutions, ASIC manufacturers, mining, custodians, brokers, exchanges, and billions of dollars of investments. We provided seed funding early on for many of these projects, including The graph, Solana, Torus, StarkWare, and others, all of which were invested in our Phase I fund.

After the core infrastructure of the industry was very mature, innovation began to explore forward.

At the superstructure level, crypto research guides our investment strategy, and we look for new opportunities based on that. Over the next few years, there will be an incredible wave of innovation in open finance and Web3, as well as in new cryptography-enabled infrastructure and applications. This is because the underlying infrastructure has reached a sufficient level of maturity to provide the ground for the wave to hit. Over the next few years, we plan to invest heavily in Phase II of the fund.

I. Embracing Open Finance

  1. DeFi Underlying Applications

We have been an active DeFi investor in the industry for the past two years, including in Aave, Alpha, oxygen, Perpetual Protocol, Saffron, Serum, Swivel, and Thorchain, among others. We will continue to invest in the DeFi stack in our Phase II fund. Although we have already invested in many DeFi underlying applications, there is still plenty of room for growth and we hope to invest in more underlying assets in the coming years. 2.

Mainstreaming DeFi

As the DeFi protocol matures, there will be thousands of entrepreneurs localizing the DeFi experience. We want to support those entrepreneurs who are accelerating their adoption of DeFi. With this in mind, we have invested in Mackie Wallet, LUNA, and the fast-growing Mirror. 3.

  1. DeFi projects on Solana

Solana is the product we’re most proud of since our first investment in May 2018, and we were among the first to invest in Serum. Having recently hosted a number of Solana +Serum hackathons, it’s clear that an emerging DeFi ecosystem will go on Solana with Rust as the native programming language, leveraging Solana’s performance to plug into Serum’s composable on-chain order book, which will then support the best entrepreneurs to build scalable DeFi applications on Solana.

II. Web3.0

  1. Web3.0 Infrastructure

We have written about Web3, one of our Crypto Mega papers, and specifically the Web3 stack. We have made several investments in some of the most strategic layers from our Phase I fund. While the Web3 stack has come a long way, it is still in its infancy. We continue to invest in the core infrastructure of the stack, such as Arweave, The graph, and Torus. 2.

  1. Fan token distribution platform for creators

With the rise of the creator economy on Instagram, YouTube, TikTok and SubStack over the past few years, it’s easy to see that creators are looking for new ways to engage with their fans and profit from their work. We believe that cryptocurrency will unlock new mechanisms for creators to monetize their work. A handful of companies are already experimenting in this space, including Mirror, audius and aimi, and we believe the industry will flourish in the coming years.

iii. infrastructure and applications using cryptography

  1. Industry applications with cryptographically native incentive models

In addition to consumer and creator-focused applications, we are looking for applications that leverage the features of cryptographic native incentive models to solve industry and social problems. We believe this category will create a wave of non-native cryptographic innovation.

Helium is an inspiring example of our portfolio in the wireless networking space, where Helium’s strength lies in its ability to create new business models for deploying and managing wireless networks. This can only be achieved by using the economic model that comes with cryptocurrency to incentivize people around the world to deploy hotspots.

We’ve learned a lot from working closely with the Helium team over the past two years. But one of the most important things we have found is that crypto can be used to incentivize people to build social infrastructure that is distributed around the world. We think this is a great idea and is significant in areas such as data collection such as weather, logistics data, etc. There is a trillion dollar opportunity for such companies beyond Helium, and we are a global leader in leading such investments.

  1. Social apps injected into the financial system

Encryption has made investing easier than ever. We want to invest in new social apps that embed crypto finance in ways that are not possible with traditional financial paths. eToro is the first example of a mainstream traditional financial product. The opportunity to build social finance apps on the cryptocurrency path is 10 to 100 times greater. 3.

  1. Crypto Native Gaming Platforms

The first wave of native crypto gaming is focused on assets that have special powers given to players (e.g., cards). We are looking to invest in games that are only possible in the crypto industry. This could include metaverse like Decentraland or Axie Infinity, or in entirely new games that utilize crypto-native concepts like pledges. We have no firm beliefs about the importance of particular mechanics. However, we will seek support from game developers who can incorporate the use of native cryptocurrencies to design new mechanics that are not yet widely understood.

iv. nft and digital collectibles

  1. Digital Collectibles

NFT has flourished over the past year, providing the foundational technology for digitizing real collectibles. the design space related to NFT is huge, and we are excited to attract the most cutting-edge entrepreneurs in the space.

  1. social tokens

Based on the focus on digital collectibles, we believe crypto creates new opportunities for people to directly monetize their personal brands and share them with the public. The primary embodiment of this is the Income Distribution Agreement (ISA). But when using crypto mechanisms, the exploitable space is much larger than the debt + equity scope of traditional capital stacks.

  1. Building the Metaverse

While it is unclear whether a metaverse is imminent, it will be a huge opportunity to leverage trusted middleware technologies that will continue to be in a massively scalable state. We are looking to invest in infrastructure and native applications that can build the metaverse in all its forms, as well as market expansion.

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