In previous years, traditional funding within the crypto space was once considered ineffective. After all, the crypto-currencies offers various controversial but great ways to fund projects. Some of these approaches include; initial exchange offering (IEO), initial coin offering (ICO), and the now trending initial decentralized exchange (DEX) offering.
However, with the constant evolution of the crypto industry, startups are now looking for both capital and mentorship. This is because both will help startups develop a valuable and working product and now venture capital seems to be the most attractive option.
To this end, Cointelegraph scheduled with the founding partner of Sevenx, Li Rongbin. The interview centered around why entrepreneurs and crypto startups need venture capital funding.
Talk to us about your fund.
Sevenx Ventures was established in early 2020, so it is a relatively young firm and brand. However, every one of the founding partners (three in number) has a profound wealth of experience in crypto VC.
I answered the question by ascertaining that the brand is one of the first VCs to invest in NFTs and DeFI in China. The firm is backed by DeFi projects such as Zerion, Dodo, Debank, Daomaker, and Furucombo. The firm is also backed by
NFT-related projects such as Whales, Rangers, YGG, and Alchemy NFT.
Before launching Seven, we’ve had our very own crypto venture funds established in Shanghai, and Beijing. However, we decided to integrate into one because we are looking to gather knowledge and experience to offer greater value to our portfolio.
Why do you feel the crypto industry requires a corporate investment since there are several alternatives like IDO and ICO, to find a project?
We have a lot of faith in decentralization and we believe that the decentralized approach of fundraising is very beneficial. Certainly, alternatives such as IDO and ICO will offer users the community and publicity they crave. Nonetheless, VCs are very experienced and offer decent resources and connections within the industry which are useful for bootstrapping.
Presently, there’s an ongoing debate as to whether or not an entrepreneur should receive VCs’ funds. In some situations, these organizations offer limited help and are also the quickest to dump projects in the near seasons. Although I think the problem lies in how entrepreneurs handle the utilization and communication of what VCs entails and what it provides.
What kind of firms do you invest in? How do you carry out your due diligence and research?
We live creativity and we are looking for projects that are innovative and creative enough to disrupt the present crypto model. And Yes, we are not scared of taking major risks on startups.
To be more specific, we are investing in projects with sound perception and funds that have a vivid picture and direction of their project. We love innovations but these innovations must be accompanied by sound analysis and reasoning.
Certainly, we’ll offer the founder as well as its team members the capital required for the project. But we must support entrepreneurs who have a clear idea of what they’re executing. We invest in entrepreneurs who want to test new waters and boundaries. Not those who want to place it safe and earn some profits or gains.
As regards research, we’ll be analyzing distinct markers and creating an architect design. For instance, what is the basis for the entire DeFi movement and how many pillars should it build on? We then evaluate the force that drives the factors behind the project. We have this design tagged “get-BTC” which helps to evaluate a product from six distinct facets. These include economy, governance, business model, team, community, and technology.
What is the most important factor when investing in a crypto company – the team or product?
At the earliest stage, I believe that the team behind the project is the most important factor. The thing is products can always evolve to meet the people, ‘s need but people are difficult to change. Hence we are more about the teams, especially those that have had experiences with failure.
At a more advanced stage, the product then matters most. The product must constantly be able to meet the demands of the changing market. Without this, the project is bound to fail.