Over the past three years, Hodl has grown significantly as a brand and correspondingly, our team has also considerably expanded. The team of Hodl consists of 25+ team members with all different backgrounds and experiences, all story worthy, however, we want to highlight a few key members who made Hodl as we know Hodl today. The fourth individual in this series is our Head of Ventures: Anton Shakur.
In 2017, Anton began his journey in the world of digital assets by venturing into trading and analysis. His inherent curiosity gradually guided him to diverse roles within the market, including sectors such as mining and blockchain-based gaming. After a brief hiatus, he repositioned himself through more active trading and investments. Simultaneously, while completing his MBA, he became part of Hodl as a fundamental analyst and trader.
During his time at Hodl, Anton laid the foundation for the venture capital arm of Hodl and is now leading the launch of a new VC fund of the Hodl Group, Hodl Ventures.
Yes, of course. I entered the digital assets space in 2017, a time when the industry caught the attention of many. During this period, I started to work part-time with a big Ethereum miner in Europe as a trader. Consequently, to educate myself more on the technology side, I joined a start-up that was building one of the first exchanges for in-game non-fungible assets, as well as a Software Development Kit for Web2 game publishers to easily transition into blockchain gaming.
Many people remember the ICO boom, yet despite the rapid growth of the protocols that raised funds in Ethereum the follow-up bear market has become the endpoint for many of them. We were no exception. The biggest lesson that I distilled from that time is that the importance of timing is as vital as the product itself if not greater. I also understood on a deeper level the cyclical nature of all markets.
After that, I stepped away from 'daily crypto' for a while and worked in international logistics, traded, yet still kept an eye on the markets. Then what happened I call 'a perfect storm': while coming to the Netherlands to pursue my MBA degree, the crypto market started to show vivid signs of revival, which brought my attention back to the space and made me more actively involved. It was also around that time I was looking for people that share my interest in crypto and have deep knowledge of that market, then I met Hodl and joined its team.
At Hodl, I was initially involved in the fund's liquid strategies as an analyst and trader. Then, understanding Hodl's domain expertise and what can be leveraged, as well as looking at it from the perspective of investment products, I proposed to go further on the risk curve and explore venture capital. The idea was well received by the board and from now on I've been busy with leading the development of that direction of Hodl.
There's an expression among fellow VCs: as a venture capitalist, you invest as much in verticals as you do in a project itself. What I mean by that is the following: when markets grow exponentially they do so in categories. In crypto that has been exemplified by the DeFi summer of 2020, the gaming boom & bust cycle of 2021, and many more. There is a clear capital rotation between different sectors based on narratives, liquidity, developers migration etc. The claim is that positioning within the right vertical within the right part of the cycle will allow you to draw significant returns and outperform the rest of the market. That, of course, doesn't exclude 'the right team' and 'the right product' factors in venture capital, as you essentially invest in people that are capable enough to bring something of value that will fill a gap in the market.
As such, we spend lots of time and effort on understanding these trends, trying to extrapolate what will be the next key return drivers. We stay in close touch with the developer community, live on-chain, and analyze the markets from the problems/needed solutions perspective.
I also like to say that as a VC we are much more in the relationship business than the investment part. I find that to be the most rewarding aspect of venture capital as you get to know a lot of bright people and bond with them. That allows you to have an information edge and I think that's how you stay ahead of the curve.
That's a great question. We have our portfolio composition based on the sector's diversification, as well as position sizes. During the first part of the bear market, from a risk-reward perspective, we were logically more focused on having liquidity and cautiously looking into the infrastructure plays, the foundational elements that support sectors like DeFi or gaming.
As we approach the Bitcoin Halving, as well as other probabilistically positive crypto catalysts, we are pivoting to the application layer and the verticals determined by our investment thesis.
I think that's also imperative to understand that venture capital is a game of extreme exceptions. Meaning that there's a super high 'loss ratio', with most of the early-stage projects failing and only a few 'home runs' bringing most of the revenue. So we are very well aware of that and when we find our winners, we always strive to size our positions in them.
Regarding the future of venture capital in crypto, I see a blurring of lines between private and secondary markets. This signifies that numerous venture capitalists are evolving into entities resembling private equity firms within the digital asset industry. Their scope has expanded beyond pre-seed investments, encompassing positions in the liquid market as well.
That choice is somehow logical from the opportunity cost view. In the bear market, in some cases, it makes sense to deploy in liquid crypto positions that are traded at a heavy discount to what might be considered as their intrinsic value rather than locking your liquidity for an extensive period of time in something that's by default risky.
To address that, we've designed an open-ended pocket within our new VC fund. That will allow us to take advantage of such market situations, and also double down on our ‘winners’ by buying off the secondary market if that’s necessary.
I expect that among investment companies in crypto, those having hybrid strategies will likely outperform the more traditional crypto VCs focused solely on private market deals.
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