Backing founders who export crypto to the world

I often get asked what our investment thesis is in crypto. Some, when they take a look at our portfolio, see a lot of DeFi investments and assume we’re a DeFi focused fund. Others see that we’ve been early to DeSci and assume our focus is there.

The truth, however, is that we’re neither a DeFi nor a DeSci focused fund. We’re not a fund focused specifically on any one area in crypto.

We see ourselves as a generalist fund that invests in companies leveraging crypto to solve a particular problem in a chosen industry.

These companies can operate in any industry, sit at different layers in the stack and sell to businesses, consumers or developers. The connective tissue is that they solve problems that exist within their chosen industries and use crypto as part of the solution to that problem. We like to say we invest in companies that “export” the benefits of crypto to the rest of the world.

Ultimately, crypto encompasses a suite of tools - smart contracts, fungible tokens / stablecoins, NFTs, DAOs, crypto wallets etc. - that founders can use when building their products. How they use them can vary significantly.

Lets take a look at three examples within our portfolio to showcase what I mean.

Morpho is a financial services infrastructure company that enables fintechs, banks and other companies to integrate lending and borrowing offerings into their products. Most notably, Coinbase has built a borrow product for its retail users that has already generated approximately $850m in borrow volume since launching earlier this year. Morpho is designed as a decentralized platform on the Ethereum blockchain. The reason for this design choice was not ideological, but rooted in rational business sense. By leveraging crypto, Morpho enables businesses that build on its infrastructure to offer more efficient, cheaper and global lending experiences than if they had chosen to build on other infrastructure.

HairDAO is a biotech focused on bringing new hairloss treatments to market. For structural reasons, early hairloss research receives virtually zero funding, which is why the most “recent” hairloss drug to make it to market was Finasteride in 1997 (a drug that comes with many undesirable side effects). HairDAO is solving that gap by creating a patient owned and operated biotech, which funds, develops and commercializes new hairloss drugs. HairDAO leverages token incentives to incentivize its community to contribute to their in-house R&D and is structured as a DAO so that anyone in the world can seamlessly participate.

Courtyard is a consumer company that has developed a digitally-native collectibles experience. On Courtyard users can buy, sell, and trade a range of physically backed collectibles, which are digital collectibles that can be redeemed for the underlying physical asset at anytime. Courtyard's digital collectibles are all encoded as NFTs on Polygon and stored in users' embedded wallets with Privy. Users, however, are not aware of any of the crypto wiring under the hood. The experience feels web2 but is powered by crypto.

Three different companies building three different products across three different industries.

Our deeply held belief is that crypto is a platform upon which ultimately all industries will build on. This informs our investing approach which is both broad but also specific.

It’s broad because we don’t portend to know what the best areas will be to develop something in. There are certain areas we actively spend more time identifying opportunities in. Lending has been one of those, which contributed to our investments in Morpho, Tenor, Maple and Exponent. But generally we find that at the earliest stages being too guided can make you miss the forest for the trees.

A broad thesis helps us focus on what is most important: founders. Specifically, founders that use crypto in a compelling way to solve big problems.