For the 28th part of Unhashed, I reached out to Emma Cui, Founding Partner & Chief Executive Officer of LongHash Ventures, and discussed the various aspects of VC funding in the web3 space.
Hi Emma! Welcome to Unhashed. What is your career story, how did you venture into the crypto space, and what led you to work on LongHash Ventures?
I first bought Ether in early 2016. I joined crypto full-time in late 2017 when my co-founder Shi Khai, whom I met at McKinsey, and I decided to launch LongHash Ventures together in Singapore. We started as a Web3-focused accelerator, which has now grown into a leading Web3 early-stage VC fund and accelerator in Asia.
From day 1, the values that Web3 stands for – transparency, true ownership of data and assets enabled by distributed ledger technology and cryptography, trustless and permissionless exchange of assets – resonated strongly with us. We want to build LongHash Ventures into a platform that not only invests in the future of Web3 but also venture-builds and value-adds to projects in a Web3 native way.
Crypto and Web3 startups drew nearly $32 billion in funding from the VC market last year. Can you explain this sudden surge of interest for the web3 space and what key factors do you think are driving VCs to invest in this space?
The Web3 revolution started in 2008 when Bitcoin was first invented. Since then, we’ve been through a few cycles of boom and bust, whereby each cycle brings in new innovation, more adoption and a clearer understanding of what Web3 could be. So I wouldn’t call it a sudden surge of interest.
The factors driving this wave of adoption are:
- Real use cases have emerged: Defi, GameFi, Metaverse, NFTs, etc. Each vertical has brought in a diverse set of users, investors, and stakeholders.
- The underlying technology has matured: Various layers across the entire Web3 stack matured at rapid speed. Layers 0/1/2, middleware, marketplaces - they have all come a long way.
- Traditional players started to adopt/invest in this space: For instance, El Salvador has made Bitcoin legal tender, and traditional and Web3 native VCs have raised billions of dollars to allocate to the space.
Okay! A slightly controversial question here. Jack Dorsey, the former CEO of Twitter, said last year that when VCs are involved, Web3 cannot truly belong to its users. What is your opinion on this?
I don’t agree with Jack Dorsey’s view. Decentralization is a journey and I don’t think we are even close to the end. Compared to the Web2 model, where ownership of startups remains within a small circle of insiders (team and VCs) until they become publicly listed, Web 3 model has given the retail and the community an incredible opportunity to participate and gain ownership of the projects that they use and like early on. And this ownership doesn’t have to be obtained through capital contribution. It can be earned via proof of contribution. For example, users contribute to the early liquidity pool of a decentralized exchange, or test out the product and provide feedback, or spread the word and attract other users.
Blockchain networks are essentially permissionless, allowing any developer to build and launch projects on their own. So, in this context, what do you think is the importance of accelerators in web3? Are they pivotal to the success of emergent startups?
I think Web3 calls for a different breed of accelerators. They are of paramount importance to a protocol’s success because they focus on bootstrapping the ecosystem for the protocol’s growth in its early days.
At LongHash Ventures, we invest in the underlying protocol token, accelerate early-stage projects and bootstrap the ecosystem. We actively participate in governance and take a long-term view to support the growth of the ecosystem.
A specific example is our involvement with the Polkadot ecosystem since 2019:
- We invested in Polkadot’s private sale in 2019 and subsequently partnered with Parity to launch the first Polkadot accelerator (we had Polkascan, Polkawallet, and Plasm/Aster come through the program)
- We invested in >10 Polkadot/Substrate projects including Acala, Astar, Manta, Unique Network, Bit Country, Composable, and Zeitgeist
- We committed >1M DOT and >100k KSM tokens for Parachain Crowdloans for Acala, Moonbeam, Astar, Kilt, Bit Country, Centrifuge, Composable, and others
- We have authored and produced thought leadership on Polkadot through Medium articles and through our Web 3 Native podcast
- We have spoken at Polkadot events (DotCon 2019, Polkadot Singapore meetup, Polkadot Decoded) and hosted folks from the ecosystem at our accelerator in Singapore (including Gavin Wood and Bjorn Wagner)
We’ve also supported the Filecoin ecosystem in a similar way and now are looking to expand the relationship with the Cosmos ecosystem and a number of other upcoming protocols.
Can you also share insights into LongHash Ventures? What kind of projects are you focused on building and how has your journey been so far?
We focus on building and investing in projects that are Web3 native, in a sense that these projects have unique business models that are not possible with Web2 technologies. They leverage the unique advantages that Web3 has to offer, such as on-chain digital ownership, tokenomics, and community governance.
At this point, we are particularly interested in multi-chain infrastructure across the key verticals that we are bullish on, such as DeFi, GameFi, Metaverse, NFT and DAO. We also place a lot of focus on vision-driven founders.
Speaking of compelling projects, what innovations do you think will define the transition towards web3 and a more open social and financial infrastructure?
I think what defines Web3 is a fundamentally more equitable ownership structure and open/permissionless participation.
We look forward to seeing more innovations around below key areas so that today’s internet population can be onboarded to Web3 en masse.
- Scalable and secure basic layers
- Better UI/UX for retail users to gain access to Web3 services without realizing they are Web3 services
- Privacy solutions that can protect users from being tracked on-chain
Lastly, is there any advice that you would like to share with new crypto and DeFi investors?
Do your own research and participate actively in the projects that you have invested in, which means trying out the product, immersing yourself in the community, and talking to the founding team to understand their vision (most founders are actually very friendly and approachable!). Additionally, understand that crypto is a risk asset and manage your exposure accordingly.
Disclaimer: The sole purpose of Unhashed is to unhash (decode) information about projects innovating using blockchain and cryptocurrencies and share it with the community. The