In this episode of Inquisitive VC, host Nawaz Ahmed sits down with Andy Kangpan, Founder and General Partner of Metalayer Ventures, a $25M crypto venture fund focused on blockchain adoption in financial services.
Andy shares his journey from investing at Two Sigma during the 2017 ICO boom to founding Metalayer after the FTX collapse—driven by the belief that crypto’s next chapter lies in real-world deployment, not speculation.
He opens up about the emotional rollercoaster of raising a first fund, the key lessons learned from rejection, and how Metalayers balanced 50/50 approach to equity and token investments positions them for the evolving crypto landscape.
Listen as Andy and Nawaz discuss:
Why financial services are the next frontier for blockchain adoption
What makes crypto fundraising so different (and harder) than startups
How to stay sane through constant LP rejections
Metalayers strategy for concentrated, high-conviction investing
Andy’s surprising obsession with skateboarding in New York City
🎧 Brought to you by Carta — modern infrastructure for private markets.
Follow @nawazahmedvc and subscribe to Inquisitive VC for more inside stories from founders and fund managers shaping the future of venture.
Season 1 is Sponsored by Carta:
Carta is the leading provider of world-class software purpose-built for everyone in private capital. We connect founders, investors, and limited partners through software purpose-built for private capital. Trusted by 65,000+ companies in 160+ countries, Carta’s platform of software and services lays the groundwork so you can build, invest, and scale with confidence. Our Fund Administration platform supports 9,000+ funds and SPVs, representing nearly $185B in assets under management, with tools designed to enhance the strategic impact of fund CFOs. Recognized by Fortune, Forbes, Fast Company, Inc. and Great Places to Work, Carta is shaping the future of private market infrastructure. Find out more about Carta at carta.com/sg/en/.
Transcript:
00;02;15;08 - 00;02;17;15
Andy Kangpan
Thank you for having me. Excited to be here.
00;02;17;18 - 00;02;31;23
Nawaz Ahmed
Fantastic. I wanted to start with, you know, your background a little bit. So how you got into crypto and how you got into the world of, you know, private investing and venture capital?
00;02;31;26 - 00;02;59;06
Andy Kangpan
Yeah, definitely. So I came into the crypto ecosystem, with, from the venture capital perspective. So I’ve been in the VC space for, about ten years now. Most of that time was at a firm, called Two Sigma Investments. So I sat on that, the private investments team there. And, initially I started out as a journalist, at that firm.
00;02;59;08 - 00;03;24;18
Andy Kangpan
Crypto was, always part of my focus there. So I joined the team in 2017 at that point in time. There was a lot of excitement about the ecosystem. Given the ICO boom that was happening. And, I worked closely with, a few of my colleagues there who are now my partners at meta layer on leading research for the organization.
00;03;24;20 - 00;03;50;21
Andy Kangpan
Across a number of different dimensions, but ultimately led to some of the firm’s early investments in the ecosystem. So that was really my first, real foray into the space. And over time, I started to spend more of my professional and personal time working into the space. Ultimately, around 2020, I made the decision to shift all of my attention, on the category.
00;03;50;21 - 00;04;03;02
Andy Kangpan
And, at that point in time, basically started to lead all of the firm’s private investments in the category. Until I left, a little over a year ago.
00;04;03;05 - 00;04;16;20
Nawaz Ahmed
Understood. And could you talk a little bit about the type of investing you did at Two Sigma? Was it private, like, venture capital style was illiquid? Curious on that part.
00;04;16;22 - 00;04;48;06
Andy Kangpan
The investment activity happened across, a few different buckets. The, bulk of the focus was, early stage private investments, within the venture capital mandate at Two Sigma. So, in that capacity, we were focused on a mix of equity and token based investments, at the seed and series stages, pretty broad thematic focus, but I would say it tended to have a tilt more towards, applications and, financial services ecosystem.
00;04;48;09 - 00;05;23;22
Andy Kangpan
So a lot of like trading infrastructure, DeFi applications, things of that nature. There was a second bucket of activity, which was, investments into the crypto space that had a little bit more of that strategic lens. So, I was tapped to help lead an effort, that got started around 2021, to really start building connectivity into, the space through, minority investments and primarily market infrastructure companies that are, that were catering towards more institutional players on the trading side.
00;05;23;24 - 00;05;50;25
Andy Kangpan
And then lastly, around that time, the organization was exploring, the opportunity to, trade crypto as an asset class. And I had the opportunity to work pretty closely with a number of teams there. I should probably shouldn’t get into too much detail. Exactly what, sort of, ripple strategies were there, but, I played at, pretty active role and some of the early days of that, that effort.
00;05;50;25 - 00;05;56;26
Andy Kangpan
So, those are the three primary categories, that I focused my time on. And I was at Two Sigma.
00;05;56;29 - 00;06;19;12
Nawaz Ahmed
Okay, great. Really helpful. And I guess now at this point, curious, the thinking on, you know, when you were leaving to Sigma, you know, what was the thinking around leaving to start a new venture fund, you know, how do you come to that type of decision, you know, how do you find your partners who are willing to kind of take this leap as well?
00;06;19;14 - 00;06;23;22
Nawaz Ahmed
Would love to kind of go down that that mindset.
00;06;23;25 - 00;06;57;27
Andy Kangpan
Yeah. So, this all really started to come together after, in 2023, after the collapse of FDX. Within the context of, the Two Sigma organization, it became clear to me at least that building, a crypto strategy and the way that I felt was, the right way to go about it. Was really difficult to do within the context of a larger investment management platform.
00;06;58;00 - 00;07;23;26
Andy Kangpan
And, you know, it’s interesting, I spoke with a lot of my, peers at other firms, at different HFT funds who faced similar challenges at that point in time. And I think they’re they’re basically they’re a variety of issues. Some specific to the firms themselves. But I think the commonalities are that, at the time, at least crypto wasn’t a big enough market from a volume perspective for a lot of these firms to dedicate a lot of resources to.
00;07;23;28 - 00;07;50;05
Andy Kangpan
So it was a space that clearly was growing, and was interesting, but just not something that could be put at the top of that priority list. And secondarily, if you remember, at that point in time, the regulatory environment for crypto, especially in the US, was extremely adversarial. So, the regulatory risk, that these firms faced when assessing the opportunity was pretty significant.
00;07;50;06 - 00;08;19;08
Andy Kangpan
So taking those two things together, it, there’s a lot of friction and sort of, pushing forward, on a crypto strategy, especially after the market went sideways. But the the thing that really catalyzed it for me was, you know, that that sort of friction caused me to take a pause and think about, you know, if I could start, if I could build a crypto strategy without these, constraints, like, what would that actually look like?
00;08;19;10 - 00;08;38;19
Andy Kangpan
And I reconnected with, my partners, David and Micki, who I mentioned, worked with me at Two Sigma, for a period of time. And we started to just, spitball ideas around what a fund would look like. You know, where we would start. What are the things that we would focus on from an investment perspective?
00;08;38;22 - 00;09;00;03
Andy Kangpan
What are the competencies that we could pull into the fold that, would be somewhat unique? You know, how would that evolve over time? And it just became clear to me through those conversations that, there was a really exciting moment in time happening in the space to start. And you find it getting to do it with partners that I really respect and also enjoyed working with.
00;09;00;06 - 00;09;09;21
Andy Kangpan
Was something I wanted to pursue. So it was, it was those sort of combination of things that came together that ultimately led to me wanting to take the leap.
00;09;09;24 - 00;09;37;18
Nawaz Ahmed
Understood. Okay. And so while you are having these conversations, spitballing what a fun would look like, you know, I would love to hear you talk through how you got to where you are now with the fund in terms of, you know, how you think about portfolio construction, how you thought about sizing the fund, the types of checks you write like a little bit more, detail on how you came to those decisions, would be great.
00;09;37;21 - 00;10;12;00
Andy Kangpan
Yeah. So, we can start with the thematic focus of the fund. So, I think the key thesis of the firm, is a meta layer is that the blockchain industry is evolving from one that has a singular focus on infrastructure building, to one that’s focused on deploying blockchain technology across a variety of industries. And specifically, we see adoption happening in the financial services ecosystem.
00;10;12;03 - 00;10;42;15
Andy Kangpan
We felt strongly at that point in time when we were talking about what would a fund if we were to start now, focus on from the best perspective. We saw a lot of tailwinds at play, particularly with the sort of increased interest in institutions, to, both trade crypto assets, but also look at using, different, crypto technology as a way to build more efficient and innovative financial services.
00;10;42;17 - 00;11;08;08
Andy Kangpan
So we thought that was going to be a trend that really drove the ecosystem forward in the midst of, the sort of market consolidation that was happening at that point in time. So, that was really the the, driving force of like what we wanted to invest into, in terms of the fund model, we, we knew that we wanted to to start with the venture capital fund.
00;11;08;11 - 00;11;31;23
Andy Kangpan
It’s, where the three of us have spent most of our time professionally, myself at, two Sigma. My partner Mickey spent also a lot of time at a firm called workbench, which is enterprise software focused find, in addition to Two Sigma. And then my partner David also spent time at Green Oaks, which is a, another firm in the venture capital space.
00;11;31;25 - 00;11;55;26
Andy Kangpan
So we knew we had a lot of shared interest and passion for, investing and, the early stages of an entrepreneur’s journey. And we also knew that, at least historically speaking, smaller funds tend to outperform larger funds from a returns perspective. And looking at the crypto space in particular, that’s that’s historically been true.
00;11;56;03 - 00;12;25;16
Andy Kangpan
But also, we felt that given the size of the market, a smaller fund would make, the most sense, just in terms of the number of opportunities that we felt excited about that we were seeing and the size of rounds that we thought would make sense. And so we ultimately landed at a fly at, sort of, smaller fund a size, from a, fund model perspective at 25 million.
00;12;25;19 - 00;12;57;00
Andy Kangpan
And we take a relatively concentrated approach, to portfolio construction. So we’re looking to build a portfolio of roughly 30 companies and investing, on average, about 700 K into those companies, over a three year period. And, yeah, I won’t get into, like, the weeds of how we got to those numbers, but, we feel it’s, ultimately just a good pace that we can execute against in order to build a portfolio of exciting businesses, and all focused on pre-seed seed investments.
00;12;57;03 - 00;13;18;23
Nawaz Ahmed
Okay. Makes sense. And, you know, it sounds like all three of you come from interesting backgrounds. The three firms sound quite different. You know, I as far as I know, Green Oaks, they do a lot of, you know, growth stage, very large checks, you know, workbench being not so much crypto. How do you guys, you know, come together work in the crypto fund.
00;13;18;26 - 00;13;26;15
Nawaz Ahmed
You know, align the way that you think and make decisions. How how does that kind of work out for you guys.
00;13;26;18 - 00;13;49;29
Andy Kangpan
Yeah, we we the benefit of having had a broad set of exposure, to a variety of venture funds in the space is, you know, we have a lot of institutional training and how to think about, finding deals, how to think about assessing those opportunities, and how to go about getting allocation into competitive rounds.
00;13;50;02 - 00;14;17;26
Andy Kangpan
And, that’s really benefited us nicely, at least. And sort of the early phases of deploying fund wine, and our ability to invest in the companies that we’ve been excited about, to date, we’ve always had a shared, interest and passion for crypto. As mentioned, when we were together at Two Sigma in 2017, we were like those young guys basically on the team that were trying to convince, a big hedge fund to do more stuff in crypto.
00;14;17;29 - 00;14;42;14
Andy Kangpan
And like, we were going through all the whitepapers, tried to explain to the investment committee way, all these networks were, what all these applications could be. And we were also, even after we sort of went our separate ways, so very excited about crypto, and, and continued to stay in touch.
00;14;42;16 - 00;15;06;29
Andy Kangpan
Despite the fact we no longer were colleagues. And so, that shared interest had, has continued, you know, to that, to the journey that we’re on now. And I think we’ve benefited a lot from having a variety of experiences. You know, myself primarily coming more from the investor side of things. My partner Mickey, when he left Two Sigma, I joined chain as an early employee there.
00;15;07;02 - 00;15;33;28
Andy Kangpan
So he was able to get firsthand experience building, a blockchain network, particularly at a phase when that protocol was growing quite quickly. And my partner David comes at the space. More from the engineering perspective, where, he actually spent most of his time at Two Sigma on the trading side of the house. And when he was at, Green Oaks, he was mostly focused on, engineering at building out, infrastructure for the investment process.
00;15;34;00 - 00;15;51;04
Andy Kangpan
So, we, I believe we come at the space with a really unique set of experiences and competencies that gives us a really, unique perspective while also, you know, having a lot of experience in crypto and shared passion for, the future of the space.
00;15;51;06 - 00;16;16;26
Nawaz Ahmed
Yeah. Gotcha. Okay. Would love to understand the the journey of fundraising for you. Like, I understand all three of you probably didn’t do much fundraising before starting to layer. So we’d love to kind of understand how was that journey for you? What was the most surprising parts of fundraising?
00;16;16;29 - 00;16;45;11
Andy Kangpan
Yeah, well, it was very hard, as you’ll probably hear from, most first time fund managers. And, you know, it wasn’t surprising that it was hard, but I think how hard it actually was when you’re in that process was somewhat surprising. And maybe we’re a little naive thinking that given our, our sort of institutional background would be more prepared for it, but nothing can really prepare you for it until you just go through it.
00;16;45;14 - 00;17;20;28
Andy Kangpan
I’d say the things that were surprising, was the the intensity of the emotional roller coaster coaster ride was, was very significant. So, you know, there’s just a lot of factors outside of your control. Everything from the market environment at large to the particular situation that NLP has. Like, you know, where NLP is in their fund cycle, what NLP likes to hear in a pitch, all those kinds of things.
00;17;21;00 - 00;17;40;20
Andy Kangpan
And there’s a lot of uncertainty, especially at the outset of like whether or not you’re even going to get the fund off the ground. But in order to even have a shot at getting off the ground, you have to leave your job and you have to take that leap. And so there’s this, like, very scary period of time where, you’re not making any money, you’re unclear the things going to work.
00;17;40;22 - 00;18;15;02
Andy Kangpan
You’re getting a lot of rejections. And so there’s that sort of roller coaster ride is, is really intense. Yeah. And then, you know, I wouldn’t say this was surprising, but, you know, venture fund fundraising was is challenging, in many unique ways relative to startup fundraising, which, you know, we can get into. But there was sort of a lot of unique nuances to, like managing a fund fundraise process that was surprising once you get into it and so difficult, to manage.
00;18;15;02 - 00;18;20;24
Andy Kangpan
So that that was an interesting, growth experience for us going through it.
00;18;20;26 - 00;18;29;11
Nawaz Ahmed
Yeah. For sure. What would you what would you say were those nuanced differences and.
00;18;29;13 - 00;19;06;20
Andy Kangpan
Yeah. The, you know, the, in fund fundraising for LPs, it’s actually rational for most LPs to wait until the very end of the process to make a commitment or not. There’s a lot of reasons for that. But I think that the probably the biggest one is that the price remains the same, whether or not for the LP, like whether or not you commit at the beginning or the end of the process, and you get way more information at the end of the process, around what the portfolio is going to look like, how the teams working together, who the other investors are.
00;19;06;23 - 00;19;43;01
Andy Kangpan
So like managing, creating deadlines and process around something where everyone incentivized to wait till the end to give you an answer. Very challenging. And the sheer amount of yeses you need to get to in order to get a fund off the ground is also somewhat distinct from startup fundraising. In your typically for most funds, you have, like, you know, a couple to a few dozen LPs in a fund, whereas in most startup rounds a year you might have, a handful of investors that’s all off the ground.
00;19;43;03 - 00;20;00;24
Andy Kangpan
It’s not to say one is any harder than the other. It’s just, there are there are a lot of dynamics at play in the country, fund fundraising, which makes it, on average, a much longer process and a lot more to us around how you how you sort of, create, a structured, process around it.
00;20;00;24 - 00;20;03;03
Andy Kangpan
So, that was quite interesting.
00;20;03;06 - 00;20;14;09
Nawaz Ahmed
Yeah. Okay. What would you what would you say was a rejection that you had that really stuck with you?
00;20;14;11 - 00;20;36;19
Andy Kangpan
Well, going back to the comment about it being a, a dynamic that you need to get to a lot of yeses, like, I think one of the things that became very clear to me through the process is that venture fundraising to a, to a certain extent, is really just a numbers game, like you just you need to talk to enough investors to get to the yeses that you need.
00;20;36;21 - 00;20;55;00
Andy Kangpan
And the generic advice that I’d probably give people now is like, don’t raise a venture fund if you can’t stand rejection, because that’s just going to be like a very common part of your job. And especially for people who come from an investor role. Like that’s a very, very much something that you’re not used to because you’re used to sitting on the other side of the table.
00;20;55;00 - 00;21;26;02
Andy Kangpan
So that’s, that’s something that you, will need to get used to. I won’t, name names, but I would say the, the rejections that are really frustrating are the ones that come from, what I called Time Bandits. Where, like, they’re investors that express a lot of interest and, give you a signal that they can action, like, make a decision.
00;21;26;05 - 00;21;45;20
Andy Kangpan
But for various reasons, aren’t aren’t actually in market, aren’t able to make an investment given where they are in their, like, fundraising cycle. And then also like, do the work of like spending time with you and getting to know you. And you know, there’s different reasons why people do that by I think those end up being really frustrating.
00;21;45;20 - 00;22;00;03
Andy Kangpan
And there are there are a few of those of the process in particular that where like, it’s frustrating to, to, to deal with. But I would say, yeah, I think those were the ones that stuck with me. But I’ll, I’ll, I’ll hold off on. Yeah.
00;22;00;05 - 00;22;27;18
Nawaz Ahmed
But fair enough. Fair enough. Yeah. One of the things, when, when people were asking me about, like, fundraising was, I think one of the big differences I saw between startup fundraising and fundraising for a fund is that for a startup, you know, I feel like VCs and even angels to an extent, are quite out there in the in the sense of, you know, they want to look for interesting companies and do a deal where LPs are very much the opposite.
00;22;27;18 - 00;22;42;25
Nawaz Ahmed
They’re like quite hard to find. A lot of them are really not, looking to do a lot of deals. So it’s, it’s a quite a big job to kind of convince them to come around. I’m not sure if you had that type of experience to.
00;22;42;27 - 00;23;02;11
Andy Kangpan
Yeah. There’s there’s a segment of LPs that are like known like, you know, the, the fund of funds and, the really big thing in the office is that do this like very commonly, but there’s a whole universe of all these that, you’d be very surprised to learn that they are actually investing in bonds, are open to investing in funds.
00;23;02;14 - 00;23;33;23
Andy Kangpan
So unearthing the universe of LPs in and of itself is a challenge. And so, yeah, a big part of the job became prospecting, like actually surfacing up names that you could pursue and build relationships with. And the other challenging dynamic, with venture fundraising, by the way, is that it’s a very long commitment for an LP as opposed to raising a liquid fund, which has a, faster time to liquidity.
00;23;33;25 - 00;23;55;15
Andy Kangpan
This this is a very long commitment, a 7 to 10 years often. So, that’s also commitment you’re making. You’re asking someone to make oftentimes without really knowing you for very long. So, that that’s a, that’s a dynamic that you have to manage and get around, at times. So that’s another unique sort of challenge of the process.
00;23;55;17 - 00;24;13;24
Nawaz Ahmed
Yeah. Right. Is there any advice that you received from other, you know, GP’s or investors that you spoke to before starting fundraising that just turned out to be completely wrong, or was unexpectedly true?
00;24;13;27 - 00;24;38;25
Andy Kangpan
Well, there’s definitely advice that was true. I don’t know if it was unexpected, but, you know, a couple of things come to mind. One piece of advice I got actually, from a number of people was, get going, like, just just, start investing and get to a first close as quickly as you can.
00;24;38;27 - 00;25;03;01
Andy Kangpan
And, that ended up being really good advice for a lot of reasons. One of the the psychological challenges of fundraising when you set out, like when you go out to raise, you tell people that you’re going to you’re targeting a certain amount of money. And that can become a goalpost that really only you care that much about.
00;25;03;03 - 00;25;26;23
Andy Kangpan
And you can actually raise a fund that’s smaller than the target and still have a viable fund wine, to sort of demonstrate that you can get access to good deals next year to venture strategy. And so, it being led to this, like, number that you start with the beginning of process, can sometimes be, not a productive thing.
00;25;27;00 - 00;25;52;24
Andy Kangpan
The other thing is that, it’s very helpful in a fundraise, to get going, make some investments and, just start demonstrating that you can execute because the conversation shifts away from the sort of vision. And then more about, like, here are the deals I’m doing. And that ends up becoming a more fun thing, I think for both sides to talk about, as opposed to just like a very high level market thesis.
00;25;52;27 - 00;26;18;05
Andy Kangpan
So, that that is to be really sort of great advice that, you know, we, we took to heart through the process, I mean, another piece of advice that we got that, we didn’t do the best job of listening to, which interestingly, I would probably give this advice to founders, too, is, your pitch is going to get better, over the process.
00;26;18;09 - 00;26;46;16
Andy Kangpan
It’s going to get more concise. It’s going to get more focused. It’ll be more concrete. You’ll be able to speak more about the things that you’re excited about, all that stuff. And, so I would, I would, like, manage the process appropriately, where that, that sort of, the checks out with that, the conversations where it’s like higher stakes, like larger checks or like more sort of professional quote unquote LPs that made me more used to hearing the pitch.
00;26;46;19 - 00;27;07;28
Andy Kangpan
Probably worth stating those conversations for when you’re actually well prepared to have those conversations. So, you know, warm, warm up as much as you can, sort of build momentum before you get to those conversations versus like just trying to do it all at once. And so, that advice ended up being an, in retrospect, really good.
00;27;07;28 - 00;27;16;29
Andy Kangpan
Although I don’t think we necessarily get the best job and following that advice. But, I think if I had to do it over, that’s definitely one thing that I would try to pace better.
00;27;17;02 - 00;27;37;16
Nawaz Ahmed
Yeah. That’s, that’s some great thoughts. Okay. I, I’d love to understand how you’re thinking about the market right now in terms of, you know, crypto venture. You know, there’s a lot of kind of people have a lot of opinions about crypto VCs on on Twitter. How do you kind of feel about the market right now?
00;27;37;18 - 00;27;53;21
Nawaz Ahmed
And also, you know, considering, how tokens are doing for, for venture investors, you know, in the past few years and how you feel about that compared to you know, equity investing, in your current strategy?
00;27;53;23 - 00;28;44;07
Andy Kangpan
Yeah. I so from a market dynamics perspective, I think we’re in a really exciting time in the space. Like undeniably. Stablecoins are, top of mind for everyone. I think circle’s IPO really has pushed that conversation out of just crypto native, circles into, the broader, public. And so, as a result, that’s been driving a lot of the activity in the venture space where you have a lot of capital going towards, stablecoin issuers, stablecoin infrastructure, payments related companies, things of that nature.
00;28;44;09 - 00;29;21;14
Andy Kangpan
But I would say generally like the, that trend and sort of the, the sort of broader push for crypto being infused into the financial industry has really reignited, I think, interest in the space, at least, especially in like the public markets, you know, it’s interesting in the crypto venture side of things, while the space, has started to take up in growth in the sense of like capital, capital deployed, it’s still relatively subdued compared to where we were a few years ago.
00;29;21;16 - 00;29;56;02
Andy Kangpan
Maybe this is actually just the steady state of the industry on the crypto venture side, but it does seem like it’s artificially constrained because there’s the ecosystem. Is is nursing like a hangover still from that like 2122 era of, mania and excess. So, the big thing there is that, as, as most folks listening to is probably, recognize like raising a fund new fund right now, both for emerging managers and for existing funds is is challenging.
00;29;56;04 - 00;30;29;24
Andy Kangpan
There’s a lot of anecdotes that I hear of just that continuing to be a dynamic and the, the capital raising side of things. So as a result, there’s a trickle down effect here, like the the sort of size of the industry, in terms of just total capital that could can be deployed into the ecosystem. So despite the fact that, you know, many assets are getting are reaching all time highs, on the public side of things and IPOs are happening where, you know, people are sort of, getting excited again about crypto equity businesses.
00;30;29;26 - 00;30;56;13
Andy Kangpan
Yeah. Venture still kind of remain subdued. It’s really, great for funds that have capital to deploy because that creates an environment where, you know, it’s not always the case, but I think on average, valuations still are somewhat reasonable compared to what we saw again in 21, 22. So I think it’s an interesting dynamic from that perspective.
00;30;56;15 - 00;31;22;22
Andy Kangpan
The crypto equities versus token, debate is an interesting one as well, where interestingly, when we set out to raise the fund, we made it very explicit to LPs that we would be balanced in our approach, said the fund model we sent to LPs had an allocation of 50% of our investable capital going towards equity deals, at 50% of our capital going towards token investments.
00;31;22;25 - 00;31;43;03
Andy Kangpan
We got a lot of questions, actually, about how we think about equity investing, given that historically there hasn’t been a lot of liquidity and the time to liquidity tends to be, on average, longer. And, you know, so right now what’s interesting is like the tokens in past few years at least have been underperforming a number of equity investments.
00;31;43;05 - 00;32;07;05
Andy Kangpan
You know, circle’s IPO has obviously done really well for its investors. Hayden Road was acquired for a very significant amount. Their bid, you know, bridge, and, and a handful of others. So, that that’s really flipped the script a little bit on what people find. It’s interesting. I still think that token investments are going to perform really well.
00;32;07;08 - 00;32;33;10
Andy Kangpan
You know, one of our investment early lessons in the fund was in Athena, and they’ve done really well from a token price perspective. So I think there’s still room for, for, for projects to launch tokens that are, going to perform well, I just think that there’s going to be a greater amount of, I think the public markets are a little bit more discerning.
00;32;33;10 - 00;32;59;19
Andy Kangpan
So like the, the, token, the project actually needs to have a compelling product and, increasingly what we’re seeing is, projects that generate fees or revenue are actually doing relatively well. From a token price perspective, compared to the projects that are, a little bit more amorphous in terms of like what the product is and what the business model will ultimately be.
00;32;59;21 - 00;33;25;16
Andy Kangpan
So, I still think, if, you know, projects are, sort of tick those boxes, though, they can have a chance of doing well. But I still I also continue to be bullish on equities. Like, I think we’re entering a market now where public markets are much more receptive to the crypto pitch. And also there are a lot of strategic buyers making a big push into the ecosystem that are looking to make acquisitions to accelerate the digital asset strategy.
00;33;25;19 - 00;33;46;28
Andy Kangpan
And we’ll see more M&A activity as a result. So we continue to remain balanced in our approach. I think both types of investments have pros and cons by, I think, a venture portfolio that has balanced exposure to both of those asset types will outperform any one portfolio that’s heavily weighted towards one side or the other.
00;33;47;00 - 00;33;57;18
Nawaz Ahmed
So when you say you have, about 50, 50 equity tokens, is that like total private token investments or liquid token investments?
00;33;57;20 - 00;34;09;25
Andy Kangpan
So those are, all private token investments. We at the moment and the venture fund don’t do anything on the liquid side. So we’re not purchasing tokens on the open market.
00;34;09;27 - 00;34;26;29
Nawaz Ahmed
Okay. Cool. Makes sense. Is there a company that you may have invested in already from the fund or previously that really, you know, exemplifies what are the types of companies Medallia wants to invest in?
00;34;27;01 - 00;34;46;04
Andy Kangpan
Yeah, I think that, all that yeah, I’ll do like the classic venture comment, which is like all of our companies are great. They’re all representative of all the companies that we would want to invest in. But I, you know, the example that I threw out there, which I often talk about is because it’s I think it’s easier to understand is, the company called Crossover Markets.
00;34;46;04 - 00;35;17;01
Andy Kangpan
So, crossover markets as an equity business. They are, building an institution only exchange, that is, bringing the ECN model to the digital asset space. Basically what that means is, they are focused specifically on the exchange side on executing the trades. But they’re not focused on other aspects of, why exchanges in the space today focus on meaning like custody, and brokerage.
00;35;17;07 - 00;35;50;18
Andy Kangpan
So, what you see is from a market structure perspective today in crypto exchanges, too, is that these exchanges like Coinbase, Kraken and others are vertically integrated for the most part. So they tend to offer these services as a bundled, platform to their customers. If you look at other asset classes that, have significant institutional volume, so equities, affects commodities, etc., the market structure on the exchange that looks very different and that these things are typically separated.
00;35;50;18 - 00;36;23;24
Andy Kangpan
So you have different service providers focused on custody, different time brokers in the space. You have exchanges that are, you know, focused on, execution. And we believe that the digital asset space is moving in that direction. And crossover markets is the first to market, and the market leader currently and, building, that, exchange model and the ecosystem, the founder is also very representative of the type of entrepreneur we like to back.
00;36;23;24 - 00;36;53;11
Andy Kangpan
So, Brandon was formerly the head of prime brokerage at Jefferies. He’s also an executive at an organization called XLM. So he has deep connectivity into the trading ecosystem, but also very intimately understands crypto from a market structure perspective. And they’ve quickly become, a leader in the space in terms of working with the leading institutions in the ecosystem.
00;36;53;13 - 00;37;04;20
Andy Kangpan
In terms of, market participants on the exchange. So, they’ve done really well. And I think a really good example of the type of business that we want to be supporting. Kind of fun.
00;37;04;22 - 00;37;14;16
Nawaz Ahmed
Cool. Very cool. Final question. What’s the secret obsession of yours that nobody knows about?
00;37;14;18 - 00;37;47;18
Andy Kangpan
Oh, man. I, I’m very into, skateboarding, so it’s, a hobby that I picked up when I was really young that, when I moved to New York for college, a while back now. But, reignited my passion for it because the New York City is like a really big, Mecca for skateboarding.
00;37;47;21 - 00;38;14;01
Andy Kangpan
There’s, like, a lot of famous parks and spots that people skate and skate videos. So, I got really excited about it again when I moved here and picked it back up. And so I still actually, skateboard a decent amount, although I’m older now and, more prone to injuries. So, and not as much free time as I used to have, so I don’t, I don’t really do anything, so, risky anymore, but it’s still a great way to get around.
00;38;14;01 - 00;38;37;26
Andy Kangpan
And I still to this day, keep up with the skateboarding scene, for lack of a better term. Like the, the major brands. And like this, the skaters they’re sponsoring and like, the state of the sport and that kind of thing. So, yeah, it’s it’s something that I, I’m really, interested in personally that I don’t want to talk about too much in crypto circles.
00;38;37;29 - 00;38;59;09
Nawaz Ahmed
That’s really cool. That’s really cool. Yeah, I, I haven’t heard that before. As well. And when I ask people these questions. So it’s cool to see a skater back out there. But cool. Thanks, Andy. That’s that’s all, the questions that I have for today, you know, really appreciate your time. I think, that it was a great chat.
00;38;59;11 - 00;39;04;25
Andy Kangpan
Thank you. I appreciate you having me. And, Yeah, I it was great having a conversation.
