Crypto investment strategy of VC who supported FTX, Solana
- Edith Yeung has supported some of the most prominent crypto companies at the seed stage.
- She explains her investment strategy, which builds on the $ 100 million venture capital fund she co-founded.
- And she shares 2 start-ups in her portfolio that are flying under the radar.
Edith Yeung describes herself as a “baby VC”, having only eight years of venture capital experience under her belt.
But really, she downplays her already impressive accomplishments.
In her previous role as a partner at 500 startups and now as a general partner of Race capital, it has invested in some of the leading data infrastructure and fintech companies, including three “decacorns” – companies valued at $ 10 billion – crypto exchange FTX and networks Solana and Stellar, as well as a unicorn, Agora.io, at the seed stage.
She co-founded Race Capital in 2019, a $ 100 million fund focused on enterprise computing, including data and fintech infrastructure. Although it is a more generalist fund, the company rose to prominence for identifying crypto winners early on, such as Solana, Lightning labs and FTX.
Identify the winners
Yeung admits that there isn’t much to see in many of these early-stage businesses.
Most investments focus on finding people who are excited about a very specific space and vertical.
That excitement should then be transferred to the Race Capital team, Yeung said. As a former software developer, she should want to jump in and build with them.
“I am an operator at heart, an investor, not a financier trying to understand technology,” Yeung said.
While some might think Yeung’s technical background would give him an edge in finding investments, this is not necessarily the case at the seed stage.
Over the years, Yeung has learned that getting involved at this very early stage means feeling comfortable investing in things you don’t understand, because ideas and strategies change so much. If you want to understand investing, you better focus on growth where everything is pre-proven, she said.
“Over the years I’d say 99% of people in this space, especially in the crypto space. It’s all about the money and it’s actually rare to find teams that really want to build something substantial.” , Yeung said.
In 2013, Yeung bought his first bitcoin and experienced a number of bullish and bearish cycles. And thus, she is able to identify the founders who are there for the long term.
One example is Solana, a layer one blockchain solution. Yeung met founder Anatoly Yakovenko even before he finished the network’s white paper.
It was one of the few venture capitalists willing to bet on Yakovenko’s vision, as he built the blockchain during what has become the crypto winter. In 2018, she participated in the company preselection round as a partner of 500 Startups, alongside two partners of Abstract companies for an undisclosed amount.
In many cases, Yeung seeks to build with the team, helping to remove obstacles for the team. She helped find offices for Solana.
“[The Solana team] I actually spent eight months at the 500 Partners office in San Francisco, “Yeung said.” And then I found another email in August of the same year, I introduced them to their first office. , it was a sublet from another project. “
With FTX, a cryptocurrency exchange founded by 29-year-old billionaire Sam Bankman-Fried, Yeung contributed to the company’s public relations strategy.
“I actually went to the FTX team and said, ‘Look, I want to write your press release, I want this help to make you known,'” Yeung said. “… The FTX tour was led by Proof of Capital because I actually wanted to help with the presentation and help them talk to reporters because they didn’t know anyone. Now of course Sam is on TV every day. days they don’t need help anymore.
But in a way, I think it’s really being able to jump in and get your hands dirty and get things done and I love to do that. “
Yeung led the FTX round of funding for $ 8 million via Race Capital, formerly known as Proof of Capital. FTX is now considered one of the most prominent investments in the crypto space. His most recent Series B round values the company at $ 18 billion.
Startups to watch
While he has found clear winners in the crypto space when discussing which startups to watch in Race Capital’s portfolio, Yeung highlights two very different companies outside of the crypto realm.
1) Opaque systems
Opaque systems is a company working to create a solution that helps individuals access and work with sensitive data in a secure cloud environment, even across multiple organizations.
This is becoming increasingly important as companies need to develop GDPR compliant solutions.
Opaque raised $ 9.5 million in a funding round in July.
2) Good grades
Good marks is a note-taking app for iPad.
“GoodNotes is the most popular note sharing platform on the iPad to start with,” Yeung said. “Students love to draw these beautiful class notes using GoodNotes. They have been around for a while and we are the sole investor for GoodNotes. They’re awesome, just a super dedicated team … so we’re super excited about them. “