Cypher Capital can be called the "a16z of the Middle East" or the "Hillhouse" of Web3 in the Middle East. Its influence in the Middle East, North Africa and Asia is quite unique, and according to public information, it has abundant funds. This institution started from Bitcoin mining (Phoenix). After building Phoenix into the world's largest Bitcoin network computing power giant, founder Bijan Alizadeh initiated the establishment of Cypher Capital on this basis to diversify the group's allocation. , Cypher Capital is headquartered in Abu Dhabi and Dubai. It conducts direct investment in mining, nodes, mother funds, and primary and secondary market projects in the global Web3 field. In 2022, it will launch a US$100 million VC focusing on the early field of Web3. , is the only "Capital With Solution" in the Middle East, providing full-stack ecological resource support including capital, Nodes, human resources and other resources to front-line founders around the world. There are also many crypto VCs with a scale of more than 1 billion US dollars in Dubai. The Dubai Government Fund is also the largest fund force. Previously, the current Sheikh was also actively conducting investment layout through different government and semi-governmental agencies. For details, please see the author's previous article "200,000 Chinese Dubai: Another major Web3 capital in Asia", but Cypher is particularly unique because of its resource accumulation. Cypher recently established Cypher Hub, an offline 10,000-square-foot cryptocurrency networking center in JBR on the seaside in Dubai, which is becoming a must-stop for global founders and investors coming to Dubai. Bill is currently the Chairman/General Partner of Cypher, and an independent director of the Ton Foundation, a public chain incubated by Telegram with 800 million monthly active users. Before that, he was the global head of investment and financing at Binance (Head of M&A and Binance Labs). Before that, he was the investment director in the global technology field of JD.com, with complete experience in the three technology cycles of Web1, Web2, and Web3. He has also witnessed the rise of China's Internet in the past 20 years and the globalization wave of Chinese Web3 from 2017 to the present. It’s a pleasure to break down Bill’s insights for readers this time. Bill's career: Entering Web3 from the era of the rise of China's Internet BlockBeats: Can you tell us how you entered the VC industry? Bill: I first made technology and medical investments in Zhixin Capital, a US dollar PE fund;Later, with the rise of CVC in China, I stayed at JD.com for six years and was responsible for JD.com’s global technology/fintech investments. Web2 itself saw its relative growth slow down in 2020, and at the same time joined Binance by chance and became the head of Binance's M&A and Binance Labs. BlockBeats: How did you come to the Middle East? Bill: Because the regulation in the Middle East is relatively friendly to Web3, and there is a lot of high-quality "offline traffic", this place is like the Casablanca of Web3. Indians, Chinese, Europeans and Americans will come here for different reasons to make friends. It was very convenient; a lot of our team came at that time, so I came too. After I came here, I found it was pretty good, so I stayed. I joined Cypher Capital after coming to the Middle East. BlockBeats: What do you think is the difference between traditional VC and Web3 VC? Bill: Traditional VC has a history of more than fifty years (Sequoia was founded in 1972), and the size of traditional VC funds is a process that grows from small to large. At the beginning, a US dollar fund may only have a few hundred million US dollars in Silicon Valley. Later, the first phase of the Vision Fund will have 100 billion, turning it into a Growth Mega Fund. This is also related to the development of the entire TMT industry: in the end, many businesses in the TMT industry are getting bigger and bigger, reaching hundreds of billions of dollars. At this time, many investors said to the founder, why don't you take more of my money, build high walls, accumulate food, and slowly become the king (I will list it later); finally, in the past 30 years, the world has been in an interest rate cut cycle, and funds Investors (LPs) also have more money. Therefore, companies like DST, Tiger, and Vision gradually began to develop in the late 1990s and 2000, making traditional VCs grow larger and larger. Of course, I think 2022 will be a hurdle. This is a year of paradigm shift; in the foreseeable future, money will no longer be cheap, and the entire VC industry will become different. I used to think that traditional VCs are getting bigger and bigger, mainly for two reasons. One reason is that founders and investors are willing to focus on cultivating many big businesses in the primary market, which is what I mentioned before. The second reason is that in the past two to three decades, global interest rates have been cut, and money has become more and more abundant.So there is more money willing to choose alternative investment in this area. You are willing to do whatever it takes, whether it is an endowment or a pension. So it is equivalent to saying that both the asset side and the capital side are willing to grow the company in the primary market. But Web3 VC is very different. First, because Web3 projects are judged by stage, in fact, according to the definition of Web2, they are often listed in round A or round B; from this perspective, the pool of money left for the primary market itself is very small. . Second, in the past, for example, a project, such as Didi in China or Uber in the United States, had to find the best local investors. Therefore, many Web2 projects are not actually global in nature, but a model that is used in several economies around the world. Here's a set for you. However, the Web3 company itself does not require much capital, and at the same time it needs global capital, so in the end there is not much room left for each VC. So this is why the Web3 industry will only have a history of 13 years in 2022. Suddenly, it seems that the VCs in this industry are as involution as the VCs of web2, which have been developed for more than 50 years. Behind this is a different industrial structure. But the same point is that I think it will not be easy to get money in the future. After all, today Web3 is just a small player in the face of global macroeconomics and interest rates; the current market will be more beneficial to investors, but good assets will always be scarce. Even in a bear market, particularly outstanding companies will still have a lot of capital to pursue them. BlockBeats, the investment destination of Cypher Capital, the top cryptocurrency investment fund in the Middle East: Can you tell us how you got involved with Cypher Capital? It has been almost half a year since you joined Cypher. What investments are you proud of making under your stewardship? Bill: Cypher and I were introduced to each other by CZ in 2021. Later, I became friends with the founders of Cypher and Phoenix. We gradually talked about whether we should do something together. This is also a process of gradually getting to know each other. In addition, my definition of myself is a Maritime Chinese. Maybe I generally divide Chinese people into two categories, one is more continental and the other is more oceanic, and I am the latter.I think it’s fun to follow the Silk Road. My partners are all from different places, including Middle Easterners, Europeans, and Indians. Everyone works together in a partnership in a relatively open manner. One is that we started investing in funds. After all, we are a very young institution, but at the same time we have the cash flow generated as a mining company. I think in this case why don’t we support and link more young GP investors who are very complementary to us in the bear market. This is a process of strategic planning and making friends. Secondly, we opened Cypher Hub, which is a maker space with more than 60 seats under the Ferris wheel on the seaside of Dubai. In the past three years, due to the epidemic, our industry seems to be all online, but in fact, people will eventually return to offline and community. Offline is a very good catalyst for building trust. We regard our center as a meet up place for the future Middle East Web3 community. We have recently held events with Polygon and INSEAD Business School, and have also held sharing sessions on other public chains (TON, Mysten Labs, etc.) before. The third is that we voted for Mysten, which will be expanded later. BlockBeats: What did you invest in after coming to Cypher? Bill: We are currently investing in the best projects from the global project pool. At present, they are basically founders in the United States, Central and Eastern Europe, and Asia. In direct investment, one of the more representative transactions we made before was: as the only fund in the entire Middle East and Europe, we invested in Mysten Labs (Sui Blockchain). Many people will ask us, as a young fund, why should we choose to take your money? How do you compare with a16z? My style of play is to make the two sides completely incomparable. This is also a sentence that one of my mentors taught me that I often share with the founder, to achieve "me different, instead of me too, or me better". An American fund may instead answer the question you asked - "What's the difference between me and a16z?" But we are completely different from a16z. If the founder has the idea of ​​diversifying his captable and investor resources, he should get money from a16z or Sequoia in the United States, and then get our money in the Middle East and Europe.At that time, I was the last one to talk to the founder of SUI. The project had been subscribed several times, but the founder gave me a special quota the next day, making us their only investors in Europe and the Middle East. BlockBeats: Will Cypher Capital further define it as a fund in the Middle East MENA region + Asia? What is your Unique Selling Point and what are you busy with these days? Bill: We don’t tend to compare ourselves to other funds. Being ourselves has always been our core strategy. For example, even in Asia, we may have special Web2 resources. For example, our partner Elaine Liu is the former CHO of Meituan and an HR veteran who joined Tencent in 2003. As a CHO who has managed tens of thousands of employees, she should She is the most experienced HR among Web3 entrepreneurs in the world. The Smartdeer she invested in not only covers 20 million of the world's best TMT talent resources through the recruitment platform, especially Chinese engineer resources, but also helps these companies through compliance employment services. Rapidly deploy global teams. As a member of our ecosystem, Smartdeer has helped more than 50 Web3 companies with global recruitment and global employment of more than 100 positions, and can provide a one-stop solution to the talent needs of global WEB3.0 startups. In addition, we have recently cooperated with a youth team in Asia to establish the Chinese community of Lens, the SociaFi project, which surprised everyone around the world at our value creation capabilities. We should be regarded as the most solid and high-quality ecological existence in the Middle East. If a founder only wants to take money from the United States, we may not be able to get in. But in fact, I have never seen such a founder. Every founder hopes to have people from three or four continents on my cap table. of the best funds. We rarely have a headache in competing for the cap table, because of this strategy, we thought clearly from the beginning. Phoenix technology now has the largest computing power in the global Bitcoin network; our compliance exchange has invited executives from Kraken and the ex-CTO of KuCoin, and our Fenix ​​Game is also a company with an investment of US$150 million and a base in the Middle East. Web3 gaming company. In the end, every organization in the world will say that it has an ecology, and we are not exempt from this. But in the end, is your ecology the one on PPT, or is it a capable delivery?I think we are the latter. BlockBeats: What is Cypher’s current AUM size, and what is its preferred investment allocation? Bill: We prefer not to disclose our AUM. Our asset allocation includes mining, investment funds (GP), primary and secondary direct investment, Distressed Asset acquisition, etc. For direct investment, our check size is between US$200,000 and US$10 million. We still prefer early-stage projects, but we will also participate in the growth stage/OTC rounds of many projects. We feel that the current market is somewhat similar to the Internet. When you get up, there are lots of opportunities for long slopes, wet snow, and compound interest growth. We will also hold some secondary market projects based on our long-term vision, and ultimately make judgments based on quality and value. Regarding geographical selection: Ultimately, our investment logic is based on value and we have no preference for geography. Our partnership team itself comes from several continents. Basically, when we discuss projects, we don’t discuss region. BlockBeats: What are the hard metrics you generally look at? What is the most important thing, soft metric? Bill: Many people invest based on price and emotion. Perhaps it is because of my personal growth background. We have always insisted on making value-based investments in this industry. I think common sense itself eventually goes through the technology cycle. Whether it is non-technical investment, investment in TMT in the past 20 years, or recent investment in web3, the ideal state in the end is good tracks, cars, and racers. However, the judgment factors at different stages in this process will have different weights. When looking at mid- to late-stage projects, basically the data itself can help you judge whether it is a good track, a good car, and a good driver. But if you go further, such as angel wheel projects, you may still use this judgment framework, but your judgment will be based more on qualitative observations. Mid- to late-stage projects are more like science, and early-stage projects are more like art. Projects in the middle and late stages are more about establishing a strict judgment system within an organization, but in the middle and early stages, contrarian (non-consensus) must be respected. Here I’ll take Layer One’s Mysten investment as an example. For example, the "Layer One" operating system of Web2 mobile Internet has only two operating systems in the mobile Internet, one is iOS and the other is Android. Their competition actually ended as early as 2010 (after 2010, you will no longer You will encounter Symbian and Windows mobile versions, because they were eliminated in the Layer One competition of the mobile Internet).In Web2, winner takes all. One is called economies of scale, and the other is network effect. These are two characteristics of a monopoly economy. So I often joke that among the more than 190 countries and regions around the world, the ones that impose the most severe taxes on enterprises actually have no tax at all. Not on the list of more than 190, but ios and Android, because they charge 30% business tax to companies within their jurisdiction (please note that it is business tax, which means tax is directly deducted from income, which is terrible; the UAE only charges 5% consumption tax, this is the power of monopoly.) But in the field of Web3 operating system, there will also be network effects, but Web3 operating system is subject to its technical characteristics, so for a long time, it is hoping Able to improve one's scalability. Therefore, this business may be a little different from the Web2 operating system. It has a little bit of "diseconomies of scale"; secondly, in the process of evolution, it itself is decentralized. From a perspective, why can’t there be more operating systems in this industry? Why can't a big application run its own operating system? Even in 2022, we still feel that there is an opportunity to bet on the operating system, even though the Web3 industry is already 13 years old. Our internal research system is a comparison across cycles. Sharing these things with our founders can also help them rethink their future strategies from a historical perspective. The second is to go to the racing car. In the racing car, we will feel that the previous technical accumulation of Meta is excellent, so I will not go into details about this. Moreover, as the industry progresses now, based on the first reason I mentioned, the winner is far from taking all, and the industry still has opportunities. Third, as for racers, I have a good rapport with Evan Chang from Mysten Labs. I think he should be considered one of the founders of L1, a technical leader with rare platform development experience across three technology cycles. Finally, what I just said is actually all about quality, but just talking about quality without price is actually useless. It's like saying that we all think that Ethereum will be the decentralized Alibaba Cloud in the long term, but if you bought Ethereum for 4,000 yuan, you should be in a depressed mood now, so talking about quality without price is always a rogue.We would think that the valuation at that time was reasonable, because any first-tier L1 should have a market value of at least 15 billion or more in the future, whether it is Aptos today or others. Combining these points, we will feel that it is obvious when the trigger is pulled on this matter in the end. Let me first talk about what I think is the biggest challenge in this industry now. Compared with 2001, the global Internet DAU was increasing at that time, despite the poor asset prices. At that time, the number of users of Netscape and IE was increasing, because users did not care whether you were in a bear market or a bull market. The Internet was valuable to me, so I would surf the Internet. However, the Web3 bear market in 2022 is actually not only a decline in asset prices, but also a growth in global users. In a sense, it is also in a plateau period. In the end, the ceiling of DAU for people all over the world to speculate in coins is limited. In fact, we can just take a look at how many users Robinhood or Futu have in the world. So in the end, what is the greatest common denominator of the third generation of the Internet? Apart from the current financial technology, it should be the same as the first and second generations, that is, social networking and entertainment; in the end, it may also start to empower industries. , but maybe maybe the third wave. If we open up the global Web2 big business today, the biggest ones are Infra and Application. One end is the trillion-dollar application, the other is the trillion-dollar Infra, and in the middle are various segments of tens of billions and hundreds of billions of dollars. In the field of Web3, many investors today are also investing in Web3's Infra, that is, investing in airports. When you don't know what the plane looks like, investing in airports is safer. We are a company that wants to invest in "airport" infra and build "aircraft" applications. This talks about our cooperation with TON. TON is Layer One incubated by Telegram with 800 million monthly active users. We support the TON ecosystem. , TON can become an airport that will incubate many aircraft in the future. In addition, we have been dealing with the Ton team for a long time. They are a very solid and hard-working team. We hope that through our own efforts, we will contribute to their ecology and the future 50 Hundreds of millions of Web2 users enter Web3 and do some interesting things.BlockBeats: Since the airport is still under construction, I am investing in the infra L1 public chain. It is relatively rare to directly invest in some SocialFi and GameFi projects, right? Don’t you want to say that you want to see if you can cast the next StepN or Nostr? Bill: Of course we will invest in applications, and we will announce several official transactions soon. BlockBeats: Regarding the current market situation of Web3, do you think it has turned from bear to bull, or is it a bull trap? Bill: The macro environment is an objective condition that we need to accept. We generally don’t make predictions about the macro environment. I think if we don’t think about advancing, we should think about retreating first. We will assume that there will not be a big bull market in the world in the future. In this environment, we should check the quality and price, so that we can be invincible. . But I think the current macro situation is much better than I expected before, because first, China's current rebound is a bright card for the world. Second, interest rates themselves have not continued to rise, so I think the overall situation is okay. BlockBeats: What do you think of the Chinese Web3 startups? Have you seen any better projects helmed by Chinese people? Of course SUI must have an Asian team. Do you have anything to say to Chinese Web3 entrepreneurs who want to start a business in Dubai? Bill: First of all, Chinese entrepreneurship has reached the world's first-tier level in most technologies. Chinese Web3 also needs to learn from their predecessors and catch up. For example, various manufacturing industries, from current mobile phones to future electric vehicles, are all dominated by the Chinese. Whether it is Joyoung Soybean Milk Machine or Huawei mobile phones, they are sold all over the world. In terms of Web2, for example, SheIn, Tik Tok, and Zoom, These are also Chinese founders. So last year I saw some very pessimistic statements, thinking that Chinese people couldn't do well in Web3 because they didn't speak English. I think this is actually a statement of not being enterprising, because the Chinese people born in the 1970s and 1960s are not as good at English as those born in the 1970s and 1960s. They have made their international careers so successful, so why suddenly those born in the 1985s and 1990s are not as good as others? The founder thinks he can’t do Web3 anymore? Really weird.Although we have regulatory restrictions in China, the base of Chinese users around the world includes the base of users in the entire global Confucian cultural circle. When I say the Confucian cultural circle, it includes global Chinese + Japan, South Korea, and Southeast Asia, and then In addition, the Chinese have already created world-class product development capabilities and product experience in Web2; based on the above, I don't see any reason why the Chinese cannot do well in Web3. Regarding supervision, I think you must abide by the laws and regulations of your own place, but on a global scale, this is a general direction worth trying. Let’s talk about global centralized exchanges, or 70% of global centralized CeFi is controlled by Chinese people today. In decentralized ones, such as Web3 native, the proportion may not be as high as in CEX, but we are now We can already see many Chinese people doing many of these projects, whether in infrastructure or application layer. In addition, I think that when Chinese people are at the helm, they should not label themselves as Chinese. When you label yourself, it already means that you are discriminating and you are not international enough. Zoom inside Web2 was named Silicon Valley’s most popular employer among employees last year. Many of its senior executives are not Chinese, but I personally remember that Yuan Zheng arrived in the United States when he was 28 years old. He was a relatively middle-aged Chinese who eventually succeeded in internationalization. Of course, everyone has a sense of local sentiment. I personally think it is very good for the Chinese Web3 founders to come to Dubai to start a business. Nowadays, everyone will choose Hong Kong and Singapore by default. I think it’s okay if they are familiar with the roads. But coming to Dubai itself I think will give the project and team a completely different experience. You may be exposed to a new market and make some new friends. local friends, and I think the supervision is also very friendly and supportive. As an entrepreneur, you can choose to go to Nanyang, and of course the Silk Road is also a good choice. Advantages of Web3 Chinese Entrepreneurship in Dubai BlockBeats: You currently choose to be based in Dubai, or at least fly between Dubai and the country or around the world. What are the advantages of Dubai? Like Singapore or North America or something like that? What do you think of Dubai?Bill: First of all, Dubai is like a Web3 Casablanca. Including teams from the CIS region, that is, countries in Central and Eastern Europe and the former Soviet Union, as well as Indian, European and American founders will also come here, so here you will see more diversity and inclusion. Living here, you will have a sense of history. Everyone will say that there are actually not many developers in Dubai. I think it is right, but there is one thing about Dubai that no other center can compare with. It is a hodgepodge and a melting pot. I think this is a point that no one else, whether it’s the center of the United States, the center of Asia, or Europe, can compare with. This is also one of the reasons why I particularly like this city from the perspective of choosing a city to live in. Second, from a time zone perspective, although our Cypher Hub itself is a card we have offline. But online is indeed an important part of market life. In Dubai you will find that you seem to have become the king of time zones. Because people in Asia work half the day, you can just have a meeting with them when you wake up in the morning. Basically, it may be better for all urban areas. It is also very convenient for us to have meetings in European and American time zones. The third thing I think is that Dubai itself will have a lot of offline traffic. Although Dubai does not have some particularly high-quality world-class forums until today, because many world-class forums are still in Denver, Lisbon and so on, but many people will experience it. Stop in Dubai. For example, our team often doesn’t need to travel. We just stay in Dubai and meet many people from other places. In the end, I think it’s regulation, including the tax advantages of this place, and the safety of the city. I think these are the reasons why I am particularly willing to stay in the Middle East and Dubai. But there is another point that may have something to do with my personal background. In fact, most of my career in the past was in technology and Web2 in Asia. In fact, now we will see that due to the paradigm shift in geopolitics and economics, Asia and the Middle East are increasingly cooperating in the entire pan-tech field. We at Cypher are now also becoming the "reception office" for Asian technology giants in the Middle East. It is very happy to make friends through this method;I feel that in this place you will personally experience many changes in geopolitical, economic, and cultural collisions, and this change will also give me a sense of historical participation, engaging in an epic game. BlockBeats: Are there any books or movies you recommend? Bill: I would recommend Proof of Stake by Vitalik. He should be regarded as an opinion leader in our industry. Everyone expresses a matter in a different way. You can make meritorious deeds, or you can choose to establish morality and reputation; some people do a big business through meritorious deeds. I think Vitalik may be more of the latter. I think it is also because of his leadership that Ethereum is a particularly vital ecosystem today. I think this is a collection similar to his own, and I would recommend friends who are interested in this industry to take a look. Postscript: Bill’s investment logic draws on the rise of Web2 Internet, focusing on users, estimating user magnitude, and track selection. After the interview, Bill said that this was his first Chinese-language interview on crypto investment, and he felt a little "terrified." When talking about why they did not invest in another excellent GP in the industry, Bill said that they would prefer to invest in one that is geographically or complementary in style, but unfortunately they are unable to invest in that GP for the time being. The author believes that the number of cryptocurrency projects and GPs coming to the Middle East is increasing day by day, and the next excellent opportunity is always right in front of you.