Guest: Jin Wenji, founder of Avant Blockchain Capital

Interview: flowie, ChainCatcher

What is the next big opportunity after the Internet? This has always been a question that Jin Wenjie, founder of Avant Blockchain Capital, needed to think about.

From joining Silicon Valley startups in 1997 to participate in project operations, to joining Legend Capital in 2007 to become an investor, to joining Sequoia Capital China as managing director in 2019, Jin Wenjie has experienced the development and rise and fall of Web1, Web2, and Web3. In more than ten years of TMT investment career, Jin Wenjie has been deeply involved in the growth of some well-known Internet companies, and has invested in listed companies or unicorns such as Bilibili, Ucloud, Mobile Legend, and Musical.ly.

However, after more than 20 years of Internet development, growth bottlenecks emerged, and Web2 giants also gave rise to many structural problems due to monopoly. Jin Wenjie began to think about the next development of the Internet. In 2017, by chance, Jin Wenjie became acquainted with encryption through Bitcoin. More than ten years of TMT (Technology, Media and Telecom) investment experience made him realize that when the Internet has been basically popularized around the world, Crypto’s advocacy of allowing users to truly own their own data or rights is an important evolution after the Internet.

So in 2018, Jin Wenji founded his first crypto fund to try crypto investment, and recently founded his second crypto fund, Avant Blockchain Capital. Currently, Avant Blockchain Capital has disclosed that it has participated in the investment of Takio, ETHstorage, Beachglass Labs, D3NS, CREDARB and other projects.

From traditional Web2 investment to crypto investment, how did Jin Wenjie build Avant Blockchain Capital? What is his investment strategy? How do you view the narrative of the current investment cycle? Around these questions, Jin Wenjie, founder of Avant Blockchain Capital, recently accepted an interview with ChainCatcher.

1. ChainCatcher: What was the first opportunity that led you to enter the world of Crypto? How did you understand Crypto at that time?

Jin Wenji: I entered the world of Crypto in November 2017. At that time, the cryptocurrency world was still a niche market, and the price of Bitcoin was about $1,000, but it occupied 80% of the entire crypto market. I felt that Bitcoin seemed to be a magical force, so I started to study its white paper and gradually became interested in Crypto.

2. ChainCatcher: Why did you decide to leave Sequoia China and create a Web3 fund? What is the background of the creation of Avant Blockchain Capital?

Jin Wenji: Creating Avant Blockchain Capital, a crypto fund, was a natural move. I previously invested in TMT in traditional Web2 funds, and I always needed to pay attention to the next big opportunity after the Internet. At the time, I thought that users owning their own data would be an evolution of Web2.

This judgment first has a major premise that the Internet penetration rate is very high. There are about 700 million to 800 million people in the world now, and most people can access the Internet. Many developing countries have also directly skipped the PC era and moved to the mobile Internet era. Because of the Internet, everyone can own their own data and rights.

Secondly, computing power has been greatly improved. Crypto builds trust with code, and many consensuses require a lot of calculations to complete, which requires high computing power. In the past few years, computing power has increased while costs have also been greatly reduced, providing a high possibility for the operation of Crypto.

In addition, Web2 Internet companies are gradually moving towards monopoly. After the monopoly, various political and economic problems will arise, and a solution is urgently needed. Crypto's decentralized concept can provide some solutions.

We have previously invested in many projects such as cloud technology architecture in traditional Web2 funds. In the Web2 era, these projects were open source and attracted developers from all over the world to participate. However, the cloud infrastructure used to be centralized, but now it is more decentralized, so we are also more familiar with developers in the encryption field.

Our fund is a top-down research institution that focuses on areas such as infrastructure. The research and investment team is also globally deployed, currently in the United States, Europe, and Southeast Asia.

3. ChainCatcher: Speaking of Web2 Internet, your career has almost spanned the entire cycle of Internet development. You have participated in and invested in listed companies such as Bilibili. What differences do you think there are in the growth paths or market competition between giants in the crypto field and giants in the traditional Internet field?

Jin Wenjie: It is actually not clear at the moment. The concept of blockchain itself is decentralized, but you will find that the concentration of leading blockchain products such as public chains may be higher than Web2.

The chain itself is to be decentralized, but its consensus, such as the POS mechanism, is centralized, so I think it is more likely to be a decentralization of ideas and values. This decentralization is a dynamic rather than a static process. For example, if a public chain is too centralized, or its voice and economic interests are too much in the hands of a few people, people may choose to leave it and form other public chains or ecosystems to break this centralization. On the contrary, if it can maintain the values ​​of the community, it can exist for a long time.

The values ​​of the crypto field are very important. Many leading products cannot be called giants. For example, Ethereum is not a company or an economic entity, but rather an ecosystem. This is a very new thing and cannot be copied with the traditional Web2 thinking.

4. ChainCatcher: Avant Blockchain Capital’s official website discloses four invested projects including Takio and ETHstorage, which are basically infrastructure projects. What is your current investment strategy?

Jin Wenji: First of all, we focus on investing in infrastructure that improves the efficiency of blockchain. We believe that if the entire blockchain wants to become the World Computer, its efficiency must be improved, otherwise it will not be able to carry or provide the possibility for the emergence of large-scale applications. Similar to the Web2 era, if there was no transition from 3G to 4G, short videos would not have appeared at all, and if smartphones had not dropped to the thousand-yuan level, mobile Internet would not have been able to rise.

At present, we have invested in Layer2 project Takio and storage project EthStorage in this part of infrastructure. EthStorage also won the first place in the EDCON of this Ethereum Black Mountain Conference. Layer2 is actually more computing-oriented to ensure the improvement of computing efficiency and reduction of costs in large-scale applications in the future. In addition, if blockchain wants to become a world computer, it also needs data storage capabilities, so we also invested in storage projects.

Secondly, we also invest in infrastructure that facilitates users to enter the cryptocurrency market. Currently, the entry threshold for cryptocurrency is very high and requires a certain degree of professionalism. For example, different chains have different wallets, wallets require mnemonics, anti-theft and privacy protection, etc. We are also optimistic about this kind of infrastructure with mature user interfaces. In this field, we invested in a DID track project D3NS, whose founder previously had a background in the Ethereum Foundation.

The third thing we will look at is the combination of AI and Crypto. After the emergence of Chatgpt, there will be a big collision with Crypto, which is also a new topic for us.

5. ChainCatcher: Can you elaborate on how you view the possibility of combining AI and Crypto?

Jin Wenjie: The current large AI models are very concentrated, mainly in the hands of several large model companies such as ChatGPT. We cannot decide whether these large models can be combined with Crypto. It depends on ChatGPT's planning.

But we see that in another direction, there are many open source models. The training of these models consumes a lot of computing power. So in the operation of the models, we can actually use Crypto to provide some decentralized computing power, similar to the storage and bandwidth provided in mining.

Another thing that everyone is more concerned about is data protection. Data is used by large models, so is there a way to protect user data? Currently, zk is a very popular direction, and we are also exploring investment opportunities in these areas.

6. ChainCatcher: The competition in Layer2 is very exciting. How do you view the short-term and medium-term competitive landscape?

Jin Wenji: First of all, we still prefer Ethereum. We believe that Ethereum may still be in a dominant position in the long run. Then, based on Ethereum, we choose to look at ZK, because OP is already very mature, leaving limited room for innovation, and our primary investment needs to invest in innovative companies.

7. ChainCatcher: In addition to the directions mentioned above, what other narratives or vertical segments will you focus on?

Jin Wenji: We believe that there are still great opportunities on the financial side. Traditional finance, such as banks, legal tender, and other mechanisms, has many deficiencies. For example, cross-border payments involve a lot of legal tender, but the fragmented financial and banking system leads to long retention of funds and low efficiency. Crypto can provide some solutions.

8. ChainCatcher: The hot narrative of Web3 changes very quickly. New concepts such as Bitcoin ecology have emerged recently. Are there some directions that are very hot in the market but you are not very optimistic about?

Jin Wenji: We take a normal attitude towards market hot spots, and we often look back on some hot events and innovative attempts. But we should know that not all innovations will arouse strong attention. As an institution, we need to study the reasons behind them.

9. ChainCatcher: Most Web3 investment stages are in the early stages of projects. Investing in people is critical for early projects. What is your judgment logic for whether Web3 entrepreneurs are worth investing in?

Jin Wenji: First of all, we prefer value-oriented founding teams. We need to determine whether they are long-termists. In addition, we prefer entrepreneurs with a good educational background and experience in entrepreneurship in large companies. Of course, we do not rule out some young teams with very ideas and vitality.

10. ChainCatcher: From traditional Web2 investment to crypto investment, what are the changes in investment methods? What are the obvious differences between the operation of crypto VC and traditional VC?

Jin Wenji: Crypto investment is more globalized and can reach many foreign entrepreneurs. This is a challenge on one hand and an opportunity on the other. Secondly, the exit methods of crypto investment are very different from traditional Web2 investment. In addition, the listing of cryptocurrencies on exchanges is different from listing on Nasdaq. This has spawned many new investment methods, such as providing liquidity, staking, etc. in exchange for returns.

11. ChainCatcher: Many people believe that the primary and secondary crypto markets have been seriously decoupled in the past two years. The "value investment" in the primary market is not well received in the secondary market. What do you think of this phenomenon?

Jin Wenji: Ethereum has reached a peak of $4,700, and now it has fallen by more than $1,000. This kind of ups and downs are common in the cryptocurrency market. As an investor, the most important thing is to know where you earn money. The essence of finance is the same, whether in the traditional field or the encryption field. The most taboo thing is to invest in both, and in the end you may earn nothing.

12. ChainCatcher: The Hong Kong Securities and Futures Commission’s official release of policies related to virtual asset trading this week has caused a lot of discussion. What do you think about the impact of Hong Kong’s policies on Chinese crypto entrepreneurs or investors?

Jin Wenji: This is a very positive signal, which means that Hong Kong has become a new hub and has entered the compliance stage relatively quickly, which is a good progress for the promotion of cryptocurrency. However, regulation and cryptocurrency itself still need a long time to run in.

13. ChainCatcher: You mentioned that you have been in the crypto field for 6 years and have experienced some cycles. Do you think the current cycle is a good time to invest?

Jin Wenji: I think so. Now it is between bull and bear markets. The time between bull and bear markets may be longer than before because there are some uncertainties in the overall environment, such as interest rate hikes and global economic uncertainty. In this case, the test for project owners is higher, and a group of more high-quality entrepreneurial projects with lower valuations will be born. For investors, as long as they have patience and a long-term philosophy, they can invest in projects with high cost-effectiveness.