This is Knowledge Surfing, a podcast that covers the latest tech trend with founders and investors. In this episode, we are excited to have Edith Yeung, the General Partner of Race Capital to share with us the story of how she invested in Solana and FTX during both companies’ infancy. We also discussed the differences between web2 and web3 companies.
Highlights🌊
🌞 Investing Solana in 2018
🛫️ SBF – The Big Breakthrough for Solana
🚢 Tina was on the same boat with SBF!?
🤔 The difference between investing in web2 and web3
How Edith met the founders of Solana and FTX
Edith met Anatoly Yakovenko (Co-founder of Solana) at the NASDAQ Center in San Francisco when giving a talk on how to invest in token and crypto projects in January 2018. He was writing the whitepaper of Solana then. Because of Anatoly’s background in Qualcomm, he came up with the concept of using proof of history. Edith was impressed with his idea and his ambition to build a faster blockchain. Therefore, Edith decided to support this project in 2018.
In the beginning, few from the blockchain community paid attention to Solana. The big breakthrough came when Sam Bankman-Fried (aka SBF), the founder of FTX, decided to build his project Serum on Solana. This was the first vote of confidence. Then in 2021, many DeFi projects on Solana started to take off. Many projects were attracted by Solana’s low fees and fast performance. And now it has become one of the top blockchain protocols.
Edith met SBF in a DeFi event in mid-2018. He was standing next to Edith and introducing what he was doing at Alameda Research. Alameda was the top three trading firms in terms of trading volumes on Bitmax.
Web2 vs. Web3 Investing
- Legal: Traditional VCs that do equity investment might need to discuss with their LPs and amend their LPA so the fund can invest in token deals.
- Managing liquid assets: Traditionally, VC funds only deal with primary markets and usually sell their stakes when their portfolio companies are acquired or go public. However, in the Web3 world, exchanges become distribution and user acquisition channels. And investors will be holding liquid assets. Many VCs have applied for RIA licenses so they can trade a wider range of assets.
- Founders’ Expectations for Investors:
- Web2: investors optimize for ownership.
- Web3: Participation is key. No one party should own a majority of a protocol or network. Founders expect investors to be a key participant and contributor in the product and network, and be held accountable for it.
- IPO vs IDO (Going Public):
- Web2: It takes 6 – 10 years for a company to go public.
- Web3: There are hundreds of crypto exchanges and they are like the “app store” of crypto. Many companies want to list on crypto exchanges for distribution and user acquisition purposes. Oftentimes a crypto company is listed on the exchange within 2 years of its inception and before they find their PMF(Product Market Fit). Getting listed is just the beginning
About Edith Yeung
Edith is the General Partner of Race Capital. Prior to Race Capital, she was a general partner at 500 Startups. She has invested in over 50+ startups including Solana, FTX, Stellar/Lightyear, Silk Labs (acquired by Apple), Chirp (acquired by Apple), Fleksy (acquired by Pinterest), Human (acquired by Mapbox), and many more. She started out her career as an engineer and became the GM for Dolphin Browser, a Sequoia-based mobile browser with over 150mn installs worldwide.
About Race Capital
Founded in 2019, Race Capital, an early-stage Silicon Valley venture capital, invests and partners with pre-seed, seed to Series A companies. Race Capital is generally focused on all B2B/Enterprise on the infrastructure layers of the tech stack.
