Interview with Sonic Zhang of ValueNet capital on the future of venture capital and ICOs

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I visited Sonic Zhang, founder of ValueNet capital and his team in Beijing in December 2017. We (joint work with Julian Hoelz) talked with Sonic about how he and his team is evaluating deals in the blockchain space. How to cut through the noise and find the next big unicorn?

Can you tell us a bit about the history of ValueNet capital?

Sonic Zhang: Sure. We started out as an exchange. With the regulatory actions of the Chinese government this year, we shifted our focus from the exchange business to an venture fund. As a such, we are focusing only on investments in Blockchain technology.

I guess that is an interesting transitions. Running and exchange and running a venture fund is quite a different business to be in. In this world of hyper-innovation, where new investment opportunities come thick and fast, how do you keep track about what is going on in the space?

Sonic Zhang: That is true, running an exchange and a venture fund are two different things. For both businesses it helps a lot if you know the most  important players in the field. It is the network we have that we carried over from the exchange business to the investment business. For example, we have a network of partners we work together. They help us to find the best deals in their geography. Our local team then does the 2nd level due diligence on this preselected set of investment opportunities.

For the deals you are willing to do what are the parameters that need to met in order for ValueNet Capital to invest?

Sonic Zhang: That differs from deal to deal. But let me mention three things that we think are the most important ones. First, it is the team that is behind the projects. I think about it the following way – has the team worked together in the past or is it a random set of people that came together to do an ICO “gig” together. A more extreme point of view could be: if they raise 30 million USD, will the team be tempted to “run away” with the ICO proceeds or are they one something bigger, one a mission to solve a real, large scale problem? For this we also tap into all communication channels (Telegram groups, slack chats, reddit post, etc.) that are available and ask questions and observe the communications.  Second, we favor to invest in products or technology that has been around prior to the ICO mania. Having a solid and well-thought white paper is one thing, but having an actual minimum viable product (MVP) that demonstrates the feasibility of the product is a much better proof point that the project can succeed. And lastly, I think it is something that is very similar to traditional VC investment: how scalable is the idea? For example if a project is tackling the energy market in one country, how easy is it to copy this to other countries. The question is are you going to build a local taxi company or are you aiming to build the next Uber. By following this approach we make sure that we only invest in the absolute best projects. One of the investments that fulfills all three parameters that I outlined, is the Australian-based Powerledger project.

It seems as if the wild-west times are slowly but surely over. How do you think will the sector evolve?

Sonic Zhang: The future is always hardest to predict [laughs]. I believe we will witness a revolution about how new businesses are funded. The idea of ICOs as a funding vehicle where everyone can attract funds for an idea from all parts of the world is very powerful and will ignite innovation. This has some interesting implications. I think that the competition between new ideas is going to rise. If you are doing and ICO today, it is not a Silicon Valley or a Beijing Zhongguancun thing anymore, it is a truly global thing. With an ICO, you are entering a global competition.

Sonic, thank you so much for your time!

sonic zhang valuenet capital

 About Sonic Zhang:
  • Sonic Zhang graduated from University of Sydney with a Bachelor degree in Engineering in 2011 and a Master degree in Project Management in 2012.
  • Sonic is the Co-founder and Global Director of 20 Nations League of Blockchain (B20, http://www.b20.io), an international NGO focused on bridging blockchain and cryptocurrency communities worldwide.
  • He  is also the co-founder of ValueBank Group, a global network of fiat-crypto exchanges, with a crypto wallet and payment solution.
  • In his latest project, he founded ValueNet Capital (http://valuenet.capital), where he is focusing on investing in blockchain startup. He currently resides in Beijing, China.

More information about ValueNet Capital can be found on their website: http://valuenet.capital

About the Author

Dr. Thomas Reinbacher is computer scientist and management consultant and works as independent adviser in Munich and Beijing. If you want to work with me please find me on http://dr-reinbacher.com/

Interview led by Dr. Thomas Reinbacher and Julian Hoelz © Thomas Reinbacher. Disclaimer: All information presented herein is given strictly on a non-reliance basis and under the exclusion of any responsibility or liability, in particular with regard to loss or damages and/or administrative and regulatory sanctions