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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

SmartMesh Blockchain: A global network without the Internet – a discussion with the founder Henry Wang

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I visited SmartMesh Blockchain in Beijing to talk to the team team around internet protocol scientist Henry Wang, founder and CEO of SmartMesh foundation in December 2017. Henry has been working on offline communication technology since the year 2013. He launched the p2p social app YueNi (约你) an offline social networking app similar to Firechat. We (joint work with Julian Hoelz) wanted to learn from the team why they think that the internet needs to be augmented with a pure P2P, mesh-organized network.

Let’s start with the basics. Why do we need a new internet?

SmartMesh: We believe that if the internet was conceived today, it would have been a P2P network that connects smartphones and it would be much safer, cheaper, and faster compared to what we have today. With the current penetration of smartphones, i.e., 2.3 bn smartphone users as of today and a smartphone penetration rate of about 60% in 2022 [4], there is a real opportunity for a mesh network that transfers data and value from one phone to another – without relying on the internet as a central coordinating backbone. This is the type of network we are going to create with SmartMesh.

That is interesting can you tell us a bit about the underlying technology of the SmartMesh Blockchain?

SmartMesh: Sure. It all starts with the multi-year research from our Senior Research Scientist Paul on ad-hoc networks. Dr. Paul Gardner-Stephen is a senior lecturer at Flinders university and worked on robust mesh networks to provide connectivity to people which are living in parts of the planet where there is no cellular coverage at all. Another use case are regions with frequent connectivity outages caused by a natural disaster, e.g. earthquakes. His papers give a good scientific introduction to the protocol, but one of the key design decisions was to build an own network layer and thus be independent of IPv4 or IPv6 used in the internet today. The developed mesh technology has already been deployed at Efate, a pacific island located east of Brisbane, Australia. In this case, the technology was able to provide connectivity to people that normally did not have access to a cellular network. Even if internet access is present, smart mesh technology offers a resilient, decentralized, and self-healing way to communicate with higher near-field communication speed and bandwidth than provided by the internet today.

Why is that important for the advancement of Blockchain technology?

SmartMesh: We believe that our technology is important as an underlying enabler for the Internet of Things (IoT), one of the major use cases for blockchain technology. Billions of things in the IoT will need to communicate in locations where access to the internet is not available or too costly to install a gateway. Also energy consumption is important for these kind of devices especially if they are deployed outdoor and rely on battery power. Together with our SmartMesh Blockchain token we are going to couple connectivity with a means to perform payments without the need for the internet to be present. The mesh network we envision is such that people that are willing to share their own mobile phone as nodes in the global mesh network are rewarded in crypto tokens. In order to make this P2P micro-payment possible we need to overcome the current limitations of blockchain technology. We are planning to build on concepts similar as the Lightning network and the Raiden Network. For example, someone with internet access can resell to others who need it.

Are there any other interesting projects that your team is working on we should know about?

SmartMesh: Yes actually there is. We have a new team that is backed by SmartMesh, called MeshBox that is working on a hardware device. MeshBox is not only a router where nodes can connect but also serves as a content server to store and transfer content. We are confident that MeshBox will support a superior access for nodes in the Smart Mesh.

Thank you so much for your time!

More information about SmartMesh Blockchain: More information about SmartMesh on their website: https://smartmesh.io, Code geeks can check out the source code at https://github.com/SmartMeshFoundation. For the scientists: The rationale behind the Serval network layer for resilient communications by Paul Gardner-Stephen, Andrew Bettison, Romana Challans and Jeremy Lakeman, Journal of computer science http://thescipub.com/PDF/jcssp.2013.1680.1685.pdf 

Image result for smartmesh henry wang

If you are interested to learn more about the Chinese Blockchain ecosystem, check out the report: State of the Chinese Blockchain Ecosystem 

About the Author

Dr. Thomas Reinbacher is a 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/


Discussion led by Dr. Thomas Reinbacher and Julian Hoelz © Dr. 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