So far, 2023 has been a tough year for crypto, with a persistent down market and regulatory uncertainty that will likely send many blockchain ventures overseas for more favorable conditions.
Yet the potential of blockchain to improve life for everyone remains with an increasing number of projects with practical use cases. A recent survey by Inmind showed that the majority of 174 venture capital firms from Europe, Asia, the Middle East, and the U.S. are looking forward to the end of this crypto winter by the end of 2023.
Capital investment continues to pour into the blockchain space – with GameFi and Metaverse receiving the most at the beginning of the year and Web3 Infrastructure and DeFi projects rising to the top of the list by the time of the survey.
For a closer look at the direction of investment in Web3, we interviewed Cathryn Chen, Founder and CEO of MarketX, a global VC firm focusing on fintech, deeptech, and vertical SaaS.
Chen began her path of successful investments while still in her 20s, and was named among Forbes 30 under 30 Asia, Finance & Venture Capital in 2019. She has facilitated over $250M in investments for more than 30 family offices and funds across Asia and the United States.
We spoke with Chen to learn more about where VCs and investors are looking for the next big thing and how soon they think a recovery will happen.
BZ: What is the main focus of MarketX?
Chen: We are a global investment platform, starting in 2015, working with family offices, institutional, and retail investors. The goal was to give everyone access to pre-IPO deals through a FinTech platform. Two years ago, we launched a new platform that allows people to invest using crypto, not only just in meme coins, but also in more proven companies such as SpaceX and Neuralink.
Now we’re becoming more of a Web2.5 Private Bank. We also give people the option to buy Treasury Bills with crypto. The platform lets people buy traditional financial products, leveraging their crypto holdings.
BZ: What has been the reaction of affluent investors to the SEC’s recent regulatory wranglings?
Chen: For the higher net worth individuals, there are always 10-20% higher-risk products in their portfolio. Over the last few years, higher-net-worth individuals have increased their alternative investment from 10% to approximately 15-20%.
So that has been a transformational change in terms of how our industry works, [and is] why so many more advisors are now spending time talking to their clients about PVC.
BZ: Is the U.S. losing Web3 talent based on its uncertain regulatory structure?
Chen: In the last 6-to-9 months, I have seen many talented founders moving to places like Zurich, Dubai, Abu Dhabi, and Saudi Arabia because the UAE greenlights crypto platforms much more quickly.
The U.S. is losing its edge when it comes to crypto adoption. If we can implement rules that actually help prevent bad actors, there’s still room for us to develop. If we don’t, someone else will.
BZ: Is the current blockchain investment client not conducive to early success stories like yours? Would it be the same if you were starting out now?
Chen: I think the reason [is]; I have been in the right place at the right time. When I started my career, I wanted to build an international business. In 2012, I decided to go back to Asia. And that was the height of the Hong Kong IPOs. So I hit at the right time there. Then in 2014, based on observing market trends and how my smartest friends were starting companies in Silicon Valley, I decided to move back to California, where I grew up.
I was 22 when I joined a startup, and we raised $80 million. Our first company was founded by Sequoia and Lightspeed. I wanted to be part of the experience where I could see how to grow from zero to one, how to work with major players, and the best of the best in venture capital.
BZ: What do you expect the Web3 landscape to look like in the near future?
Chen: We see a future with more development of stable return investments in crypto. I see the necessity of merging Web2 and Web 3. We need this new generation of investors who have learned that investment matters.
If we can adopt more traditional alternative products and merge that with the world of crypto, we can offer the average investor a much better product that’s less risky. I think that the marriage of web 2.0 and 3.0 needs to happen in order for crypto to get on the right path.
BZ: What should investors focus on in this uncertain market?
Chen: We should focus on something more long-term. If you look at the real return over a time horizon of 10 to 20 years, it is always real technology companies solving real problems that deliver those returns.
We are very focused on deep tech. We need to look at transportation infrastructure. We need to reduce waste and look at how to turn waste into aviation fuel. We need to look at how to come up with a cheaper electric grid. We need to lay the foundation for the next 20 to 30 years.
On top of that, the whole AI revolution is happening. I just returned from a trip to Silicon Valley, where in 2 days, I met 40 different companies. You can see the VCs are becoming increasingly optimistic about the future because they see real innovation being built by people.
BZ: What is the secret to your early success?
Chen: I think you should not listen to everyone all the time. When I chose my path, leaving JPMorgan to join a two- or three-person startup in Silicon Valley, everyone thought it was career-ending. Then I left that successful company to put all my savings into my own company and pay myself nothing, sleeping in the living room of a San Francisco apartment.
I’m a firm believer that in whatever you do, you have to have conviction. And maybe everybody else will say no because most people don’t know your story. I believe in what I do, and I’m going to have some level of resilience and consistency. Every day I put in more work and believe that this is the direction I want to go. I have a unique view of the world, and if it succeeds, it’s going to succeed big. I think that’s the entrepreneurial journey for a lot of women.
BZ: Is the entrepreneurial journey harder for women in Web3?
Chen: When you go to Silicon Valley, if you just scan through the number of founders who got major backing, they’re generally men. That’s not a surprise to a lot of people. I couldn’t get any funding from Silicon Valley because everyone looked at me and said, “I’m sorry, but you know, you have a great idea, but maybe somebody else.” One guy said, “Oh, that’s a great idea, but I’m sorry, you’re just a girl with an idea.”
Some people might not take you seriously, but keep believing, and someday someone will believe in you. Somehow I was able to convince 12 billionaires to back me when I was 24 years old, naive, and honestly made every mistake there is. Somebody will see your hard work, your drive, and ambition and hopefully go on this journey with you.
Produced in association with Benzinga
Edited by Jessi Rexroad Shull and Judy Marie Sansom