In the blockchain world, innovation and change have almost become the norm. The leaders at the forefront are outlining our digital future, and OP Crypto is one of this group of revolutionaries. The leading early-stage venture capital fund is not only advancing blockchain infrastructure in Asia and the West, but is also fully supporting outstanding founders and fund managers around the world. Today, we are honored to have OP Crypto's Co-Founder and Head of Research, Lucas He, join us for an in-depth conversation that leads us to deeper insights into his vision and his incisive insights into the blockchain ecosystem.Lucas is well-traveled in the world of Web 3.0. He is not only a seasoned investor in the space, but also an experienced user of digital currencies and NFT. Having studied and worked in China, Singapore and North America, as well as having a dual academic and professional background in finance and IT, Lucas has a deep and unique perspective on the development of Web 3.0 in both East and West. He is well versed in how to use blockchain technology and decentralized thinking to optimize and even disrupt traditional financial solutions. As a core partner of OP FOF I, OP Crypto's parent fund, Lucas has delved into numerous emerging technology investment directions in North America and Asia Pacific, thus accumulating a colorful market perspective and investment philosophy. In his interaction with us, Lucas shares his career journey, his insightful observations of the industry, talks about his investment strategy, and his outlook on the future of blockchain.

OP CryptoOP Crypto is a leading early-stage venture capital firm in the crypto and blockchain industry, specializing in pre-seed and seed stage investments. The fund successfully raised $50M in September 2021 and has since invested in over 30 projects, including companies such as Scroll Tech, Snackclub, Merit Circle, Omni, and Fyde.

With the support of prominent investors like Bill Ackman and Alan Howard, as well as institutions like Galaxy Digital, Huobi, and DCG, OP Crypto has access to a global network of venture funds, scouts, and ecosystem partners to source the most competitive deals in the market.

With a core team based in the United States and strong ties to the APAC region, the fund serves as a bridge between East and West. Additionally, a dedicated portfolio team provides post-investment support to founders in areas such as marketing, tokenomics, and networking.Interview

(Kimming is the reporter of this interview, Lucas He is the co-founder of OP Crypto)

Kimming: Hello Mr. Lucas, I am Kimming, the reporter of Cointime, I am very glad to have you interviewed by us, first of all, please introduce yourself to our readers.

Lucas: I'm Lucas, I grew up in China, and received my Bachelor's Degree in Computer Science and Master's Degree in Financial Engineering from Nanyang Technological University in Singapore. I first started my career in the technology development department at Merrill Lynch, where I was able to gain a deep understanding of the whole chain of financial business systems. As a technology professional, I have always been interested in cutting-edge technologies. I have been involved in the blockchain space since 2012 or 2013 and have been impressed by its potential for the financial industry in areas such as payments, trading and settlement. I am convinced that this technology will lead the field through a dramatic transformation in the next 10 to 20 years. During my six years in Singapore, I gradually shifted from back office to front office trading and fintech consulting, providing me with a holistic view of the industry.In 2016, I decided to move to the United States to further my studies at the Massachusetts Institute of Technology (MIT) in Boston. There, I not only met leaders and core developers in the blockchain space, but also had the opportunity to work with renowned research organizations such as MIT's Media Lab, which further broadened my horizons. During this time, I met David, a partner who would later co-found OP Crypto. Upon returning from my studies, I joined the investment department of Huobi, and together with David, I focused on direct investments in the primary market and in-depth evaluation of early stage funds, laying a solid foundation for OP Crypto's main investment area. This experience not only strengthened my network of contacts on both the project and investment sides, but also gave me a deeper understanding of the Asian market, which is the core value of OP Crypto - bridging resources, networks and information between the East and West.

Kimming: Can you start with a brief introduction to OP Crypto?

Lucas: OP Crypto was co-founded by David and I in 2021. Prior to that, both of us had accumulated valuable experience and deep resources in the blockchain space. After I left Huobi, I joined State Street Bank in the US, specializing in blockchain strategy consulting and M&A activities. I do see a lot of potential for blockchain applications in the traditional financial environment, but it must be recognized that driving technological innovation in large corporations is often slow, especially in the traditional financial system in the U.S., where these innovations are subject to a number of regulatory constraints. So, while I thought the blockchain industry was promising, I longed to work in a more flexible and dynamic environment. Coincidentally, David and I had the same idea. We strongly believed that with our experience and contacts in the industry, we were well positioned to create our own brand and contribute more substantially to the advancement of the industry. This led us to co-found OP Crypto.

Kimming: You mentioned a lot of experience working in traditional financial institutions earlier when describing your career path, and I'd like to understand how you first got involved in the cryptocurrency industry? What were some specific opportunities or things that pushed you to join?

Lucas: I distinctly remember seeing in the news that the price of Bitcoin had broken below $100 for the first time, which happened around 2012 to 2013. Although I had heard about Bitcoin earlier, like most people, I didn't know much about it at the time and even remained somewhat skeptical. But when its price surpassed $100, I was deeply shocked and felt that this was no longer an area that could be easily ignored. So I quickly opened a bitcoin account and started trading, and that was the beginning of my journey into the industry, so to speak. At the time, apart from Bitcoin, there were other early cryptocurrencies such as Litecoin. I gained a lot of experience and knowledge by trading these coins, whether I made profits or suffered losses. In addition to pure trading, I also began to explore the technical principles behind it, trying to understand how it had gained such widespread interest and had a profound impact. I believe that while many people initially come to the industry for speculation, the majority of those who really stay for the long term and continue to invest and contribute are practitioners like myself who truly love the technology behind it.

Kimming: I've found that many blockchain industry leaders have study abroad experience. Singapore, although part of the Asian region, prefers English in terms of language. In your opinion, does having multilingual skills help in this field?

Lucas: Living in Singapore for 11 years has given me something to think about on a national development level. Singapore's continued prosperity is due in large part to its strong belief in globalization and its openness to welcoming global professionals. The presence of four official languages - Chinese, English, Tamil and Malay - ensures that people from all over the globe are comfortable communicating here. Regardless of the people you expect to reach or the opportunities you seek, Singapore provides an excellent arena for communication, which has undoubtedly fueled its continued growth. web 3.0 is undoubtedly one of the most globalized areas. Most products and technologies are designed to cross borders and quickly reach users and developers worldwide. Keeping abreast of global information and connecting to a wide range of global resources is critical in this industry.As a venture capitalist, we have developed deep relationships with top-tier funds and angel investors in both the East and West, ensuring that we are the first to get information on early-stage, high-quality projects. Sometimes we even establish communication with some of them before they start their ventures. Bilingualism is definitely a big advantage for our team. At the same time, global promotion of the product is crucial for any entrepreneur, whether they are from the East or the West. I've seen many great entrepreneurs confined to their local communities or interacting with local investors because of language and resource limitations. Leveraging our linguistic and cultural strengths to help them reach global resources, talent and investors more efficiently is a rewarding mission for us. I often exhort entrepreneurs, whether Eastern or Western, to cultivate a broader perspective and delve into the culture and operating rules of other markets. Such entrepreneurs with multinational backgrounds and global perspectives are also our favorite targets for investment."

Kimming: Like you said earlier, the crypto industry is taking root in different geographies. What about the direction of specific investment areas? For example, DeFi infrastructure, NFT, GameFi, etc. Which of these areas do you see as having the greatest potential at the moment?

Lucas: In short, our fund is more skewed towards investing in infrastructure and applications in the consumer space. Looking at the entire crypto space, the number of native crypto users is actually small. Relying only on native users, the market size is limited. Therefore, we are pursuing applications that can attract the next generation of non-crypto users. Already applications such as gaming, meta-universe, NFT, etc. have shown their potential as connecting Web2 and Web3 users. While the last wave of the market showed more of its financial attributes, in the next phase, we are looking more at entertainment and social applications that optimize the user experience and lower the barrier to entry. In terms of application development, we believe that Asian developers, with their rich experience, already have numerous success stories in the traditional Internet space. We also highly value Asian investors and entrepreneurs. In addition to attracting more consumers to the market, how to guide traditional financial institutions to step into this area is another core issue. We have already observed that financial institutions like BlackRock have started to plan financial products like Bitcoin ETFs. This is clearly a key turning point, as their participation will drive demand for infrastructure such as trading, risk management and back-office applications, which will enable them to trade, manage and expand their clientele in this market more professionally. Over the next five to ten years, I believe both of these areas will be important growth drivers.

Kimming: Indeed, attracting traditional Web2 users into the Web3 market is what will bring in more new money and liquidity, and I couldn't agree more. We have seen the current market environment has changed from a bull market to a relatively flat or even bear market situation. So do you see any changes in the investment strategy of your fund or VC firm in the current program, or can you elaborate on how you target your investments?

Lucas: The current market is facing a downturn: last quarter's primary investment market funding was the lowest in almost two or three years, showing that overall investment activity has slowed down. But for me personally, I have weathered three significant industry cycles and am prepared for bull and bear markets. In fact, when we raised money for OP Ventures Fund I in 2021, we recognized that bear markets are actually great times to invest. So, while others raced after hot projects in a bull market, we chose to stay calm and expect more reasonable value for our investments. We always tend to invest in early seed and angel rounds. Regarding the identification of investment targets, we follow a systematic process. First, we obtain a large number of excellent project recommendations through continuous communication with major blockchain investment institutions. We maintain a close relationship with the startup community and invested companies to gather information about numerous startups. We have also partnered with top gas pedals such as OP FOF I Fund of Funds, Orange DAO, and Alliance DAO to further reach out to early stage startup teams. Next, we conduct three to four rounds of in-depth interviews to fully evaluate the program. Before finalizing the investment, we make sure to conduct offline interviews with the founding team. This is because, in addition to written materials, we believe that direct interaction with founders is critical to perceiving their true passion and problem-solving abilities. We prefer to work with founders who share common insights and are able to engage in deep conversations. And investing is more than just a financial decision. We value long-term partnerships with founders, where both parties can empower each other and grow together. The decision to invest is just the beginning. We continue to engage with founders throughout their journey to understand their needs and provide valuable advice and resources. All of this is a core part of our investment strategy and process.

Kimming: So you focus more on founders and teams?

Lucas: Whether we are investing in projects directly or indirectly through our parent fund, we always consider the team as the most important factor to be judged. An efficient and agile team is able to adjust its strategy in a timely manner, even in the face of rapid changes in the market. They have the ability to fill gaps within the team in technical or other areas, whether through new hires or collaboration with other teams. We are therefore convinced that a team with solid experience, a constant quest for learning and the ability to adapt to changes in the market is a solid cornerstone for the long-term development of the project. Then there is market potential. When an exceptional team encounters a market full of opportunities, the combination is undoubtedly invaluable. We have witnessed many times that some technically skilled teams have encountered challenges because they failed to target markets with growth potential or find the right application scenarios. Some teams are able to go through several transformations and finally determine their direction. But more teams may encounter difficulties when they have yet to find the right market and product positioning.

Kimming: For VCs like in general, do you provide other resources to your portfolio companies besides capital? What kind of partnership approach do you use so that while you choose them, they also want to choose you as a core investor to support the development of their projects?

Lucas: Creating value for post-investment companies is critical, especially during bull markets when many top venture capital firms reach out to project owners. One of our major strengths is our deep resources in both Eastern and Western markets, which allows us to effectively help teams expand their global communities and user bases. Whether it's a European or American game, wallet, or social project that we've invested in, we've always been proactive in helping them build a comprehensive Asia-Pacific marketing strategy to ensure that they continue to gain new users in these emerging markets.For example, we once supported a multi-chain wallet project's marketing campaign in Vietnam and worked with local partners to develop a proprietary strategy that resulted in significant user growth. As many project owners do not have in-depth knowledge of a particular regional market, they need our comprehensive guidance and support in strategic placement and operations, which is exactly what we specialize in. In addition, based on our deep background in working with exchanges, we were able to provide valuable advice to these projects when they were looking for liquidity partnerships at a later stage (e.g. with exchanges, market makers, Launchpad, etc.) to ensure that they implemented the most appropriate liquidity strategy.

Kimming: What advice would you give to startups that are just entering the blockchain industry?

Lucas: My advice is: don't blindly follow the trends in the market. When you lack in-depth understanding and relevant experience in a certain field or issue, following the trend is likely to bring setbacks. Every entrepreneur should reflect deeply: what unique resources or experiences do I have that allow me to excel in this particular field or problem? Many great entrepreneurs often start by solving a problem they are experiencing and then turn their perspective to the emerging Web 3.0 space, bringing new insights and strategies. We are particularly interested in whether you have a background of relevant experience and whether you have insights into the problem. Ask yourself: does my personal experience make me the ideal candidate to tackle this issue?

Kimming: What's critical for startups is whether we can see the unique value they bring and whether the problems they intend to solve are distinctive. After we've discussed project investments, I'd like to ask an in-depth question specifically about Fund of funds. A Fund of Funds that invests exclusively in cryptocurrency funds is rare in the current market, can you share your initial thoughts and the thinking behind creating such a FOF?

Lucas: Our OP Fund of Funds was founded in 2022 with a very straightforward intention: in the traditional financial sector, Fund of Funds have long been relatively mature and have attracted many investors who want to gain market exposure through them. But in the blockchain world, there was a virtual void of such products, and we were determined to fill that gap. I see several core advantages to a master fund: first, it can effectively diversify risk; even if one market sector underperforms, overall profitability is likely to remain stable.Furthermore, it opens a window for investors to gain insight into the development of each sector by interacting with multiple fund managers and hundreds of entrepreneurs in a single investment. This is a rare opportunity to learn and expand for organizations that are interested in the blockchain industry but lack understanding. In short, OP Fund of Funds aims to provide a new and diversified investment vehicle for the market. One of the highlights of our Fund of Funds is the focus on the earliest fund founders. Early stage seed funds typically deliver more attractive risk-adjusted investment returns than many mature stage funds. As early stage fund founders, we are naturally adept at finding and recognizing such opportunities. A large number of early-stage funds have approached us with fundraising opportunities, and we have been able to accurately determine their strengths and weaknesses. In addition to purely financial investments, we also focus on in-depth collaboration with fund managers, especially when they encounter difficulties in building foundations, financing, operations and investment strategies. Due to the strategic positions we hold, we are usually able to secure better investment terms, which also means our investors can enjoy greater concessions. In addition, by holding an equity stake in a GP, we are able to capture the long-term value of the fund manager, which is another of our specialties.

Kimming: So do you have some preferences for geography or tracks?

Lucas: Our investment horizon is not limited by geography or sector. The rationale behind this is simple: our goal is to find those outstanding fund founders, regardless of the sector or geography they are active in. For us, identifying and investing in talent is a priority, as people and the teams they form are the real core competencies. In terms of the strategy of the parent fund, we have deliberately diversified our risk to avoid over-leaning on a particular track, thus avoiding the risk of project homogenization. During the fund's investment journey, we continue to look at a variety of emerging sectors and geographies to ensure that we can find the best funds in each track and make a balanced distribution of investments.Kimming: Specifically, do you have a set of criteria or process to find these quality funds?

Lucas: The hunt for the right funds is not too challenging for us, mainly because cryptocurrency Fund of Funds are still a scarce species in the market. Many startup funds choose to reach out to us during the fundraising phase. At the same time, we have established deep relationships with many fund founders and managers. With these strong networks, we are able to keep abreast of quality investment opportunities in the market, whether they are in the pipeline or about to open a fund of funds.

Kimming: What do you look for in a due diligence process?

Lucas: When conducting due diligence, we delve deep into each fund's investment philosophy, operational processes and the assets they hold in their hands to ensure that we fully understand their investment strategy, unique resources and how they create value for their investees. For us, the key is to discover what sets them apart, especially in the current context where many funds hold similar strategies and investment styles. We tend to choose funds that have a depth of expertise in a particular area, rather than following the popular choice. Currently, our portfolio includes funds focused on meta-universes and gaming, secondary market quantitative strategies, as well as early-stage project incubation and campus innovation programs. Whether it's a fund or a program, we look for opportunities that have unique resources, insights and characteristics.

Kimming: What are the operational and management differences between the OP Fund of Funds and OP Ventures? How would you characterize the unique features and core strengths of OP Fund of Funds? Most importantly, how do you ensure the fund's long-term robust growth?

Lucas: At the operational level, the FOF's task seems relatively easy compared to OP Ventures. First, we only selectively invest in 15 to 25 funds, which is a relatively small number. Second, most of the funds we invest in have top-notch teams and clear investment directions. We have confidence in their decision-making and judgment, so we do not intervene too often and only provide support in the early stages or when necessary. The startups in which OP Ventures primarily invests often need more guidance. In order to help them navigate the challenges of entrepreneurship, we work more closely with the project owners and provide more in-depth guidance and advice. Additionally, the parent fund caters to a broader audience. We do not expect investors in the Parent Fund to have in-depth knowledge of the cryptocurrency industry, nor do we rely on them to bring us quality projects or liquidity. In fact, as I mentioned before, we have already touched most of the funds in the market that are raising money. However, for OP Ventures, we hold a higher standard when selecting limited partners (LPs). Our LPs are typically industry veterans with deep knowledge of cryptocurrencies and bring valuable industry resources and partnership opportunities to us and our portfolio. Therefore, the establishment of the Parent Fund means that more people will have the opportunity to share in the dividends of crypto fund investment, and thus participate in and benefit from the rapid development of the industry.

Kimming: Meeting like-minded LPs can really increase efficiency and enable a healthier, long-term synergy.

Lucas: For me, the key to sustaining the fund's robust growth over the long term is to build deep trust with our investors. We always adhere to the transparency of information and maintain close communication with investors, be it market dynamics, our investment situation or the development status of the fund. At the same time, we often organize various events and invite investors to participate in order to have in-depth communication and listen to their feedback. In my opinion, the long-term healthy development of the fund is inseparable from the support of a like-minded investment community.

Kimming: For the sake of time, let's move to the last question: Can you share the immediate goals and long-term vision of OP Crypto?

Lucas: I want us to continue to generate significant financial returns for our investors, always focusing on the most promising projects. In fact, we already have a number of companies in our portfolio that have both strength and potential, and we look forward to providing them with continued support to help them grow further. In the near term, after the deployment of the two funds, we plan to expand our product line and expect to raise the next round of venture capital funds in the second half of next year. We will also continue to monitor market developments. In the future, we may venture into more areas related to cryptocurrencies, for example, the potential of combining crypto with AI or real assets. As investors, we aim to deliver ahead-of-market insights and above-market returns to our investors. Our vision is to be the top venture capital firm connecting the East and West markets. I strongly believe that the future is an era of globalization, especially in the context of Web3, which requires a global perspective. Although there are still differences and barriers across fields and geographies, it is important to transcend these limitations in order to drive Web3 into wider adoption. We hope to build solid bridges for this process.

Kimming: I couldn't agree more. Applications of blockchain technology, such as cryptocurrencies, should penetrate a wide range of sectors, not just as a financial rival.

Lucas: Yes, technology is not meant to disrupt, but to better complement and develop existing systems. Finding a balance between technology and life, and making it more harmoniously integrated into reality is our quest.

Kimming: In closing, I wish OP Crypto the best of luck in its future endeavors and thank Lucas again for sharing today.

Lucas: And thank you very much for the invitation!

Conclusion

In this interview, almost all the investment ideas Lucas mentioned resonated with me, which made me even more excited about the future development of Lucas and OP Crypto. During the exchange, I deeply felt his keen insight and rich professional knowledge, which made me have a clearer and deeper understanding of the prospect of the blockchain field. What's more, Lucas embodied the passion, persistence, and relentless pursuit of innovation in the field, which convinced me even more: blockchain technology is not just limited to code or data, but is a force that may redefine the way we live, work, and interact with each other. OP Crypto is at the forefront of this technological change, and the unremitting efforts of the team are aimed at making this vision become a reality. Their team is working tirelessly to make this vision a reality. Once again, a big thank you to Lucas for sharing such depth and insight with us. His experience and views are certainly a valuable guide for all those who are interested in this field. We eagerly look forward to hosting Lucas again in the near future to get an update on OP Crypto and the new milestones they have achieved in blockchain innovation. Finally, if any project founders or fund managers would like to start a deeper communication and cooperation with OP Crypto, please feel free to get in touch with us.Cointime was founded with the intention to be a bridge connecting project owners and backers, and to help the blockchain world become more prosperous.