GamesHUB #14 | Web3 Investing During The Bear Market

Meet our Guest:
Yida Gao

 Managing General Partner at Shima Capital (an early-stage global venture firm focused on supporting cutting-edge blockchain startups), and a Forbes 30 Under 30.

With our Host:
Constantin Kogan

GamesPad & BullPerks Co-Founder, Partner at BitBull Capital.

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What sectors within Web3 are particularly attractive for VCs right now?

I think what VCs are saying is infrastructure. And the reason why they’re saying that is that infrastructure projects take longer to mature and they are larger projects. And right now, in a bear market, it’s hard to think about the contrary, right?

How do you get retail investors to invest in the consumer app or use a consumer app in crypto when you’re in a bear market? If you just take the opposite of the other end of the spectrum would be infrastructure and bear markets are great for infrastructure companies because it’s cheaper to hire engineers. You need more talent to build these longer lasting infrastructure.

People are switching from tokens to equity. Please explain to us what's the main difference and why do you still prefer to deploy both?

I think for us, we love the shorter time to liquidity of token investments. We also understand the downside protection that you get from investing into equity. When we issue term sheets and negotiate deals, we typically are looking for both. The pendulum has swung from a seller’s market to a buyer’s market, buyers meaning investors, sellers, meaning companies, founders.

In a bull market, you have to bend a little bit to the market. And if all of the companies that you would wanna invest in are only issuing tokens, if you want to have exposure, then, you may need to just only purchase the tokens. But with tokens, you don’t really have a lot of control and, in governance and as the blowup of FTX has shown us we need more governance and control in this space.

Describe one particular deal that you invested in and why?

Sure. Right now in any type of Winter Bear market across Web three or web two, or web one, you know, people are going back to profitability compared to growth.

They care more about sustaining a business that makes sense from a revenue perspective. And a lot of projects, as you know, do not generate a lot of revenue in crypto. A lot of it is based on increasing token prices, network value, et cetera. We are really focused on looking at companies that have sustainable business models.

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