The venture fund led by David Gan is backed by Digital Currency Group, Galaxy Digital, Huobi Ventures, Bybit’s venture arm and others.
Fresh off the launch of its $25 million venture fund, OP Crypto Capital Management Ltd. seeks to play a more active role in the lifecycle of blockchain startups ranging from gaming to Web 3.0. Former Huobi executive turned founder David Gan spoke with Cointelegraph about the transition from his former company, the growth potential of crypto niches and the role his fund will play in bootstrapping the next generation of crypto startups.
After more than three years at Huobi Ventures and Huobi Labs, Gan transitioned to his new role seamlessly, he said. One of the primary motivations for creating the new fund was greater flexibility and autonomy in investment decisions. “In my former firm, as we grew to 2,000 employees, it was more difficult and challenging to move fast, considering the rapid pace of innovation in the crypto industry,” he explained.
A secular bull market for Bitcoin (BTC) and widespread institutional adoption of digital assets made now the ideal time to spin off a new investment fund, he added.
Increasing startup support
Venture funds have poured billions of dollars into crypto and blockchain startups this year alone, underscoring the belief that digital assets are poised to disrupt the global economy in profound ways. Gan’s fund attempts to differentiate from other VCs by offering pre- and post-deal operational support. To aid in that process, OP Crypto Capital has recruited marketing and operations professionals formerly of Huobi, Binance, OKEx and other exchanges. Projects funded through OP Capital can also receive additional avenues for liquidity via coin offerings, smart contract audits and institutional adoption.
Related: 62% of institutions to start investing in crypto within a year: Survey
The real value proposition of Web 3
When asked about the value proposition of Web 3 — a broad concept that describes the third generation of internet services — Gan said blockchain technology revolutionizes how web-based data is stored, processed and managed. He described the emergence of a “universal state layer” for managing data, which enables value settlement directly on the internet. He further explained:
“It allows us to send files in a copy-protected way, enabling true peer-to-peer transactions without intermediaries. In essence, Web 3 provides individuals with a new way to use the Internet without giving up their privacy and valuable information.”
While the company hasn’t disclosed the projects it seeks to fund, the emergence of an interconnected Web 3 world is at the center of its investment decisions. This includes funding projects that bridge the gap between centralized finance, DeFi and the so-called Metaverse.
Related: DeFi and Web 3.0: Unleashing creative juices with decentralized finance
Sizing up the crypto gaming economy
One of Gan’s boldest predictions is that gaming will be the first to bring 100 million users to the crypto market. The intersection of gaming and crypto has been gaining momentum, even in traditional worlds, thanks to the growth of non-fungible tokens, which have paved the way for true ownership of digital items that are increasingly being used across gaming platforms.
“We believe virtual communities, particularly gaming communities, will become ubiquitous, and we are committed to fostering a healthy sense of community, place, and purpose as a means of enabling and not merely an escape,” Gan said, noting that roughly one-third of the global population can be classified as gamers in one sense or another.
He further explained that 41.9 million gamers own cryptocurrency and 38% of them are Millennials between the ages of 21 and 38, according to research from Newswagg. He continued:
“Millennial gamers hold 55% of all crypto assets, compared to just 5% of all Millenials, showing that gamers are far more likely to hold crypto than the average person. 80% of gamers who own crypto are also interested in using cryptocurrency to purchase games and in-game items.”
VC look ahead
The growth of crypto-focused venture capital suggests that investors are looking at blockchain technology and digital assets beyond their immediate impact on the price of Bitcoin, Ether (ETH) and other altcoins. Funding was unaffected by the market meltdown that began in Spring 2021. As Cointelegraph continues to report, crypto exchanges and blockchain infrastructure providers have generated substantial VC interest in recent months.