Chain Venturer: August Ilag of CMT Digital

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Happy Weekend 🙋🏻‍♂️,

Welcome to Chain Venturer, a series of intriguing conversations with crypto investors. For this week’s issue, we have August Ilag from CMT Digital.

August is an Investment Partner and Head of Asia at CMT Digital. He previously helped Sequoia’s SEA crypto investment process and was instrumental in shaping the firm’s strategy in this rapidly evolving market.

Now, he’s handling all things crypto venture investment at CMT Digital, with a particular focus on Asia-based projects.

If you would like to participate in a future episode, DM me here.

-Marco

P.S. This one is a tad bit short due to time constraints, but I hope you enjoy it!

Pudgy Penguins was my first ever NFT.

I sold mind way before Luca Netz acquired the company. A bummer; especially because what Luca has done since is a great example for many crypto founders.

Luca acquired the Pudgy Penguins IP for $2.5M in April 2022. The NFT collection netted $6M revenue in the 5 months that preceded the acquisition. So the math is there to make the deal works.

Since then, Luca has showcased his excellent operational and marketing skills.

His background as a serial entrepeneur in a more “conventional” line of businesses is actually the secret sauce needed to take the Pudgy Penguins IP to the next level.

Slowly but surely, the Pudgy Penguins NFTs have turned into a real IP that even people outside of crypto is aware of. Heck, the Instagram account now boasted 880,000 followers, by playing into its adorable-ness and meme culture.

Now, the toy collections are launching at Walmart, in over 2,000 stores across the states. I’ll need to get one soon.

Anyway, enjoy this week’s conversation!

This week in governance shenanigans.

August Ilag, Investment Partner and Head of Asia at CMT Digital

August Ilag is an Investment Partner and head of Asia at CMT Digital, a leading global blockchain and web3 venture capital firm focused on early-stage investments that accelerate the adoption of blockchain technology.

August earned his BA in Economics and an MS in Management Science and Engineering from Stanford University. He began his career as an investment analyst at Citi and interned at Bain & Company as an Associate Consultant Intern.

He also served as a Tax Policy Associate at the US Senate. In 2015, he worked as a Management Consultant at McKinsey in Colombia and the Philippines before joining Sequoia as an investor in 2019. In 2023, he became an Investment Partner and Head of Asia at CMT Digital.

Here’s my conversation with August Ilag.

Quick takeaways:

• CMT Digital serves as the crypto investment arm of CMT Group, a US-based asset manager with over a 25-year history.

• CMT sees considerable infrastructure projects in the US and EU, while Asia is much more consumer-focused.

• Eventually, the crypto space needs to answer what use cases will the burgeoning infrastructure projects serve.

• There hasn’t been a substantial shift of talent from the US to Asia, but such conversations are increasingly beginning to emerge.

• Looking at Web3’s transformative impact in the Philippines, August saw the broader potential for crypto to effect meaningful changes in socioeconomic conditions.

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Launchy

What was the defining moment that drew you into the world of crypto?

In August of 2019, August became part of the Sequoia team, focusing on the Web2 landscape. His expertise spanned multiple domains such as FinTech, SaaS, consumer, and internet gaming. Additionally, he had a dedicated role in overseeing market activities in the Philippines across these various sectors.

In the early months of 2020, the wave of Non-Fungible Token (NFT) gaming started to gain significant traction in Southeast Asia, especially in the Philippines. August assumed a critical role at Sequoia during this period. He spearheaded due diligence processes for high-value assets like Axie Infinity and was instrumental in shaping Sequoia's investment strategy in this rapidly evolving market.

The Turning Point: August’s interest in Web3 technologies became particularly pronounced during this period. He was deeply intrigued by the transformative impact that Web3 gaming had on the lives of Filipinos. He observed that it was not just an avenue for wealth creation but also expanded access to essential financial services. August saw in this development the broader potential for cryptocurrency to effect meaningful changes in socioeconomic conditions.

What is CMT Digital?

CMT Digital serves as the cryptocurrency and blockchain investment arm of CMT Group, a storied US-based asset manager with over a 25-year history.

What sets CMT apart from other investment firms is its longstanding commitment to technology as a means to gain a competitive edge in the capital markets. This tech-focused philosophy traces its roots back to the founders of CMT, who guided the firm's evolution from traditional derivative trading to crypto trading (a decade-long journey) and subsequently into crypto venture capital (six years of experience).

In its early days, around the 2018 timeframe, CMT's initial fund had a broad focus on financial services and infrastructure investments, emphasizing strategic relevance to the trading desk and thematic alignment with the blockchain's developmental stage.

Today, CMT operates an opportunities fund primarily targeting pre-seed, seed, and Series A stages. The firm maintains a diverse investment portfolio across all crypto categories.

What sectors are you currently interested in, and what types of projects should be reaching out to you?

Any founder currently involved in or contemplating crypto ventures, especially in the Asia Pacific region, should not hesitate to get in touch with August. He genuinely enjoys engaging with founders, even those in the very early stages of development. CMT enthusiastically encourages founders to reach out, regardless of how nascent their projects may be.

Regarding CMT Digital's investment thesis, the firm sustains a broad-based portfolio that cuts across various crypto sectors. Nevertheless, they tend to allocate a considerable share of their investments to infrastructure-related ventures, primarily located in the U.S. and Europe. Conversely, in the Asian market, CMT Digital is noting a burgeoning trend towards consumer-centric applications in areas such as Decentralized Finance (DeFi), Gaming, Content Creation, and Social Networks.

On a personal note, August believes that the technology landscape has reached a pivotal juncture where sufficient infrastructure exists to start supporting meaningful applications. He emphasizes that while the partial readiness of this infrastructure is indeed significant, it also addresses an urgent requirement in the current investment cycle. Despite continued substantial investments funneling into infrastructure development, August contends that the industry must confront an existential query: What ultimate use cases will this burgeoning infrastructure serve?

What is your outlook on the crypto landscape in Asia?

August has yet to observe a significant influx of talent relocating from the U.S. to Asia, but he notes that such conversations are increasingly surfacing, even among companies within CMT Digital's portfolio. However, he does point out existing talent mobility within the Asia-Pacific region itself.

Singapore stands out as the dominant cryptocurrency hub in Southeast Asia, and August anticipates that the city-state will continue to maintain this status. Another emerging focal point is Hong Kong, which is experiencing an inflow of talent from Mainland China.

Rapid Fire Questions

1. What’s one book that any aspiring investment professional should read?

   • Big Mistakes: The Best Investors and Their Worst Investments by Michael Batnick.

2. What’s your biggest investment mistake?

   • Not focusing enough on founders.

3. What’s the most underrated use case of crypto?

   • DeFi.

4. What’s your most contrarian view in crypto right now?

   • Blockchain technology is undeniably valuable, but it may not represent the transformative paradigm shift some anticipate.

5. What’s the biggest risk that the crypto space is facing?

   • The lack of innovation in the space.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.