Chain Venturer: Michael Tiew of LongHash

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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 Michael Tiew from LongHash Ventures.

Michael is the Program Lead at LongHash Ventures’ accelerator program. He joined the crypto space in mid-2022 after working in private equity and management consulting.

Now, he’s working to build the best web3 accelerator in Asia.

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

-Marco

Over the past 24h, the crypto markets finally made a move that broke the stagnant price action. Unfortunately, it’s going down, not up.

• The total crypto market cap fell below $1.1 trillion. We just had one of the biggest liquidation events ($1 billion+) since the blowout of FTX.

• Open interest, which signaled how levered the market is, was at the same high as the $69,000 BTC price top.

At the same time, BNB levered positions are getting liquidated onchain, which could spell problems for Binance and CZ. $30M has been liquidated in the past 24h, with $171M worth of BNB remaining.

Enjoy your weekend and don’t get liquidated!

Michael Tiew, Program Lead at LongHash Ventures

Michael Tiew is the Program Lead at LongHash Ventures’ accelerator program. LongHash is a Singapore-based investment firm.

LongHash launched its second crypto fund with $100M AUM in Q3 2022. Its accelerator program is called LongHashX.

Having previously taken on roles in private equity and management consultant, Michael eventually jumped into crypto in mid-2022. Since then, he has helped LongHash build out one of the most notable web3 accelerator programs in Asia.

Here’s my conversation with Michael Tiew.

Quick takeaways:

• LongHashX has run 10 cohorts, incubated ~75 projects, and helped these projects raise ~$150M in funding.

• True “DeFi” with 100% decentralization won’t be successful, there will be different types of DeFi depending on the use cases.

• Being too much in our own crypto bubble without understanding other industries will limit our understanding of products that consumers actually want.

• Unique nuances in blockchain technology and the difference in user base in every jurisdiction would make a rocket internet model not as easily implementable in crypto.

• In Asia, the fact that the regulators are willing to construct a helpful framework and still want to have the builders in the country signals a very positive momentum for crypto builders.

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What’s one defining moment that made you decide to jump into crypto?

In 2018, Michael stumbled upon the world of crypto and participated lightly in the markets. In 2021, as he was still working in his old job, Michael found himself becoming much more obsessed with crypto, having seen the emergence of DeFi and NFTs. He found himself taking a more serious stance on crypto; and with better financial resources at his disposal, he saw an opportunity to dive deeper.

The moment: while he was working from home during the Covid-19 lockdown, Michael found his computer screens slowly filled with charts and crypto reading materials instead of PowerPoint and Excel.

Eventually, Michael decided to jump into crypto in mid-2022 when he chose to work for LongHash. Interestingly, the Luna collapse happened around the same time he made the jump to work in crypto.

What is the difference between LongHash Ventures and Accelerator?

LongHash was launched in early 2018 by Emma Cui, who, like Michael, is an ex-McKinsey professional. Michael mentioned that the reason Emma started Longhash was because she identified a gap in the space, as there was no notable web3 accelerator in Asia at that time.

LongHashX

LongHashX has a three-month program that is similar to the Y Combinator program with a unique spin. LongHashX always partners with the ecosystem to run the cohorts. Thus far, the program has run 10 cohorts, incubated ~75 projects, and helped these projects raise ~$150M in funding.

LongHashX has 4 cohorts coming out this year:

• LongHashX Zero Knowledge Accelerator

• LongHashX ATOM Economic Zone Accelerator

• LongHashX Safe Accelerator

• LongHashX FVM Genesis Accelerator

LongHash VC

LongHash VC started in 2021 and is currently managing two funds, one focusing on DeFi and the other on infrastructure. LongHash launched its $100M second fund in August 2022. In total, they have raised more than $150M in the past five years.

LongHash VC invests primarily in the infrastructure level and LongHashX comes in to help build projects and bootstrap the ecosystem on top of it.

For example, LongHash is investing in Neutron as VC and LongHashX run the LongHashX ATOM Economic Zone Accelerator, where the program is focusing on accelerating projects on Neutron and other Cosmos Partner Chains, in partnership with Neutron and ATOM Accelerator DAO.

LongHashX and LongHash VC are managed by separate, dedicated teams.

How does LongHash fund the accelerator program?

LongHashX partners with notable crypto projects to run cohorts.

For example, a Layer 1 blockchain project would work LongHashX to run a cohort specifically for founders that are building on top of that Layer 1 blockchain.

LongHashX then has the opportunity to invest in the projects that are participating in the cohort. For each of the teams being accepted, LongHashX invested $100K at a $5M post-money valuation. There’s also a chance for the sponsor (and other investors) to co-invest with LongHash X.

At the end of the cohort, there’s a demo day for projects that want to raise another round. On the demo day, additional investors can come in and participate in the new round, including LongHash Ventures.

What makes the LongHash accelerator unique?

LongHashX extends a range of offerings within its 3-month accelerator program.

• Firstly, there's the crucial aspect of funding.

  • Many teams that approach LongHashX are still at an early stage in their endeavors. These could be small groups of engineers fresh out of major tech firms or institutions like Stanford, eager to embark on new projects. LongHashX often becomes their first source of financial support, providing the initial backing for their ideas.

• Secondly, the program offers fireside chats and workshops while opening doors to a vast network of web3 professionals.

  • Participants in the accelerator gain access to the extensive LongHash network, as well as the valuable ecosystem partners associated with it. These workshops or fireside chats hosts experienced web3 professionals to do sessions on product design, community building, fundraising, tokenomics, and many more — for the benefit of the program’s participants.

• Thirdly, a dedicated venture builder is assigned to each project.

  • This dedicated professional collaborates closely with the project throughout the program, offering tailored support and expertise. One can think of them as temporary employees or advisors.

In a nutshell, LongHashX's accelerator program encompasses funding, network expansion, dedicated mentorship, and an overarching comprehensive ecosystem for fostering innovation and growth.

What are LongHash’s SoulBound Tokens?

SBTs (SoulBound Tokens) are non-transferable NFTs that act as digital identity tokens tied to a specific crypto wallet.

Michael stated that reputation has become something that is very important when we talk about identity in the digital space. SBT provides the ability to better track “proof” of contribution.

• LongHash has 100+ mentors that help in the program, every time they make a contribution LongHash will record it and will mint SBT for them.

• LongHash also has a scouts network that helps them find early-stage projects. If the project is accepted to the program, LongHash will mint the SBT to the scout.

LongHash is still experimenting with the utility of the SBTs. Some ideas being floated are access to exclusive events that LongHash held, exclusive access to co-invest, etc.

The end goal is to build the social graph through SBT for the LongHash ecosystem.

Crypto is open-source — why haven’t we really seen a good operator that is able to copy other projects and execute a better protocol?

Question context: The venture builder element of LongHashX reminds me of Rocket Internet. The venture studio is infamous for copying successful Western startups and replicating them with high execution speed in Emerging Markets (EMs).

We have seen this model being used in other chains (just look at the Solana DeFi ecosystem, the fees are a race to the bottom), but it has not been implemented successfully in Ethereum. Players with first-mover advantage such as Uniswap is still dominating the DEX landscape.

In theory, this should be extremely feasible in crypto. Why haven’t we seen any successful venture builders?

A lot of people have tried to fork Uniswap but without much success. It comes down to two things, distribution, and liquidity.

• Uniswap is still the go-to place for most onchain traders out there, with the best and most notable branding.

• Also, Uniswap has been innovating continuously. The team isn’t sitting idly by and waiting for others to dethrone their market dominance. For instance, Uniswap just released UniswapX. The fact that they keep innovating means that they can continue to stay as the top player in the space.

The rocket internet strategy might not be as easily doable in crypto because of localities with jurisdictions and chains.

There are localities that are more appreciated in certain countries, or certain chains.

• For example, Asian projects are very good at the speed of execution, often enables by a much more affordable talent pool. We’ve seen similar portfolio companies that have raised the same amount of funding, differ significantly in their execution because of the jurisdictions.

• For chains, a good example of localities is zkSync’s native account abstraction. So LongHashX, as an accelerator, when we look up projects that are built on zkSync, we will look for a product that really understands the power of native account abstraction.

These unique nuances in blockchain technology and the difference in user base in every jurisdiction would make a rocket internet model not as easily implementable in crypto.

How’s the crypto environment in Singapore post-Luna, 3AC, and FTX?

From the builders' side, there are still a lot of activities in Singapore. Founders are still staying in the space, and the sentiment in Asia and Southeast Asia, in general, is still very positive.

From the regulation side, there are a lot of frameworks being worked on by the Singaporean regulators (segregation of funds, stablecoin rules, etc.) to mitigate the chance of fraud. The fact that these regulators are willing to construct a helpful framework and still want to have the builders in the country signals a very positive momentum for builders in crypto.

Rapid Fire Questions

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

   • The Power of Law: Venture Capital and the Making of the New Future by Sebastian Mallaby

2. What’s your biggest investment mistake?

   • Not selling XRP at the top and using too much leverage

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

   • Social dApps

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

   • True “DeFi” with 100% decentralization won’t be successful, there will be different types of DeFi depending on the use cases

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

   • Being too much in our own crypto bubble without understanding other industries, which limits our understanding of products that consumers actually want

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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.