Cryptocurrency VC SLianGuairtan Founder How does SLianGuairtan invest in the cryptocurrency industry

Exploring the Cryptocurrency Industry A Look into SLianGuairtan Founder's VC Investing Methods

Author: Marco Manoppo, Chian Catalyst Column Chain Venturer; Translation: LianGuai0xxz

Melody He is the co-founder and partner of SLianGuairtan Group, a leading blockchain investment and consulting firm based in Singapore and Hong Kong. She also leads the consulting business of the group, SLianGuairtan Advisory.

Melody’s career began in the investment banking division of Goldman Sachs in Hong Kong, where she made significant contributions to a number of financing and M&A transactions, including the notable Baidu IPO.

With ten years of investment banking experience, Melody ventured into early-stage investing and joined MOX/SOSV, a top global accelerator venture capital firm, as an investment partner.

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Ultimately, Melody founded SLianGuairtan in 2017. Through SLianGuairtan Group, Melody has collaborated extensively with renowned crypto projects such as SweatCoin, Pintu, WilderWorld, BitDAO, Qredo, Dapper Labs/Flow, Solana, Blockfolio, Blockstack, Origin, and Deribit.

This is my conversation with Melody He.

Key Highlights:

SLianGuairtan Group has three unique divisions that allow the company to capture entrepreneurs’ longer life journey.

SLianGuairtan Labs recognizes that the best ideas are not internally generated, and the best founders are not hired CEOs.

Fast money associated with token issuance can actually lead to faster collapse as it may lack the support of deep market understanding.

While cryptocurrencies have an open-source nature, simply copying existing products and adding tokens is not enough to create competitive and differentiated products.

The transparency and permissionless nature of tokens can accelerate network growth, making it more agile than traditional models.

What was the decisive moment that attracted you to the crypto space?

In 2012, Melody founded a startup in Beijing. For her venture, she hired graduates from top Chinese universities as engineers. Coincidentally, these engineers spent some time experimenting with Bitcoin early on, which was Melody’s first exposure to cryptocurrencies. However, she didn’t pay much attention to it at the time as her focus was on the mobile technology revolution.

With the booming growth of the iPhone, Melody and her team were dedicated to developing innovative mobile experiences. They explored different ways in which users interacted with mobile-first products and experimented with new business models. Because of this, they didn’t prioritize cryptocurrencies or see its potential.

At the end of 2014, Melody moved to Singapore, where there was a small but growing startup ecosystem with a special interest in fintech. Melody attended many fintech events and noticed an increase in startups using blockchain technology. However, these startups mainly focused on using blockchain for tasks such as managing company stocks and fundraising (cap table), rather than focusing on the tokens themselves.

At around the same time, Melody also came across a company that was trying to use Bitcoin as a global payment center currency. This idea appealed to Melody because she had experienced high bank fees and exchange rates when sending money from China. As a result, Melody delved deeper into the potential applications of Bitcoin.

In 2017, Melody decided to invest in ICOs as a learning experience. This experience deepened Melody’s understanding of token sales and their potential for global fundraising, as well as how to use tokens to build user communities.

Later that year, Melody and her team founded SLianGuairtan, an investment and consulting firm that aimed not only to invest in crypto startups but also to provide assistance and advice to companies in building their token issuance and distribution, particularly in Asia.

Since its establishment, SLianGuairtan has collaborated with industry giants such as Solana, Flow, Dapper Labs, and Stacks.

What is SLianGuairtan Group?

SLianGuairtan Group is a blockchain consulting and asset management company. The company consists of three components.

SLianGuairtan Advisory: The consulting division of SLianGuairtan Group, helping cryptocurrency companies with fundraising, mergers and acquisitions, and other consulting/transaction activities.

SLianGuairtan Capital: The asset management division of SLianGuairtan Group, with hedge fund and venture capital tools.

SLianGuairtan Labs: The risk studio division of SLianGuairtan Group, helping founders in co-creating companies.

What sets SLianGuairtan Group apart?

SLianGuairtan Advisory focuses on later-stage companies, SLianGuairtan Capital focuses on seed to Series A funding, and SLianGuairtan Labs targets the pre-seed stage.

Through these three divisions, SLianGuairtan is able to capture the longer lifespan of entrepreneurs from early seed to later stage. This structure also provides SLianGuairtan with more potential sources of income in different market cycles.

SLianGuairtan Labs is the latest entity of SLianGuairtan Group. Can you explain its idea in detail?

SLianGuairtan realized that infrastructure projects need a thriving ecosystem to attract developers to build applications. To address this, SLianGuairtan Group launched SLianGuairtan Labs, a risk studio responsible for incubating projects to the MVP stage, then hiring suitable CEOs and spinning them off with external funding.

However, SLianGuairtan Labs later realized that the most innovative ideas often come from external sources, and the most effective founders may not necessarily be hired CEOs.

SLianGuairtan Labs has now shifted its strategy to a co-building model, holding 15-20% equity in the company while actively participating in early-stage ideation, development, business strategy, and marketing.

Why hasn’t the “Rocket Internet” risk studio model been successful in the cryptocurrency field?

According to Melody, the new SLianGuairtan Labs approach adds more value than previous strategies. She emphasizes the drawbacks of risk studio models like Rocket Internet in the cryptocurrency field because the success of web3 startups often stems from unique insights and a deep understanding of the industry.

Simply copying existing products and adding tokens is not enough to create competitive and differentiated products. That’s why even though the code repositories of many popular products are open source, the Rocket Internet model still doesn’t work well.

SLianGuairtan’s experience also suggests that fast money associated with token issuance can actually lead to faster collapses because it may lack a genuine vision or deep market understanding as support. Melody points out that even early successful projects like Sushiswap struggle to beat Uniswap in competition.

Which industries or types of projects is SLianGuairtan Group currently interested in?

On the SLianGuairtan Labs side, they are actively seeking opportunities in the consumer cryptocurrency space.

The team is primarily composed of individuals with product and institutional backgrounds who are passionate about exploring the integration of NFTs in consumer engagement, particularly in areas such as membership, loyalty points, and participation programs. The goal is to foster the development of industries that are highly relevant and directly impact consumers.

In terms of investment, SLianGuairtan Capital maintains a broad mission of exploring opportunities across the entire cryptocurrency field. However, Melody notes that the group is not focused on certain areas, including investments in exchanges, brokers, and market-making teams.

Instead, SLianGuairtan operates three distinct funds, each with a specific focus:

Hedge Fund -> DeFi

Venture Fund -> Infrastructure

Venture Fund -> Metaverse, gaming, and NFTs

Regarding Uniswap UI fees, we’ve seen debates about whether tokens or equity capture value. What are your thoughts?

Melody believes that the transparency and permissionless nature of tokens can accelerate network growth, making it more agile than traditional models.

In addition, tokens are jurisdiction-agnostic. They provide global operations with flexibility and speed. Achieving this through equity would be much more challenging due to limited jurisdictions. Furthermore, tokens are purely digital and have smart contract integration.

However, while tokens can be an excellent tool for capturing participants, revenue may still flow towards equity holders. Challenges arise especially during market downturns and when the fragility of the company’s foundation becomes apparent, resulting in conflicts of interest between token holders and equity holders. Such conflicts can expose flaws in investor base and equity structure design.

Regarding SLianGuairtan’s investment strategy, Melody prefers simple models. Either directly invest in equity and use tokens as user rewards, or purely invest in infrastructure projects where the main value is usually in the tokens.

Quick Q&A

Which book should ambitious investment professionals read?

The Power Law: Venture Capital and the Making of the New Future – Sebastian Mallaby.

What is the biggest investment you missed out on?

Missed out on OpenSea’s first round of funding.

What is the most underestimated use case for cryptocurrencies?

Prioritizing user experience and pragmatically choosing partially centralized applications to provide high-quality, consumer-centric products.

What is your contrasting view on cryptocurrencies now?

The next wave of successful user-centric companies may build their own public chains and drive infrastructure development with specific use cases.

What is the biggest risk in the cryptocurrency field?

The existence of cryptocurrency boom-bust cycles, frequent hacker attacks, and negative publicity can hinder widespread adoption and keep users, applications, and regulatory agencies away from the technology.

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