Source: Wu Says

In this interview, Qiao Wang, co-founder of Alliance and a well-known investor in the crypto industry, shared his investment strategies in the Crypto field. Alliance currently primarily invests in ultra-early projects valued at several million dollars. He detailed the investment and incubation of PUMPFUN in this round, which achieved at least 1000 times the return; as well as the investment in Moonshot, which yielded over a hundred times return. He stated that the success of the PUMPFUN project hinges on the youth and innovative capabilities of their team. He mentioned that the biggest change after Trump took office was the appointment of SEC chair and Treasury Secretary who are not hostile to cryptocurrencies, which would greatly improve entrepreneurial sentiment.

Opening Introduction

Colin: In recent months, due to the rise of some memecoin-related projects, the Chinese community has paid more attention to you. So I wanted to invite you to do a podcast and talk about this field. Could you start by introducing yourself, including your background and how you entered the crypto space?

Qiao: I was born in Jinan and immigrated to Canada at the age of 12. After graduating from university, I went to work in the United States. For the first six or seven years of my career, I was engaged in high-frequency trading in the traditional finance industry. In 2011, a colleague introduced me to Bitcoin. At that time, I didn’t buy it, but in 2012, another friend suggested I try investing, which led me to delve deeper into Crypto. In 2014, I participated in the ICO of Ethereum, which was my early investment experience in the Crypto field. Although it was a personal investment, it was somewhat similar to the nature of VC, as Vitalik is my alumnus.

In 2017, I joined Messari, where I was responsible for the company's product line and built the technical team. I worked at Messari for three years, and in 2020, I left Messari to start my own venture, founding Alliance, an incubator focused on cryptocurrencies, and I have been doing this ever since.

Colin: What prompted you to decide to start your own business?

Qiao: Actually, in the last year at Messari, our products, especially the B2B products, had made good progress. People thought Messari mainly focused on consumer-facing research and analysis tools, but in fact, Messari excelled in B2B business. At that time, we had already found the product-market fit. I really enjoy the startup phase from 0 to 1, but once it reaches 1, I’m not as interested in scaling the business from 1 to 10. So after leaving Messari, I kept thinking about how to continuously do things from 0 to 1, even doing it four to five times a year. This idea was the catalyst for me to start Alliance.

Team Composition and Investment Strategy of Alliance

Colin: In the beginning, did you have a few partners working on this together? What are their backgrounds?

Qiao: The positioning of Alliance is to invest in projects at the very early stage, so we are quite different from most VCs. We place a strong emphasis on deep involvement, enjoying helping founders find good ideas, develop go-to-market strategies, and fundraising plans in the early stages of projects. The goal of Alliance is to focus on 0 to 1 projects, helping four to five such projects each year.

Our partners are all very "crypto native," with about ten years of experience in this industry. One of my partners, Imran, is often active on Twitter, and people may know him; he was previously a professional VC. Another partner is Jacob. Then there’s another partner, Roberto, whose background leans towards Web2; he previously worked at YC and is one of its founders, with a deep understanding of the incubation and accelerator space.

Initially, we used our own funds without LPs, but as the number of projects increased and the investment amounts grew, we started to have LPs. Currently, the team is not large, with about fourteen to fifteen people.

Colin: Is the main work focused on investment, incubation, and research?

Qiao: Not entirely. We actually have a product team of five people, which makes up one-third of the company. Our investment and research team is relatively small, probably just three or four people. The product team’s job is to build an internal social network for the founders of the projects we invest in, allowing them to ask each other questions or discuss topics, such as their views on VCs, etc. This serves as a very interesting internal social platform. Next, we may develop an external social network to allow projects that we do not invest in to join.

Colin: Since the beginning, how many projects have you invested in? Are these projects all at the very early stage, like angel rounds?

Qiao: Yes, we have now invested in about 150 to 200 projects. Four to five years ago, the projects we invested in were not the earliest, as there were not many projects at that time, and the venture capital funding in the Crypto field was also limited, so our investments were similar to those of other VCs. However, in the past year or two, we have basically focused on the earliest Pre-seed stage.

Colin: What is the current scale of the entire fund?

Qiao: Now, looking at it from the VC logic, the scale of a VC fund changes with the post-investment valuation (mark-up).

Colin: According to your logic, did you start investing more in angel rounds or early projects one or two years ago? Was that a turning point for you? Before that, you might not have had much exposure to very early projects?

Qiao: Before that, most of the projects we encountered were indeed early-stage projects. There have been many changes in the industry over the past few years. Two years ago, the number of projects increased by one or two orders of magnitude compared to before, and the venture capital funding in the Crypto field also grew by one or two orders of magnitude. In this situation, different VCs would encounter projects at different stages and might even miss some projects. Therefore, we ultimately decided to focus on the very early stage, completely concentrating on Pre-seed.

Colin: Does your investment style lean towards gaming and DeFi, or consumer products?

Qiao: Not entirely. This actually relates to market conditions. For example, we have also invested in many infrastructure (Infra) projects, such as Arbitrum, which have performed very well, as well as other Layer 2 projects. However, this year, there are many projects in the infrastructure field, and VCs are also inclined to invest in infrastructure, which has led to inflated and unreasonable valuations for Infra projects. In such cases, we choose not to engage with these overvalued projects. Conversely, consumer projects often have lower valuations, especially those like the memecoins you just mentioned, which many VCs are hesitant to touch.

Colin: Can you reveal how many rounds your fund has had? For example, how have the returns been in the earlier rounds?

Qiao: We are currently in the third fund, with the first fund launched in 2021. 2021 was the worst year for the entire Crypto VC industry, but our first fund still performed in the top 5% of the industry, possibly even higher.

Colin: From the current perspective, or from this cycle, are there any particular opportunities or chances that have allowed you to delve deeper into the memecoin space? How involved are you with the currently mainstream memecoin products?

Qiao: In this cycle, the most successful project we invested in is PUMPFUN, which is at least a thousand times return project. At the time we invested in PUMPFUN, they were actually working on a different direction. They tried several different directions before finally establishing the current idea of PUMPFUN. Initially, we didn’t expect it to become a memecoin project. My thought at that time was that it could serve as a token launchpad, but I wasn’t sure what kind of token would be launched. I just felt it had potential, similar to Zora (an NFT launchpad). Zora has done very well, with stable income for several years, but it didn’t have a tradable token, so I thought a project like this was needed, which is why we decided to invest.

As a result, PUMPFUN eventually evolved into a launchpad focused on memecoins, which is common in early-stage investments; you can never fully foresee the final form of a project. However, later on, PUMPFUN indeed became one of the projects that sparked the entire memecoin space. After that, we also invested in Moonshot, where we were clear from the start that it would be a memecoin-type product, which was already very clear at the time of investment.

Successful Investment Cases: Background, Team Characteristics, and Success Factors of PUMPFUN and Moonshot

Colin: OK, what was the reason for choosing to invest in PUMPFUN initially? Of course, you mentioned earlier that you felt there was a need for such a token launchpad, but what kind of research did you do on their team at that time? Did you place a lot of importance on the team’s style and background when investing?

Qiao: When we invested in PUMPFUN, they were not actually doing a launchpad; they initially started as an NFT marketplace but shifted to their current direction after several attempts. When selecting this team, we mainly focused on the team rather than the specific idea. Especially in the Pre-seed stage, particularly for consumer applications, the success rate is very low, and the team is likely to adjust their direction, so the core focus is still on the team’s potential.

Colin: Are they a Chinese team?

Qiao: No, they are a European team.

Colin: Understood. Now looking back at their success, what qualities do you think the team has that made you optimistic about them? Is their success directly related to team characteristics, or is it more about luck?

Qiao: There is certainly a significant element of luck in successful projects, but there are also inevitable factors. The success of the PUMPFUN project hinges on the youth and innovative capabilities of their team. Many people have thought of this idea, but only the PUMPFUN team could truly execute it. I believe one reason is that they are very young; their CTO didn’t even attend university, with the highest education being high school, yet he is technically very strong. Their youth and technical prowess allow them to view problems differently and have a keen intuition about products.

Colin: Indeed, many hacker-type talents do not have traditional higher education backgrounds.

Qiao: Yes, at this stage, background is not the main consideration; we focus more on understanding their thinking process through communication and seeing their understanding and intuition about the product.

Colin: When you invested in PUMPFUN last December, what was the valuation approximately? Was it in the tens of millions?

Qiao: It wasn’t that high; our investments are generally in the millions, and our standard amount for the Pre-seed stage is 5 million dollars. We generally do not invest in projects with valuations in the tens of millions.

Colin: Since you are investing in early-stage projects, does that mean the failure rate is quite high? What do you estimate the failure rate to be?

Qiao: The failure rate depends on how you define failure. If a project goes to zero, then it counts as a failure. I would roughly categorize investment outcomes into three types: the first type is going to zero; the second type is recovering the principal or making a slight profit; the third type is achieving returns of 10 times, 100 times, or even 1000 times. PUMPFUN falls into the category of extremely high-return projects, which is an exception. So far, the zero-rate of the projects we have invested in is actually quite low, which surprised me. My expectation was that one-third would go to zero, one-third would recover the principal, and one-third would achieve returns of over ten times. But the reality is that very few projects have gone to zero; if the team is good enough and truly committed, they usually find a way to survive.

Colin: It seems that you have unique insights and methods when it comes to selecting teams. So, besides youth and drive, what other selection criteria do you have?

Qiao: Youth is not a standard; we have also invested in founders in their thirties or even older. The key is the match between the team's background and the project. If it's a memecoin launchpad, a younger team might be more suitable, but for infrastructure (Infra) projects, a team in their early twenties may not be competent and would need a more experienced technical background. Therefore, the critical factor is whether the team's background matches the project.

Colin: When you invested in PUMPFUN, was it equity investment or token?

Qiao: It was a hybrid. For consumer projects like PUMPFUN, they don’t need a lot of funding; we only invested a few hundred thousand dollars.

Colin: For a project valued at several million, that’s still a significant amount.

Qiao: Yes, our amount is not small, but for consumer projects, a few hundred thousand dollars is often enough. Sometimes, too much funding can become a hindrance.

Colin: What kind of support did you provide during PUMPFUN's success?

Qiao: The core idea of the project was provided by us, but the execution ultimately lies with the team. A good idea is only 1% of success; 99% is in execution. An excellent team can usually identify good ideas and execute them effectively. Many successful ideas are not particularly novel; the key is in execution.

Colin: Did PUMPFUN face many competitors before their success? How did they win the competition?

Qiao: Yes, PUMPFUN had some competitors from the beginning, although not many. However, as their revenue reached tens of millions of dollars, competitors quickly increased. The key to their success was their execution and deep understanding of users, as they themselves are users.

Colin: How many people are on their team?

Qiao: There are currently about a dozen people; initially, there were only three.

Colin: The profit per person is very high.

Qiao: Yes, many excellent Web2 startups are like this. Instagram had only a dozen people when it was acquired by Facebook.

Qiao's Views on the Current Memecoin Space and Market Potential Analysis

Colin: I have two more questions about PUMPFUN. First, what do you think their future direction will be? Will they undergo any transformation or upgrade, such as moving towards a more centralized exchange direction?

Qiao: I have some understanding of their future direction, but I cannot disclose that at the moment.

Colin: Understood, no problem. The other question is, do you think they will issue their own token? Or will they do this to some extent?

Qiao: I can't say that either, hahaha.

Colin: Alright, then let’s talk about another phenomenal project—Moonshot. When did you start connecting with them? How did the project team find you?

Qiao: This project is from our last fund, and we connected with them around June or July. I don’t know how they found us, but they applied through our website, and after a few discussions, our team was very impressed with them. This team doesn’t have any prominent background; they are just two young people.

Colin: Which country are they from?

Qiao: They are a team from the United States, and one of the founders is a student at Duke University; that’s the only impression I have of their background. Normally, VCs wouldn’t invest in such a team, but after talking with them, you realize they have a great feel for the product.

Qiao: The idea behind Moonshot is very simple; it solves a direct problem. For example, on centralized exchanges like Coinbase or Binance, you can deposit fiat currency and then purchase tokens, but those tokens are already listed. Moonshot allows users to directly purchase memecoins with fiat currency. This idea is very simple, but as long as the problem exists and a sufficiently good solution is provided, it can develop very well.

Colin: So their advantage is the ability to purchase memecoins with fiat currency, or is it more like a curated memecoin platform?

Qiao: Curation is very important. When we discussed this, we found that the uniqueness of their team lies in their decision to only recommend the version of memecoins with the highest liquidity within the same category. For example, for the same category of Trump memecoins, they won’t show multiple versions to users but will filter out the highest quality one. This simplified user experience is particularly good for retail investors.

Colin: What was their valuation when you invested?

Qiao: We don’t invest in projects with valuations in the tens of millions.

Colin: Isn’t their valuation already very high now? Do they have the latest round of financing?

Qiao: Their current valuation is about 100 times the initial investment.

Colin: It seems that PUMPFUN and Moonshot are your two most successful projects in this cycle; are there any others?

Qiao: We previously invested in a project called Glow, which belongs to the decentralized energy (DePIN) field, mainly focusing on carbon offsetting (carbon credits). Their recent round of valuation reached 160 million dollars, backed by the globally leading clean energy VC USV.

Colin: You are also involved in memecoin investments; how do you view the sustainability of this space? Since both PUMPFUN and Moonshot focus on this, if this space lacks sustainability, these projects will also be affected.

Qiao: Even if we hadn’t invested in PUMPFUN and Moonshot, I would still believe that the memecoin space has high sustainability. What is the core purpose of buying memecoins? Many people do it to "turn their fortunes around." In contrast, buying VC coins (tokens supported by VCs) is difficult to achieve such returns, as many VC coins start to decline as soon as they are listed. Additionally, while some VC coins may perform well during specific market cycles, such as in the DeFi space, ordinary retail investors usually do not understand these areas and prefer to buy things they can easily comprehend. Therefore, these two points combined give memecoins a certain level of sustainability.

Colin: That’s true. In the current cycle, VC coins have faced strong challenges from memecoins, partly due to regulatory impacts. Due to regulatory restrictions, ICOs and many launchpad projects cannot proceed, to some extent, memecoins have replaced the opportunities for retail investors to participate in ICOs early on.

Qiao: Even if VC coins could do ICOs, what would the final result be? First, retail investors may not understand the content of these VC coin projects; second, investments often take months to unlock. In contrast, memecoins provide immediate liquidity after investment. Therefore, the existence of ICOs does not impact memecoins; rather, it has a greater effect on VCs, as many projects find it increasingly difficult to raise funds from VCs and thus choose to go directly for ICOs.

Expectations for Changes in U.S. Regulatory Policies and Their Impact on the Crypto Industry

Colin: However, I think expecting Trump to quickly relax policies in this area after taking office may not be very realistic. There may be a significant difference between his pre-election promises and post-election actions. But since you are in the U.S., I would still like to hear your thoughts on what certain changes Trump’s election would bring to the Crypto industry.

Qiao: The most obvious change should be that Trump will not appoint someone like Gary Gensler to head the SEC (Securities and Exchange Commission). This is very critical, not only for the SEC but also for the Treasury, as both departments are very important.

Colin: Yes, the Treasury is responsible for stablecoins and some related areas.

Qiao: Right, the Treasury not only manages stablecoins but also deals with privacy issues, and even self-custody falls under their jurisdiction. The Treasury actually has much greater power than the SEC; it’s just that over the past four years, they haven’t specifically targeted Crypto. If the next Treasury Secretary has an unfriendly attitude, it could have a very negative impact on the industry.

Colin: I remember that when Trump took office, a head of the currency department at the Treasury was very supportive of Crypto.

Qiao: Yes. So the most direct change is that if the SEC and the Treasury no longer suppress Crypto, then entrepreneurs in the U.S. and even globally will be more willing to pursue Crypto projects. Over the past four years, the SEC has mainly targeted legitimate projects rather than those that are truly violating regulations; FTX was hardly regulated.

Qiao: Therefore, the most direct impact is the enhancement of entrepreneurial sentiment, which is very beneficial for Crypto. This change can almost be seen immediately; it doesn’t require new laws or regulatory adjustments—just a change in attitude, and entrepreneurial sentiment can improve right away. Besides sentiment, the new laws you mentioned, such as those regarding stablecoins or ICOs, do indeed take time to push forward. However, with both houses of Congress currently led by Republicans, the likelihood of passing laws is higher, but it still requires time.

Colin: After your investments in PUMPFUN and Moonshot were successful, have you seen a noticeable increase in projects seeking you out?

Qiao: There has indeed been an increase. In fact, even before PUMPFUN and Moonshot, most entrepreneurs in the U.S. and Europe were already aware of us. As you just mentioned, the Chinese community may have only recently started to truly understand us. In fact, in our most recent round of projects, the proportion of Chinese teams is quite high, about 30% to 40% are from China. Chinese teams find it difficult to raise funds from Western VCs, mainly due to cultural and language barriers, but for me, these are not issues.

Future Investment Directions and Advice for Chinese Entrepreneurial Teams

Colin: You have four years of experience in early-stage incubation and investment, and you just mentioned that about 30% to 40% of your investment projects are Chinese teams. Do you think there are differences between Chinese entrepreneurs and those from the U.S. and Europe?

Qiao: Essentially, there isn't much difference; the main differences are in language and culture. For example, there can be some barriers when communicating with Western communities or VCs. I find that many Chinese projects place a lot of importance on gaining support and endorsement from Western VCs. I always tell them that this is not really important; the value of endorsement is minimal. The key is to create a good product, which will naturally attract good VCs to come to you. Of course, the community does have some influence, which is a cultural difference.

Colin: Indeed, creating a product with real users and revenue is not easy. Successful projects like PUMPFUN are rare; there might be only one among thousands or tens of thousands of projects. Do you think this type of product is foreseeable, or does it require luck and market competition to drive it?

Qiao: Luck plays a significant role. PUMPFUN is an example; even when they first started this project, we provided the idea, but we did not anticipate it would grow this large. The element of chance is very high, almost over 90%.

Views on the Current Popularity of Memecoins

Colin: Do you think there are any changes in the hotspots of this cycle compared to the last cycle? Around 2019, fields like DeFi, NFTs, and gaming were very popular, but this cycle seems to have only memecoins as a hot topic?

Qiao: This cycle is indeed somewhat different; the main hot areas are memecoins and stablecoins. However, stablecoin projects typically do not issue tokens.

Colin: Yes, projects supported by Circle or Tether tend to be more stable. Will you invest in new stablecoin projects?

Qiao: We will not invest in stablecoin projects that compete with Circle or Tether, but we will invest in some application layer or infrastructure (Infra) related projects, such as cross-border payments. In the Infra space, we have invested in a bridge project that was acquired, which provides APIs for developers and can be seen as a kind of stablecoin infrastructure.

Colin: What do you think about the phenomenon of memecoins being concentrated on Solana? And the competition between Solana and Ethereum?

Qiao: I’m not entirely sure why memecoins are concentrated on Solana, but I suspect it has to do with early influencer Anson. He brought a large number of users to Solana, and their participation may have driven the growth of memecoins.

Colin: Indeed, influencer promotions are very important for memecoins. For example, Murad's recent promotions have brought new momentum to memecoins. His thinking is very clear; I did a podcast with him a few days ago, and it was indeed special.

Qiao: Yes, Murad is indeed impressive. Although many traditional VCs do not think highly of him, you can tell from his speech that his thinking is very clear.

Colin: Indeed, his logic is very straightforward. There are many people who do not recognize someone like Ansem, but he actually has a lot of ideas and a very strong technical background.

Standards, Processes, and Subsequent Support for Team Selection

Colin: Returning to the earlier question, you have received so many project applications; what are the standards and processes for screening? How did you initially filter out the projects of interest?

Qiao: The screening work is mainly my responsibility. I review four to five thousand projects each year, looking at about a dozen each day. I don’t have specific standards; I mainly rely on intuition. Through their application materials, I can sense the clarity of their ideas, their background, and the attractiveness of the project.

Colin: Then, if they pass the initial screening, how do you further engage with these teams?

Qiao: If they pass the initial screening, I will arrange for our partners to chat with them. Many excellent projects can be judged in just a five-minute conversation; although we say it’s a 20-minute chat, a few minutes are usually enough.

Colin: What kind of support do you provide after investing?

Qiao: We mainly help in three areas: first, assisting them in entering the market, finding users, and analyzing user feedback; second, if the initial idea of the project is not mature, we will discuss new ideas with them; third, we help them with fundraising.

Views on Recent Performance of VC Tokens, TON, and the Impact of Trump's Election

Colin: What do you think about the recent poor performance of VC-supported tokens, such as some projects experiencing significant declines on Binance?

Qiao: The phenomenon is simple: there are too many project tokens and insufficient funds. The FDV (Fully Diluted Valuation) of VC coins is too high, and no one is willing to take over, leading to price declines. In contrast, the initial FDV of memecoins is usually lower, allowing for natural growth. Centralized exchanges are also responsible for this phenomenon, as they listed some projects without a user base, ultimately harming retail users.

Colin: What do you think about the recently popular TON blockchain games? Have you considered investing in similar projects?

Qiao: We have been looking for opportunities to invest in TON blockchain projects, but we have not yet found particularly good teams. TON is indeed unique as the only Web3 project supported by a large social media platform, but it also faces some challenges, such as user quality and token performance issues.

Colin: How long do you think this Crypto bull market will last under Trump's influence?

Qiao: I’m not sure how long it will last, but the outlook for the next three to six months is very good. However, it mainly depends on macroeconomic policies; Trump’s Crypto policies are one aspect, but macroeconomic factors are more important.

Colin: Alright, we’ve discussed a lot today. Thank you very much for your time, and I hope we can delve deeper next time.

Qiao: Sure, thank you.

免责声明：本文章仅代表作者个人观点，不代表本平台的立场和观点。本文章仅供信息分享，不构成对任何人的任何投资建议。用户与作者之间的任何争议，与本平台无关。如网页中刊载的文章或图片涉及侵权，请提供相关的权利证明和身份证明发送邮件到support@aicoin.com，本平台相关工作人员将会进行核查。