Learn more about Multicoin, a popular investment firm in the blockchain world.

After introducing several thematic investment reports written by the American blockchain investment institution Multicoin Capital to Chinese readers, ChainNews decided to delve into how this American internet-famous investment institution was established, how they think, and how they make decisions for its Chinese readers.

In an interview with ChainNews, Kyle Samani, the co-founder of Multicoin Capital, expressed that they have been paying attention to the Chinese market and will continue to invest more efforts into the Chinese market. Also, can you guess which project he is bullish on?

Author/Interviewer: ZhiXiong Pan

Advertisement - Scroll down for more content

In the world of cryptocurrency investment, if you are not familiar with the two founding partners of Multicoin Capital (hereinafter referred to as "Multicoin"), Kyle Samani and Tushar Jain, and have not read the trend reports written by them, then... oh my, you need to read this article carefully. After all, these two investors frequently write and publish reports on their investment philosophy, which hold significant influence in the mainstream cryptocurrency investment market.

This investment fund, headquartered in Texas, USA, was established in January 2017, focusing on cryptocurrency asset investments. It is a hedge fund company, but its investment approach is strictly "Thesis-Driven" or "investment theme-driven."

When evaluating the excellence of an investment fund, one usually looks at the fund's capital management scale and historical performance. However, due to the regulations of the U.S. Securities and Exchange Commission (SEC), many pieces of information about private equity funds are not publicly available, so there is a lack of official data to reference. Multicoin also refused to confirm specific information about its fund management scale to ChainNews.

ChainNews has collected information from various sources and obtained some information about Multicoin's fund management status for readers to reference: as a limited partnership investment fund, Multicoin had a fund management scale of approximately $10 million in December 2017; in May 2018, the fund management scale was around $50 million. According to CrunchBase, as of January 2019, the fund had raised a total of $75 million. Based on this information, Multicoin's current scale in the cryptocurrency investment fund market is considered above average.

A limited partnership can also be referred to as an LP/GP structure, meaning Multicoin has two types of partners, limited partners (LP) and general partners (GP). Limited partners are the fund's investors, while general partners are the fund's managers.

According to publicly available information compiled by Block123.com, Multicoin's LPs include prominent figures. Multicoin has received support from various well-known venture capital companies and key personnel in New York and Silicon Valley, such as David Sacks and Bill Lee from Craft Ventures, Marc Andreessen and Chris Dixon from a16z, Compound VC, Vy Capital, Passport Capital, Adam Zeplain from mark VC, Ari Paul from BlockTower, and Elad Gil, among others.

Looking at historical performance, Multicoin's returns have outperformed the overall cryptocurrency market.

ChainNews has received performance summary emails from Multicoin sent to its LPs and reported on Multicoin's performance throughout the entire year of 2018 at the beginning of 2019.

According to the email, Multicoin reported a 32.9% investment loss for the full year of 2018, but it was "better than the overall cryptocurrency market" as Bitcoin, for comparison, had over a 70% loss in USD value in 2018. Calculated from the fund's establishment in October 2017, by the end of 2018, the overall investment return was 67.5%. In the secondary market sector, Multicoin profited from shorting Litecoin, Ethereum Classic, and XRP but incurred losses from investing in EOS.

Although Multicoin made significant profits by shorting some cryptocurrency assets, they have always emphasized that their investment strategy is thesis or theme-driven.

Kyle Samani, Tushar Jain, and their team have been diligent in their research, and their investment logic is very clear. In summary, if we were to put it into one sentence:

Due to the erosion of consumer trust in governments and corporations, now is the time, which has generated three investment themes. Multicoin will formulate investment strategies around these three themes, namely

• Open Finance theme, also known as DeFi, corresponding to the gradual rise of applications in open finance or decentralized finance scenarios;
• Web3 vision, meaning users can control their own data, potentially disrupting data monopolies by tech giants;
• Borderless currency, including the concept of digital gold, indicating that the application scenarios for stablecoins will gradually increase.

These concepts will eventually be reflected in Multicoin's investment portfolio.

加密資產會創造互聯網歷史上一次最大的財富轉移。

The story of Multicoin's two founders, Kyle Samani and Tushar Jain, begins during their university days. Kyle Samani and Tushar Jain both attended New York University Stern School of Business and quickly became friends after starting their studies.

After graduation, they each pursued entrepreneurial ventures. In 2013, Kyle founded a company called Pristine, which developed software for Google Glass and surgical procedures. However, due to the cancellation of the Google Glass project, he was forced to sell the company at the end of 2015.

In 2016, Kyle came across something called "Ethereum" during its second phase "Homestead" launch, coinciding with a significant increase in search volume that month based on Google Trends historical data. This marked the first stable version of the Ethereum network, which gained widespread recognition during this phase, with an increasing number of miners.

Kyle found Ethereum to be the coolest thing he had ever seen for two reasons: the closure of Google Glass made him aware of the risks associated with centralized platforms, and a platform that no one can shut down is irresistible; at the same time, it presented a great investment opportunity as he realized that every financial institution globally is essentially a massive smart contract.

Based on his experience of founding and failing with a project, and his newfound discovery of Ethereum, Kyle began to rethink his approach. Eventually, he chose to pursue investment opportunities instead of creating a new project.

Kyle Samani wearing Google Glass

On the other hand, in July 2013, Tushar founded a medical IT company called ePatientFinder. As early as 2013, he became familiar with cryptocurrencies and bought two bitcoins after researching Bitcoin, perhaps considering it as his entry fee.

Initially, he did not realize that Bitcoin could be used for more than just black market transactions like those on the Silk Road. It was only after Kyle shared the Ethereum whitepaper with him that Tushar realized the potential of blockchain technology.

Tushar Jain

At the time, Tushar's company was building an online platform in the medical IT field. He discovered that these blockchain projects could actually replace many traditional online businesses. Tushar believed that cryptocurrencies represent a new organizational form for human economic activities, similar to the emergence of "public companies" at the end of the 15th century to the beginning of the 16th century, presenting a completely different organizational mechanism.

Ultimately, he chose to co-found Multicoin with Kyle instead of starting another entrepreneurial venture.