Blockchain investor Miko Matsumura on picking winners: Investing in teams over projects
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For blockchain investor and unicorn builder Miko Matsumura, it’s always about investing in a team rather than a project. Matsumura is a managing partner of Gumi Cryptos Capital (gCC), a San Francisco-based $500 million early-stage blockchain investment fund.
One of the latest projects that gCC invested in is the strategic partnership between Greek-founded web3 infrastructure company Mysten Labs and Ethos, creators of the Ethos Wallet product, which enables users to discover and experience next-generation decentralized applications (“dApps”) on Sui Layer 1, a blockchain that redefines asset ownership.
In an interview with The Recursive, Matsumura shares his thoughts on gCC’s latest investments, their philosophy, how the fund chooses where to invest, what’s next for the blockchain and crypto space, and more.
The Recursive: Mysten Labs and Ethos Partnership on Sui – What Will It Bring to the Industry?
Miko Matsumura: We are very excited about the Sui ecosystem – what is exciting about the Ethos wallet is that their approach to wallet is with a much deeper integration into the ecosystem. So the idea might be closer to an app store model than just a wallet. In a way, the interactions, the games, the applications are really integrated, both discovered through the wallet, but also in a way integrated into the wallet.
So your interactions with the Sui ecosystem are very native—so you just flow, you go through this kind of collection of applications, and I think one of the things we’ve noticed in the launch of the Sui platform has been that they’ve really focused on to deliver very high quality, one of a kind gaming experiences.
We feel that an app store model and the concept of a game store is a very popular idea – whether it’s something like streaming or these kinds of browser experiences that make a lot of sense.
When you look at places like the Google Play Store on mobile, or if you look at places like the Apple App Store for iOS, you definitely end up seeing a lot of things related to entertainment. And I feel like that will be a pretty big part of the Mysten Lab ecosystem.
We’re definitely excited about that – and that’s why gCC invested in this project, which is related to the domain task, around what we think is going to happen, but obviously we also just think that this team is world class and super awesome as well .
What is gCC’s blockchain and crypto investment philosophy and strategies?
We are basically a very strong builder-centric fund. We really only invest in the early stages of web3 projects and startups and in this particular case we definitely lead more than we follow.
Because we see ourselves as a builder-customer – all three partners have founded and scaled and built and exited companies, including M&A or IPO or different types of outcomes. And because of this, we as a fund are very loyally dedicated to finding these builders.
One of the things we like to call them is “Gumicorns” which is kind of like a unicorn, but in a way it’s more like a specific type of individual. So, you know, we definitely saw that with Nadia (ed. note – Nadia Eldeib), who’s the CEO and founder of Ethos Wallet, and we definitely feel like that’s a pretty amazing achievement.
How do you identify potential investment opportunities in early stage companies?
One of the absolute types of critical factors is very much the type of team – so we’re definitely super team-centric. The other thing we’re really looking for – we’re kind of focused on builders and construction. And we see the crypto winter markets as the best for builders, so we’re really focused on this very, very simplistic rubric to look for people who are essentially building software that other people want to use.
So essentially we’re really looking at themes like mass adoption, that brings us into themes like financial services, gaming – so we’re just looking for those people. We are definitely happy to have very sophisticated and professional product people, coupled with sophisticated engineers to deliver. So our main focus is to kind of quickly deliver very powerful, very usable software.
And in a way, part of our criteria is really looking for that, and we love to see that combination. So if you look at the kind of founding team like at Ethos Wallet – kind of a construction engineer combined with a product person, that’s the combination that’s very powerful for us.
The building software part is really the technical part, and the product part is the one that people want to use. So in a way these two characters are a very important part. For example, if you go back to the founding of Apple, you can really see the classic Steve Jobs and Steve Wozniak.
Essentially, you have a kind of product, a visionary person, and then you have like a kind of engineer. So those are the things that I think we find most compelling and attractive. Because when we think of these two things as creating software, and people who want to use it, those are the two sides of that point.
What type of sectors or projects would you say are most interesting in the industry right now?
I would say that in vertical industries, we tend to focus on financial services, including DeFi. We also tend to focus on things like games and game-related projects. I think one of the exciting things about wallet infrastructure is that it’s definitely horizontal.
We believe that just the basic wallet functionality is quite commoditized. But we feel that an approach Ethos is taking, where you really see more of an app store with application discovery, becomes a little more differentiated.
Especially with the kind of new ecosystem like Mysten Labs, you tend to see it as a very good opportunity for new players to emerge and provide new infrastructure.
How has the behavior of investors in blockchain and crypto changed in recent years?
I think one of the biggest changes in the infrastructure investment paradigm is that we’re really moving towards modular infrastructure. So we’re excited about this kind of modularity, and it becomes more risk-aversely investable. I think the average time to become a unicorn in Web 2, according to the book “Super Founders” is about four years, median time, and then it starts to decrease around seven years.
Essentially, if your project will take about four to seven years to bring to scale, you may be a suitable target for raising venture capital. Whereas if your project takes 10, 20 or 30 years to ship, or just start showing results, it’s probably a poor candidate for venture capital – because the funds don’t operate on that time scale.
One of the things we’ve seen in terms of the changes in the industry is that this idea of modularity creates an opportunity for new money to go to new places. And that requires something that’s monolithic, like a Layer-1 that breaks into L1, L2, or it breaks it up into chunks that can all be funded independently.
Which I think gives these parts a better granularity to be more compatible with venture investing – whereas I feel the traditional model really borrows a lot from open source.
In light of current market conditions, what advice would you give to investors looking to enter the blockchain space?
It is very, very important to have adequate diversification because I feel there is a lot of risk in this market. So my advice to anyone jumping into this market should definitely be that you need to try to stay diversified.
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