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Tony Cheng, Managing Partner at Foresight Ventures, on Crypto Venture Capital and Investing

In an exclusive interview with cryptonews.com, Tony Cheng, Managing Partner at Foresight Ventures, talks about investing in China, investment trends of 2023, and various ways where the VC landscape changed in 2022.

About Tony Cheng

Tony Cheng is a Managing Partner at Foresight Ventures, where he covers Web3 investments for the firm while also acting as Head of Corporate Development at Bitget Exchange. Formerly an investor at Sequoia Capital China and 3G Capital, Tony is well-versed in both traditional and crypto VC. Tony has also worked as a consultant at Oliver Wyman after earning his business degree from Saïd Business School, University of Oxford.

Tony Cheng gave a wide-ranging exclusive interview which you can see below, and we are happy for you to use it for publication provided there is a credit to www.cryptonews.com. 

Highlights Of The Interview

  • Foresight Ventures’ approach to venture capital and crypto investing
  • Different approaches an Eastern-based VC firm takes compared to those in the West
  • First-mover advantage and the strength of community – are these metrics that important?
  • Investment trends of 2023
  • Various ways where the VC landscape changed in 2022




Full Transcript Of The Interview

Matt Zahab 
Ladies and gentlemen, welcome back to the Cryptonews Podcast. We are buzzing as always, and I’m super pumped to have today’s guest on the show. Today we have Tony Cheng, the Managing Partner of Foresight Ventures. Tony covers Web3 investments for the firm while also acting as Head of Corporate Development at Bitget Exchange we also had on the pod. Tony was formerly an investor at Sequoia Capital China and 3G Capital, as Tony is a well versed in both traditional and crypto venture capital. Tony has also worked as a consultant at Oliver Wyman after earning his business degree from Saïd Business School at the one and only University of Oxford. Been trying to get this guy in the pod for a hot minute. We finally got in mind love to see it Tony pumped to have you on man, how you doing? 

Tony Cheng 
I’m doing good. Thanks so much for having me on the show, Matt, really looking forward to speaking today. 

Matt Zahab 
Thanks, Tony. It’s been we’ve been going at your team for a while try to make this happen. Our listeners love when VCs and seasoned investors come on the show, especially in today’s market. Obviously, it’s very wishy washy. It’s been a bit of a gong show, but it was shitshow. And I can’t wait to get into this, I think a good place to start just to sort of set the table. Let’s go back to square one. Tell me about your background, your role at Foresight and give me a brief overview of Foresight as well. 

Tony Cheng 
Yeah, so um, I started my career in management consulting, doing a lot of work with financial institutions. I got lucky that I was in consulting during like the FinTech boom in China, did a lot of work with FinTech companies, gained a lot of insight into the industry. Then I got poached by Sequoia to cover FinTech investments. At Sequoia I cover FinTech investments for the team. I looked at China, I looked at South East Asia, I looked at Korea, I did deals in Africa. So I did a lot of FinTech got into crypto back then, but didn’t really invest in early stage crypto yet, unfortunately, cuz like those were the best times to have invested in hindsight, right. But yeah, so I started out my career in pretty much a lot of like these Web2 investments, looked at payments, look at asset management, insurance, all that good stuff. And I left Sequoia to join a hedge fund to kind of lead their growth investing, looking at public investing as well. But I realized like, that just wasn’t for me, my interests, especially over the past kind of couple of years, was more and more kind of tilted towards crypto because of how much innovation there that was happening in the space. If you look at a lot of the traditional FinTech companies, they weren’t really innovating. They were just trying to figure out how to better acquire customers, while in crypto, you’re still thinking up a lot of new applications, a lot of new infrastructure that needs to be built. So that was what excited me. And I joined Foresight Ventures early last year. On Foresight Ventures is a $400 million fund, our single LP is Bitget the exchange. And what we do for the exchange is we invest in the crypto ecosystem, both strategically and financially. So by financially, I mean just for monetary gain right? Now, what kind of differentiates us from a lot of these other VCs is like we have a really large ecosystem around us. So we’re willing to kind of spend more capital into building out the infrastructure at the foot. So for example, we spent quite a bit on building up our incubation arm, our advisory arm, hiring people to kind of help on token design, token security, and all of that very important stuff in crypto. So we’re very kind of long term oriented. The exchange is one of the top five in the world today. So like we’re really willing to kind of push for a longer term view in the crypto world, we’re trying to build a lot of infrastructure in this space. When we talk to projects, we try to provide as much value out as possible in the form of like working with our portfolio companies working with the exchange, getting users with our wallet as well, so and then we also have a news media platform called Foresight News. And then that’s also like one of the top media platforms in China. So that’s also another way for us to kind of get the word out about a lot of our interesting projects. So yeah, so we’re very kind of hands on and we’re very willing to kind of help build out the ecosystem and we’re lucky we have a really large LP that also shares the same vision. 

Matt Zahab 
That was a great overview. One thing I find really interesting is how venture capital firms decide to manage its sizing portfolio construction, filtering, all that kind of stuff. Can you shed any light Are you on any of those? Like, how do you guys decide to you know, spend or invest will say, one mil versus 10 mil, or, you know, a couple 100k versus a couple mil like, what are what’s the decision-making process to get to that goal? Like, how does that work? 

Tony Cheng 
Oh, that’s a great question. I think like this varies significantly, like between different funds, right. So at Foresight, like one of the core decisions that we make in regards to this allocation is, we want to make sure the fund isn’t too concentrated in any single company, right. But at the same time, you have to make sure that you have a sizable enough stake, to make it worthwhile, on your time to write to help the company with a lot of the kind of stuff that they need help on right like BD mark, customer acquisition, and all of that good stuff. So when we think about sizing, it is often a function of valuation, our conviction in the company and the allocation that we can get. So today, like a lot of the companies that we’ve done, the check sizes range more around 200k, up to a million, we’ve done a few deals, that kind of went up to 3 million, but those were at those companies had really high valuations then as well. So our stake, were, too, isn’t too high. So um, yeah, so I guess like, just to kind of sum up, right? It’s often a multiple multitude of factors. But I think the most important one, I think, is our conviction on that company on that founder.

Matt Zahab 
Is it? Tony, I have literally millions of question locked and loaded in the chamber here. So my apologies, if this becomes a little redundant, just this is something that I’m incredibly interested in. When you get a pitch deck from whoever it may be. What’s sort of the next step after that is that pitch deck due diligence, meeting with the founder, walk me through that whole process. And a quick follow up to that you just talked about, you know, the founder, and I hear venture capitalist all the time speaking about the importance of the founder, or the founding team, right, a lot of VCs won’t really touch a solo founder, they always want at least a team of two, it just again, the power of multiples, it just makes life a hell of a lot easier, less work on your plate. What do you vet and founder besides the obvious, you know, proven track record grit, you know, ability to raise funds ability to be resourceful? Are there any sort of extra variables or perhaps under the table variables that you guys look for in a founding team as well?

Tony Cheng 
Yeah, I’ll take the first I’ll take the founder team first founder question first. I think like one of the most important questions that I asked the founder is his conviction, right in the idea of what they’re building, because like, oftentimes, in crypto, you have people that are a lot more short term oriented, because like, it’s just easy to kind of do like get rich quick schemes, right in crypto do a lot of project, you copy a project that is there’s a lot of ways to kind of set up. But I think like one of the most important questions. But then the most important kind of traits we look for in a founder is his conviction in the space and how much he wants it right? And how much he’s studied this space, or research this space to show that he really wants this to kind of be successful. Because the reason why it’s this right, it’s this kind of conviction is because crypto changes so fast, right? There’s so many moving parts every single day, new innovations happen, like every hour or so. So what happens is like people can get sidetracked really easily. We often want founders that are persistent in their kind of pursuit of their vision, but at the same time, right? If he is super persistent, on a kind of wrong trail, like after, let’s say, half a year or a year, we realize like this direction doesn’t work, he still needs to pivot. So like I think conviction and his idea is super important. But at the same time, we also want to make sure that he really thinks about this and he is open to kind of feedback. So yeah, I think like for us, number one, obviously is the conviction, his understanding of the space. But number two is his willingness, his openness to kind of speak with others, on openness to ideas, openness to feedback, or with investors as well as kind of peers.

Matt Zahab 
If you were to have like a dream founder, like, you know, one of the Mark Zuckerberg or Adam Newman’s or Elon Musk’s, like who is sort of your ideal blueprint crypto founder at the moment. I know it’s a bit of a weird one. But if you could sort of replicate or double anyone that’s currently in the space, who would you pick? And why?

Tony Cheng 
Probably Elon, right, I think because if you look at what Elon has done over the years, like he’s often taken his ideas and ran with them. Even when like everybody was said, You’re crazy. Sounds are crazy. Right? SpaceX, Starlink, right, Tesla, all of this even Twitter today, right? I think that’s a super…

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