Multicoin Capital: The Four Major Investment Focuses and Eleven Investment Directions for the Future

This article is from the Multicoin Capital official blog.
At the beginning of May, Multicoin Capital announced the completion of a $100 million second-phase venture fund, while also releasing its upcoming investment strategy and thoughts on hot sectors. Chain Catcher has compiled this without changing the original meaning, hoping to inspire you.
How does Multicoin Capital invest?
Generally, we prefer to support entrepreneurs from the early stages and work hard alongside them. Including hedge fund capital, we can invest as little as $500,000 in early-stage transactions or as much as $100 million in a single transaction. We are long-term value investors and will assist investors across all stages of development, from startup to mature public markets.
Once we decide to invest in a project, we will steadfastly support it and actively participate in its development. As mentioned in our previous articles, the best way to capture Alpha is to participate in building it.
The project that received the largest single investment from our first fund is Helium, accounting for about 12% of the total fund size. We are still looking for similar opportunities and are willing to work closely with entrepreneurial teams to build deep consensus and achieve results. Moreover, we can leverage larger hedge funds to invest in project tokens in the secondary market, which is somewhat different from traditional VC.
The Next Wave of Crypto Innovation
In recent years, investments in the crypto industry have primarily focused on technology and infrastructure development, including Layer 1 and Layer 2, zero-knowledge proof systems, key management solutions, indexing and querying solutions, storage solutions, ASIC manufacturers, mining, custodians, brokers, exchanges, and other billions of dollars in investments. We provided seed funding for many such projects early on, including The Graph, Solana, Torus, and StarkWare, all of which were part of our first fund.
As the core infrastructure of the industry matures, innovation begins to explore new frontiers.
On the superstructure level, crypto research reports guide our investment strategy, and we look for new opportunities based on this. In the coming years, open finance and Web3, along with new crypto-enabled infrastructure and applications, will unleash an incredible wave of innovation. The foundational infrastructure has matured enough to provide the soil for this wave to come. In the next few years, we plan to invest heavily in our second fund.
1. Embracing Open Finance

1. DeFi Underlying Applications
   For the past two years, we have been active DeFi investors in the industry, including in Aave, Alpha, Oxygen, Perpetual Protocol, Saffron, Serum, Swivel, and Thorchain. We will continue to invest in the DeFi stack in our second fund. Although we have already invested in many DeFi underlying applications, there is still significant room for growth, and we hope to invest in more underlying assets moving forward.
2. Mainstreaming DeFi
   As DeFi protocols mature, thousands of entrepreneurs will localize the DeFi experience. We want to support those entrepreneurs who are accelerating the adoption of DeFi. Based on this, we have invested in Wheat Wallet, LUNA, and the rapidly growing Mirror.
3. DeFi Projects on Solana
   Solana is the product we are most proud of since our first investment in May 2018, and we were among the first institutions to invest in Serum. Recently, several Solana + Serum hackathons have been held, and it is clear that Solana will develop a new DeFi ecosystem using Rust as its native programming language, leveraging Solana's performance to integrate into Serum's composable on-chain order book, supporting the best entrepreneurs to build scalable DeFi applications on Solana.
   2. Web 3.0
4. Web 3.0 Infrastructure
   We have written about Web 3, which is one of our Crypto Mega papers, particularly focusing on the Web 3 stack. We made several strategic investments in some of the most significant aspects from our first fund. Although the Web 3 stack has come a long way, it is still in its infancy. We will continue to invest in core infrastructure within the stack, such as Arweave, The Graph, and Torus.
5. Fan Token Issuance Platforms for Creators
   In recent years, with the rise of the creator economy on platforms like Instagram, YouTube, TikTok, and SubStack, it is evident that creators are seeking new ways to engage with fans and monetize their work. We believe that cryptocurrencies will unlock new monetization mechanisms for creators. A few companies are already experimenting in this space, including Mirror, Audius, and Aimi, and we believe this industry will thrive in the coming years.
   3. Infrastructure and Applications Using Crypto Technology
6. Industry Applications with Crypto-Native Incentive Models
   In addition to consumer- and creator-focused applications, we are also looking for applications that leverage crypto-native incentive model characteristics to solve industry and societal problems. We believe this category will unleash a wave of non-native crypto innovation.
   Helium is an inspiring example in our wireless network portfolio. Helium's advantage lies in its ability to create new business models for deploying and managing wireless networks. This can only be achieved by using the economic model inherent in cryptocurrencies to incentivize people around the world to deploy hotspots.
   Over the past two years, we have worked closely with the Helium team and learned a lot. However, the most important takeaway is that crypto technology can be used to incentivize people to build social infrastructure distributed around the world. We believe this is a great idea and has significant implications in areas such as data collection, including weather and logistics data. Besides Helium, there will be trillions of dollars of opportunities in this space, and we are globally leading in driving such investments.
7. Social Applications Injecting into the Financial System
   Crypto has made investing easier than ever. We want to invest in new types of social applications that embed crypto finance in ways that traditional financial paths cannot achieve. eToro is the first mainstream example of a traditional financial product. The opportunity to build social finance applications along the crypto path is 10 to 100 times larger.
8. Crypto-Native Gaming Platforms
   The first wave of native crypto games primarily focused on assets that empower players with special powers (e.g., cards). We are seeking to invest in games that are only possible in the crypto industry. This could include metaverses like Decentraland or Axie Infinity or new games that utilize crypto-native concepts such as staking. We do not have a firm belief in the importance of specific mechanisms. However, we will seek support from game developers who can combine native cryptocurrencies to design new mechanisms that are not yet widely understood.
   4. NFTs and Digital Collectibles
9. Digital Collectibles
   NFTs have flourished over the past year, providing the foundational technology for digitizing real-world collectibles. The design space related to NFTs is vast, and we are excited to attract the most cutting-edge entrepreneurs in this field.
10. Social Tokens
    Focusing on digital collectibles, we believe that crypto technology creates new opportunities for individuals to directly monetize their personal brands and share them with the public. The primary manifestation is income-sharing agreements (ISA). However, the space that can be developed using crypto mechanisms far exceeds the debt + equity scope in traditional capital stacks.
11. Building the Metaverse
    While it is unclear whether the metaverse is imminent, it will be a massive opportunity. Utilizing trusted middleware technology, the metaverse will remain in a state of large-scale scalability. We are looking to invest in infrastructure and native applications of all forms that can build the metaverse, as well as market expansion.