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Article source: Chain Catcher
Author: Gong Tsuen-woo
In the last six months, FBG Capital has only 3 public investment records
As we all know, fbg Capital and its founder Zhou Shuoji is one of the biggest winners in the crypto digital asset market, with media statistics currently investing more than 80 total investments, including omisego, zilliqa, 0x, aelf and many other well-known projects, and Zhou Shuoji also appeared on the cover of Forbes magazine last August.
However, the public's understanding of FBG and Zhou Shuoji is still quite limited, FBG Capital does not have a PR department, it has almost no pr itself, and there are only two or three public interview reports of Zhou Shuoji. How exactly did fbg capital grow? What are the investment styles and characteristics of FBG? What kind of difficulties are encountered today? Most people are vague and curious about this.
In order to answer these questions, chain catcher (id: iqklbs) interviewed dozens of entrepreneurs and investors who have dealt with fbg capital or Zhou Shuoji, although the interview is more difficult than in the past, we still obtained a lot of valuable information, and hope that through this article to help readers understand a as detailed and real as possible fbg capital and Zhou Shuoji, while fbg capital as a typical reflection of the survival of the entire cryptocurrency investment institution.
01
History and Strategy
Today's fbg capital is integrated with Zhou Shuoji, but this was not the case at the beginning of its establishment.
According to the chain catcher query, Xu Yiji, the founder of Nebulas Chain, has claimed to be one of the founders of fbg capital on many occasions. "FBG was the one who led Shuoji at the time (June-July 16), and he was still doing some trading and exchange-related things, and I don't think it's sexy." In an interview with 499block in December last year, Xu Yiji said, "After launching the fund, we raised 1,000 btc."
Although there is no information related to Xu Yiji in all the materials and reports of fbg capital, the chain catcher corroborates some of the information through multiple channels such as Li Xiong, founder of ico365, an early investment project of fbg.
"fbg Capital was actually founded by Zhou Shuoji and Xu Yiji, and I had a lot of communication with both of them in the investment process in the second half of 2016." Li Xiong told the chain catcher. However, in September 2016, Xu Yiji slowly faded out of the fbg capital-related business after getting ant financial's offer, although it returned to the currency circle a year later, and there was no public intersection with fbg capital.
As a result, Zhou Shuoji became the sole controller of fbg capital, and also opened a stage of rapid development of fbg capital. At that time, the price of Bitcoin had been floating below 4,000 yuan for 2 consecutive years, and a new round of bull market was brewing. "Many institutions did not do it because of the early entry, but the time point of FBG entry is particularly appropriate, and it is in the rising period of Bitcoin." He Yi (pseudonym), a partner of a well-known investment institution, said.
Zhou Shuoji also talked about why he entered the investment market at this time at an event. Zhou Shuoji has entered the digital currency secondary market since 14 years, and in addition to directly investing in Bitcoin, he has also frequently implemented arbitrage trading strategies such as "moving bricks" and quantification. In this process, Zhou Shuoji found two trends, one is that the scale of digital assets will continue to expand, and the other is that the share of Bitcoin will continue to decline, "Our purpose is to find the next asset with an expanding share in high-speed growth, or a class of assets." Zhou Shuoji said at the event.
At the same time, most of the main body of blockchain investment in 16 and 17 years is individuals, only a few institutions such as distributed investment focus on blockchain investment, in addition to Danhua Capital, preangle and other minority investment institutions began to try blockchain investment, the pattern of cryptocurrency investment institutions is still in a fairly early stage.
In order to form the differentiated advantage of FBG Capital as soon as possible, Zhou Shuoji adopted a strategy that now seems quite clever, that is, to bring overseas high-quality projects to China. "At that time, FBG had a certain forward-looking, with many overseas projects to do roadshows in China, and built some resource connections." Xu Yiji also said in that interview.
Li Xiong also said that the currencies such as ae and snt on the ico365 platform were introduced by fbg capital, "the helper is very good at introducing awesome overseas projects and then detonating in the Chinese community."
Shuoji Chow (from Forbes Magazine)
As the helper of the "Big V Gang", Zhou Shuoji does have significant advantages in terms of network resources and industry vision, for example, he has always maintained close ties with Huobi, and in addition to fbg capital being selected as a Huobi supernode, Zhou Shuoji served as a member of the Huobi Blockchain + Industry Alliance Committee and ran for the leader of Huobi Public Chain. On the one hand, these resource advantages can help enhance the visibility and competitiveness of the invested projects, and on the other hand, they can in turn enhance the public's brand awareness of fbg capital.
"He was very humble and friendly, always happy to help us, gave us many suggestions and directions, always came to us for events, and often shared his views on the industry in the group." Emma Liao, co-founder of FBG investment project ultrain, praised Zhou Shuoji's personality. Another founder of the FBG investment project, who asked for anonymity, also said that Zhou Shuoji's biggest feature is fighting righteousness.
It is worth noting that Zhou Shuoji is also quite keen to serve as an advisor for the invested projects, including at least 9 projects such as aeternity, aelf, zilliqa, covalent, etc., which is not common among investors in mainstream cryptocurrency investment institutions.
More importantly, Zhou Shuoji's vision is indeed poisonous, and he has invested in many projects with high returns and strong growth such as 0x, omisego, zilliqa, etc., bringing tens or even hundreds of times of returns to fbg capital, and laying the foundation for the position of fbg capital in the industry.
As for the investment characteristics and process of fbg capital, emma liao told the chain catcher that in her opinion, the investment decision-making process of fbg capital is very in line with the process and rules of traditional VC investment, "everyone in the fbg investment committee has conducted in-depth communication with us, and has conducted research on the competitive barriers, technical level, team background and other aspects of the project, which is very in-depth and rigorous."
In a forbes magazine report last year, former fbg capital trader Gordon Chen also revealed FBG's unorthodox ICO investment method, which includes keeping tabs on the founding team, monitoring chat rooms on Telegram, and maintaining communication with academics, scientists, engineers, investors and community leaders. Chen also said that when he was asked to investigate the ICO project, he constantly met with the crypto project team, "I only sleep three or four hours a night this week."
In October 2017, fbg Capital launched its globalization strategy, successively setting up offices in the United States, South Korea, Singapore, Israel and other countries, and by August 2018, a total of nearly 50 full-time employees were involved in the global investment business, which helped fbg Capital to open up more project access channels and learn more about market trends in a timely manner. According to the rough statistics of chain catchers, nearly half of the investment projects of fbg capital in 18 years belong to projects with foreign backgrounds. At the same time, few other cryptocurrency investment institutions have achieved the same degree of global layout, which also constitutes one of the moats for fbg capital to some extent.
Another important pillar of fbg Capital's business is secondary market trading, including high-frequency trading for the purpose of arbitrage, short-term trading based on inside information and market judgment, etc. Before 18 years, for the vast majority of cryptocurrency investment institutions, almost all businesses were concentrated in the primary market, but thanks to Zhou Shuoji's previous rich experience in secondary market operations, fbg Capital has regarded secondary market trading as one of the most important businesses since its inception, which has also brought quite a lot of profits to fbg capital.
FBG Capital produced 18 documents for fundraising purposes
After achieving high results in the investment and trading business, Zhou Shuoji's ambitions gradually became dissatisfied with this, and he said in an interview with Babi Finance that his vision is to build fbg capital into "Goldman Sachs in the digital currency field". Goldman Sachs has a strong control in the traditional financial field, covering investment banking, asset management, investment, consulting and many other businesses, but at present, the various roles in the blockchain industry are relatively dispersed, and "Goldman Sachs in the digital currency field" is full of temptation for all major players.
Therefore, fbg capital also established a number of derivative business brands in the first half of 2018, including the transaction solution provider fbg one, the think tank department fgb x lab, in addition to the marketing consulting company block72 jointly established with the invested company, trying to systematically output the experience and skills accumulated over the years to the industry, and then form and enhance the ecological competitiveness of the entire fbg system.
At the same time, the team size of fbg capital is also expanding rapidly, introducing a large number of senior talents from well-known enterprises such as China Renaissance Capital, Huawei, Gemini, and Ping An Insurance. A blockchain investor, Zhang Geun (pseudonym), who has dealt with its research department in Beijing and found that most of the team members are 30 or 40 years old and have a lot of work experience, which is significantly different from the situation of other research institutions where young people are mainly young.
With the development of various derivative business lines, fbg capital's public relations strategy has gradually changed. "During the critical period of our expansion, we needed some voices to be in the mainstream media." Zhou Shuoji said in an interview with Babi Finance in August last year.
Based on the above mentality, Zhou Shuoji, who had hardly accepted any media interviews before, finally broke the convention in July and August last year and accepted interviews with Forbes magazine and babi Finance, but Zhou Shuoji may not have expected that this interview would cause him many negative effects. People familiar with the matter told the chain catcher that Zhou Shuoji was very dissatisfied with the Forbes report.
In forbes' report, "Tricks of a Crypto Trader," Zhou's market operations are called "tricks," with a distinctly dismissive connotation. At the same time, the report also pointed out that fbg capital has repeatedly profited from insider information and marketing hype, "here, the democratic ideal is a joke, people rely on insider knowledge to get to the wealth freedom".
02
In the cold winter, the accumulated malpractice broke out
However, What Zhou Shuoji may not have expected is that while fbg capital intends to expand its business line and increase exposure, the industry situation has taken a sharp turn for the worse, and the price of bitcoin fell from $8231 to $5,884 in July and August last year, and since then, although it has rebounded, it has fallen from more than $6,000 to a minimum of nearly $3,000 at the end of the year.
The price of Bitcoin has been moving since the end of July last year
In this case, almost all cryptocurrency investment institutions have encountered unprecedented difficulties: it is difficult to make a profit, it is difficult to exit, it is difficult to raise funds, and the larger the investment scale, the more serious the loss, and fbg capital is no exception.
The price of a large number of projects invested by fbg capital has also fallen sharply, and even "quilted", and the assets used for investment have faced huge depreciation losses. In addition, many invested projects are reluctant to land on the exchange in the bear market, the average time required from investment to trading is much higher than the bull market stage, coupled with the secondary market "quilt", fbg capital is likely to face cash withdrawal difficulties and cash flow shrinkage in the last half year.
"[The price of the coin has been falling] will have an impact on our overall liquidity strategy management, we will now pay more attention to liquidity, the investment speed will slow down, the requirements will be higher." 」 Zhou Shuoji said in an interview with media personality Chen Yijia in August last year.
According to Crunchbase data and other network data, chain catchers found that fbg capital has only invested in 3 blockchain projects since September last year, namely aergo, ampleforth, and thundercore, which is less than one-tenth of the number of investments in January-August last year. "Like most cryptocurrency investment institutions, FBG has basically spent all the money it raised before." He Yi said.
In the case of shrinking wealth in the entire industry and the bottomless bear market, the new round of fund raising of fbg capital cannot reproduce the smooth situation of the past few years, and is facing the dilemma of slow advancement.
Quantitative arbitrage has always been an important means for fbg capital to achieve asset appreciation and obtain profits, but in the past 18 years, a large number of quantitative teams have entered the cryptocurrency market, and even become the standard of mainstream cryptocurrency investment institutions, the competition situation is becoming more and more fierce, the quantitative arbitrage space of the entire industry has shrunk significantly, even fbg capital that started with quantitative arbitrage is difficult to maintain the original level in such a market environment.
The above problems are common to cryptocurrency investment institutions, but fbg capital actually has its own more intractable special problems. "The biggest problem with fbg is that it can't retain people and it's very mobile." He Yi told the chain catcher that FBG capital personnel are more liquid than other cryptocurrency investment institutions, and many executives have also left.
According to the chain catcher's understanding in many aspects, bo dong, the partner of fbg capital who mainly operates the secondary market, has left his job in early 18 years to start a business, fbg capital partner and head of fbg x lab Richard Liu left in the second half of 2018, in addition to a number of executives and employees who left in the second half of 2018.
The chain catcher failed to successfully interview the departed personnel of fbg capital for further information, but He Yi told the chain catcher that this may be due to the distribution of benefits, and there are also problems with the management system of fbg capital. "Now the whole team is strictly managed by Zhou Shuoji, and the money that should be given will be given, just to prevent them from leaving." He Yi said.
As for derivative businesses such as fbg x, most of them have been shelved or progressed slowly due to the poor overall market and the high liquidity of team members.
In general, fbg capital has achieved remarkable results in the cryptocurrency market with its first-mover advantage and reasonable strategy, but in today's cold winter of the industry, the hidden drawbacks of the business system and team structure built by fbg capital have broken out one after another, and the substantive competitiveness may be weakened. However, fortunately, the industry status of FBG Capital is almost unaffected, and the time window is still abundant, FBG Capital and Zhou Shuoji need to find a new breakthrough as soon as possible to reconstruct the internal mechanism culture and external barriers of the FBG system.
After all, the reason why Goldman Sachs became Goldman Sachs is not that it is good at the realization of various resources or shrewd opportunism, but in its professional and complete professional management structure, the spiritual core represented by the partner culture, and the deep insight into industry trends, which is a long way to go for all cryptocurrency investment institutions.
In fact, the encounter of fbg capital is only a microcosm of the current situation of cryptocurrency investment institutions, in the case of rapid accumulation of wealth and praise, the professionalism of the investment mechanism and management system of many investment institutions has not kept up with the growth rate of its own scale, resulting in the above problems today. For these institutions, bear markets are both devastating and torturing, as well as an opportunity for metamorphosis and evolution.
The development of the blockchain industry is large, and it is certainly inseparable from the support of investment institutions, especially those with deep insight and industry responsibility. If fbg capital can seize this opportunity, strive to strengthen the construction of team culture, optimize the management and risk control mechanism, and enhance the ability to grasp the trend of the industry, and actively contribute to the long-term development of the industry and pursue value investment, it is bound to give itself the temperament and ability to cross the bull and bear, and then truly qualified to launch an impact on the name of "Goldman Sachs in the field of digital currency".
Disclaimer: This article is the work of the author of "Mars" and does not represent the official position of Mars Finance. Please indicate the source, author and link to this article
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