Projects abound in the cryptocurrency ecosystem, despite the notable drop in prices since the peak of bitcoin and the cryptocurrency market in November 2021. Several Web3 niche funds have been launched in quick succession in recent months to keep pace with the trend and unveil Tomorrow’s coins. Thus Ledger and Cathy Innovation set up a €100 million mutual fund at the beginning of June. XAnge followed in early July.
And in early August, The Block reported that Aglaé Ventures, with funding from the holding company of LVMH President Bernard Arnault, is also planning to launch a €100 million envelope fund. Web 3 is attracting more and more money. This new version of the web, based on blockchain technology and cryptocurrency, has a decentralized nature. They should make it possible to do without intermediaries such as Gafa or banks, and aim to provide content creators and users with the possibility to completely re-customize web tools.
Obstacles to blockchain adoption in the economy
Cyril Bertrand, Managing Partner of XAnge, explains why and how the €80 million Digital Ownership Fund intends to co-finance various projects related to Web 3. XAnge, which manages €600 million in assets, specializes in supporting start-ups In its infancy, investing amounts between 500,000 and 10 million euros in the incorporation stage.
Capital: Is this a good time to launch a Web 3 fund, as cryptocurrency prices have been dropping since November 2021?
Cyril Bertrand: We are in a low cycle in the cryptocurrency market, it is a difficult time to raise funds but the best time to invest. In this type of period, the teams we meet are more serious. The bounty hunters are gone. We are not looking for entrepreneurs who achieve “successes”, we are looking for traditional entrepreneurs, who will work 80 hours a week, are excellent at execution and seek hire to surround themselves well.
With this fund, we’re out for ten years, during which we should see two to three cycles of the cryptocurrency market, phases of ups and downs that last for three years overall.
Capital: How do you see Web 3, is it a particularly risky market?
Cyril Bertrand: yes. We are in a fairly explosive installation phase. Since 2010, cryptocurrencies have been in this phase, so it could last another ten years. You must be well grounded to navigate these waters. And your conviction: the general thesis behind cryptocurrencies is to question the centralization of digital giants, so do we think this form of innovation and decentralization of decision-making will be powerful enough to trigger a new wave of post-Gafa construction? At XAnge, we have believed in it for so long, we invested in Ledger in 2014.
It is the first time in my life that I have seen a possibility – not at all certain – to challenge the sovereignty of Gafa. It is impossible to get it using web 2 tools. What interests us in XAnge is this question: Is it possible to build a decentralized Uber, co-owned by its drivers?
Capital: How is Web 3 different from other industries and Web 2?
Cyril Bertrand: Web 2 is widely used today, and everyone has embraced it. Cryptocurrency is a sector specific because it is owned by only about 1% of the world’s population, which inflates the bubble phenomenon: this 1% sells to the same 1%… We are walking around in a limited world of enthusiasts and technicians.
The goal of the XAnge Digital Property Fund is to bring this technology to the remaining 99%. Of course, we won’t get to them right away, but if we can actually get cryptocurrency into the hands of 20% of the population, we’ll double the market size by 20, which would be massive and enough to create unicorns in disarray.
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Capital: How can cryptocurrency and decentralized finance be used more widely?
Cyril Bertrand: We should focus on simplifying the uses. Cryptocurrencies remain a technical environment: you should not choose the wrong account, regularly check access to your wallet (electronic wallet, editor’s note), when you accumulate large sums, you must move them to a safe place … This is cumbersome and complicated. This creates uncertainty and makes it impossible to tell anyone who “tried it”.
For ease of mainstream access, we’ll have to move on to something more mainstream. This will take a lot of work. Existing tools are still beyond the reach of ordinary humans.
Capital: What do you think is the most promising thing about Web 3?
Cyril Bertrand: We have a time approach. There was an early stage of infrastructure in cryptocurrencies, with Layer 1 networks (blockchains like Bitcoin and Ethereum, editor’s note) and wallets like Ledger. There is now DeFi (Decentralized Finance, Editor’s Note), which provides a lot of opportunities, such as creating accounting tools for companies, lending applications (loans in cryptocurrencies, editor’s note), protocols for increasing deposits and savings. Web 3 also opens new horizons in content creation and ‘games’, which are accompanied by new patterns of decentralized governance.
The question is: How are we going to bring all these innovations into the daily lives of individuals and companies? The idea is to bridge the gap between Web2 and Web3. There are effective but very complex solutions in Web3. We as an investor in Web2 can already contribute our knowledge in marketing acquisition costs and staffing tools to distribute Web3 solutions.
Capital: Do you have startups and apps on the horizon?
Cyril Bertrand: XAnge has already invested in the capital of Coinhouse and Ledger. And most recently, in Request Finance, Dogami and Morpho. The new fund must allow investment in both stocks (capital increase, editor’s note) and in tokens (digital tokens, editor’s note). We have submitted a request to the AMF for an extension of approval so that we can invest in the tokens.
Among the promising projects we are pursuing, I would particularly like to mention Kolat (a euro loan service using its crypto assets as collateral, editor’s note), Pianity (the NFT platform dedicated to music, editor’s note), Exorde Labs (a tool for exploring and linking public data on the web, note Editor’s Note) or Kinetix Tech (to create 3D animations in the metaverse, editor’s note) and Kanji (to easily create NFTs, editor’s note).
Capital: How many tricolor unicorns do you see in web 3 in 5 years?
Cyril Bertrand: We already have two, with Sorare and Ledger. If we get to ten, an average of two new ones a year, that would already be a lot.
Capital: Is the political and legal environment conducive to players in the sector?
Cyril Bertrand: The French government in particular and the European Union in general have done a good job. There was almost a major catastrophe, with the desire to ban Proof of Work (Bitcoin Blockchain Transaction Verification System, Editor’s Note), under European MiCa regulation, but the measure was finally abandoned.
In France, we have a government that is very advanced on this subject, with specialists in finance. Cryptocurrency entrepreneurs in Germany are the envy of us. We have a nice highway ahead, but we have to remember that we are small compared to the US, China and Asia in general, where there are rhinos in web 3 in the dozens. They are ahead of us.
“Bitcoin ideology denies the very existence of the state,” says economist David Kayla.