Hong Kong Blockchain Fund Hopes To Let A Hundred Startup Flowers Bloom

News | October 10, 2018 By:

The man who set up one of the first activism hedge funds in Hong Kong has launched SuperNode Community (SNC), a decentralized blockchain ecosystem that aims to democratize the traditional venture capital (VC) model for startups.

“Blockchain’s potential in the venture capital game has yet to be realized,” says Bing Lin, SNC’s Founder and CEO. “By streamlining the end-to-end seed incubation process, we envision that SNC will become the gateway to truly democratize access to opportunities in the venture capital space that have typically been out of reach for those who are not sophisticated institutional investors or high-net-worth individuals.”

The SNC ecosystem will allow participants beyond the traditional network to access a greater number of promising startups.Through SNC’s ecosystem, better incubation decisions can be made by leveraging crowd wisdom. “Startups also benefit from this model by gaining access to the right funding, strategic resources and expertise to launch their projects,” said Lin.

Through a voting mechanism, SNC’s participants can back domain experts known as “SuperNodes” to act on their behalf to perform initial due diligence and vet blockchain startups applying for funding. An Incubation Committee made up of 21 SuperNodes will then jointly decide on whether a project will be approved for incubation. Once chosen, funds will be allocated and distributed through SNC’s Foundation.

Bing Lin talked with Block Tribune about his plans and philosophies.

BLOCK TRIBUNE: What makes a company attractive for investment? Are there any sectors you’re focusing on?

BING LIN: At SNC, we want to support blockchain-focused companies ,because we believe in the power of technology to transform our everyday lives. The team’s background experience, ability to execute their idea, a well-thought-through business model that addresses a real market need, and well-designed tokenomics are the key indicators we look at when looking for a promising investment into a startup.

We like to focus more on DApps (decentralized apps). While most companies focus on the protocol layer, we believe that innovation in the application layer is what will help to drive adoption. But ultimately, it is important that the team has a real vision about where they can add value in the future.

Interest in promising companies working with this emerging technology is on the rise too. A recent report showed that in the first three quarters of 2018, blockchain and cryptocurrency startups raised almost $3.9 billion.

BLOCK TRIBUNE: Right now, the blockchain/crypto space seems like we’re in 1999-2000 in Internet terms. What will it take to come roaring back?

BING LIN:  Realistically, it will take an industry-wide effort.

The first part of this has to do with educating the public. While terms and concepts like ‘URL’, ‘browsers’ and ‘buffering’ may seem basic today, there was a time where they would seem almost alien to the man on the street. Before a wider adoption can take place, the public needs to develop a greater understanding of what the technology is and how it works.

We need to improve the interface around the technology with a particular emphasis on user experience too. Similar to how Google’s search engine made the Internet more approachable for the everyman, a solution to make blockchain user-friendly will help to increase take-up rates.

Another big part will involve building communities to foster innovation in the space. SNC believes that an ecosystem like ours — which brings together startups as well as institutional and layman participants — will help to do so in the long run.

And finally, the introduction of a regulatory framework for blockchain solutions. Once governments and official bodies develop the legal parameters for this space, we will see institutional players participating and investing.

BLOCK TRIBUNE:  What will make a company become a force in the blockchain space?

BING LIN:  In less than a decade, blockchain has emerged as one of the most game-changing technologies with the potential to change the world around us. But while companies are already utilizing it to develop transparent, secure and scalable solutions, what will really tip the needle is if they would focus more on decentralized thinking rather than focus on building a centralized model.

The blockchain technology startups that will really take off are the ones that are solving the user experience (UX) issue. It is until then that we will see better mass adoption rates of blockchain and cryptocurrency. We know that the community is expecting rapid mass adoption in blockchain technology, the industry is just waiting on better UX solutions.

BLOCK TRIBUNE: Are you modeling your company after any particular consultancy?

BING LIN:  In designing the SNC ecosystem, what we first did was, we identified the direct, indirect and potential competitors in the VC space – the blockchain investment funds, global incubation platforms, and digital asset management platforms.

Then we mapped the competitive advantages to the different stakeholders (the funds, the blockchain startups, and the lay participants). What we found was that the competitors tried to address pockets of the problems but none truly addressed the pain points of all three key stakeholders. We also found that most solutions are centralized – none could truly claim to be decentralized.

By reimagining how the VC process could work within a decentralized blockchain ecosystem, we believe we’ve uncovered a way for more players to access great early-stage deals and for blockchain startups to tap into new growth opportunities.

BLOCK TRIBUNE:  What is the best way to approach your company? As early stage investors, can someone make contact and pitch very easily, or does it have to go through trusted intermediaries?

BING LIN:  The whole incubation process is decentralized and this is the essence of SNC’s ecosystem and how it is different from other centralized solutions out there.

To apply for funding, blockchain startups simply need to sign up and submit their application via the SNC website. Their project will go through a basic qualification check, followed by a community popularity vote and finally be vetted by a congress of 21 incubation experts or ‘SuperNodes’, who makes the final incubation decision. Projects that receive majority votes will receive incubation funding.

BLOCK TRIBUNE:  What is the strangest pitch you’ve heard so far in this sector?

BING LIN: Throughout my time in the sector, I’ve come across a number of pitches. An interesting one that comes to mind was a startup who wanted to conduct a token sale without a viable business plan. When asked how much money they were looking to raise and where they would spend the funds, the founders could not answer. They just wanted to run a token sale because it seemed like a really easy way to raise funds. Unsurprisingly, we decided not to support this startup.

BLOCK TRIBUNE:  Are you focusing mostly on Asia with your investments?  Are you interested in hearing from anyone else?

BING LIN: SNC’s ecosystem is open to promising blockchain companies from around the world not just in Asia. Our mission is to accelerate the mass adoption of blockchain and this mission is borderless.

BLOCK TRIBUNE: Describe the SuperNodes that will control the system.
BING LIN: SNC is focused on building up an ecosystem of participants who can value-add in different ways. Unlike in a VC where you would have a typical management team, due diligence and vetting of blockchain startups within the SNC ecosystem would be carried out by a committee of 21 domain experts or “SuperNodes” who will make a joint decision of whether a project is approved for incubation. This group of SuperNodes is made up of community members with the highest stake of SNC tokens (SNCT). Through a voting mechanism, SNC’s participants can back SuperNodes with their own SNCT to act on their behalf to perform initial due diligence and vet blockchain startups applying for funding. If SuperNodes perform poorly, they can be voted out in subsequent monthly rounds.
Ultimately what we at SNC look for in a good group of SuperNodes is an all-star team, excellent track record, relevant experience, strong ability to execute deals and contributes to value creation. The beauty of decentralization is that the community has a say in deciding who fits the bill.