HashKey Capital Annual Review: Raised $500 million, focusing on infrastructure and more

Author: HashKey Capital

2022 marks our 7th year focusing on blockchain and crypto investments. We thank all entrepreneurs and investors for their trust and support. Currently, HashKey Capital's asset management scale has exceeded 1 billion USD. In 2022, HashKey Capital continued to deepen its global investment , covering the entire ecosystem of blockchain and crypto. Among them, we focused on infrastructure, protocols, data layers, Web3 and other sectors. At the same time, we pay attention to the intersection of data security, custody, DID, NFT, Metaverse, GameFi, applications, and other fields, taking a dual approach.

Vertical:

• Deeply cultivate the technology community to discover new trends and technological directions in the community at the first time.
• Research-driven investment, referring to independent reports from the research team, deeply exploring vertical tracks such as ZK, cross-chain, MPC, data, and gaming.

Horizontal:

• Establish long-term deep cooperation with major public chain foundations through hackathons, ecological funds, grants, etc.
• Work closely with global peer investment institutions to share quality projects and promote their rapid growth.
• Drive overall coverage of quality projects by recommending new projects from the invested ecosystem (over 300 invested companies).

HashKey Capital = Hexagon VC?

l Early investment fully explores early-stage tracks

Capturing high returns for investors with advanced industry insights.

Among the invested projects, 68 projects are first-round financing.

At the same time, in the early stages, we help projects complete long-term development strategic plans.

l Post-investment management creates value

HashKey supports companies for steady growth.

Providing comprehensive, tiered post-investment services based on the project's stage.

While connecting resources, recruiting talents, and enhancing reputation, we also urge compliance operations.

In 2022, 93 invested companies received subsequent financing.

l Phase III fund successfully completed fundraising

In 2022, we launched the HashKey Phase III Fund,

Successfully completed nearly 500 million USD in fundraising,

Gaining recognition from sovereign funds, well-known internet giants, and other institutional investors.

l Compliance licenses approved in two regions

Hong Kong: License No. 9 upgraded, allowing 100% investment in crypto assets in the future.

Singapore: Principle approval for CMS license.

l Industry heavyweight lists "on the list"

CB Insights "Top 10 Global Crypto Funds Q3 2022"

Fintech News HK "Top 10 Investment Institutions in Hong Kong's Fintech Industry 2022"

Blockdata "Top 10 Crypto and Blockchain Investment Institutions in Asia"

l Industry influence further upgraded

• Participated in top industry events such as Point Zero Forum, Singapore Fintech Festival, Hong Kong Fintech Week, and Wanxiang Blockchain Global Summit.
• Hosted flagship events like Founders Day and Founders' Club to contribute cutting-edge insights to the industry ecosystem while providing an open platform for communication and cooperation.

Regarding the past 2022 and the upcoming 2023

The HashKey Management Team has something to say:

Deng Chao "DC"

Head of HashKey Group Singapore

CEO of HashKey Capital

"In 2018, HashKey Capital was officially established. Since then, our mission has been to serve as a trusted partner for institutional and professional investors, leveraging cutting-edge industry insights and solid ecological resources to help investors capture high-growth opportunities in the blockchain and digital asset industry.

The first step after HashKey Capital's journey was to apply for local licenses from regulatory authorities in Hong Kong and Singapore and to demonstrate the value of collaborating with HashKey to various top global service providers. As 2023 approaches, our asset management platform includes diversified strategies ranging from active investment to venture capital, and we are fortunate to manage over 1 billion USD in client assets.

Over the past five years, HashKey has witnessed disruptive technological innovations in the blockchain industry. After experiencing at least three cycles, we have developed the ability to 'sit in meditation' amid 'flowing water' (market fluctuations). Throughout hundreds of meetings with institutional investors, service providers, investment peers, and regulatory bodies, we have consistently advocated and emphasized that the most critical factors for digital assets moving towards institutional-level applications should be: a belief in regulatory and compliance supremacy, strong operational and risk management capabilities, institutional-grade service providers, information transparency, and experienced investment and operational teams.

Events in the second half of 2022, such as Celcius and FTX, left us feeling frustrated and disappointed. It is clear that the aforementioned principles were overlooked by these companies, highlighting the fact that some participants in the blockchain industry still lack compliance awareness.

At HashKey Capital, there is a team of over 30 experts who focus entirely on their respective fields, driving the company's steady development in operations, finance, legal, risk compliance, technical research, liquid asset management, and marketing. As a licensed asset management company under the jurisdiction of the Hong Kong Securities and Futures Commission and a licensed fund management company recognized by the Monetary Authority of Singapore, the company's strict management system provides regulatory transparency for our financial and business operations. We adhere to sound corporate compliance processes and implement stringent cybersecurity governance.

As a regulated entity by the Hong Kong Securities and Futures Commission and the Monetary Authority of Singapore, HashKey Capital must have independent auditors express opinions on financial statements (we collaborate with Deloitte, one of the Big Four audit firms).

At the same time, HashKey Capital entrusts regulated qualified custodians to maintain and safeguard client assets. Fund assets are completely separate from the custodian's assets. We require custodial vendors to provide insurance, establish independent fund managers for all funds, and conduct KYC and AML checks before investors invest. Additionally, our funds do not borrow, lend, or use leverage in any form.

While the failure of FTX calls for all serious cryptocurrency market participants to pause and reflect, we still believe that the crypto industry moving towards the mainstream is not only possible but that its time has come.

Regarding 2023, we remain confident. Despite ongoing turmoil, it cannot hinder the improvement and evolution of the crypto and blockchain industry.

In 2023, we will continue responsible investing, conducting thorough due diligence before investments to yield high-potential targets that align with HashKey's goals and values. We will also continue to accompany our existing portfolio in growth through ongoing active management and resource support. To better serve the invested companies, we will assess and adjust our team structure to ensure we have the necessary resources and expertise to create value for the invested companies. Furthermore, we will focus on investments in emerging markets and continue to build relationships with key developer communities, including actively participating in industry events and collaborating with other organizations to help brands establish industry reputation within specific target groups."

James Boettcher (USA)

Senior Advisor at HashKey Capital

Co-founder of Focus Ventures

"In 2022, we saw a level of dishonesty towards investors in the industry that exceeded everyone's expectations. However, the collapse of FTX, Voyager, TerraLuna, Celsius, and other companies does not undermine the fundamental advantages of blockchain technology. Many seasoned technologists still believe that open, distributed ledgers and permissionless, censorship-resistant, trust-minimized computing are reshaping every aspect of the global economy.

In fact, in the long run, the collapse of FTX should accelerate the mass adoption of cryptocurrencies and bring more regulation into the space, which is welcomed by many advocates. Although 'irrational exuberance' led to the bursting of the internet bubble in the early 21st century, the TCP/IP protocol and the technology stack built on it have fundamentally changed the way most businesses and nearly all human communication, entertainment, and education operate. This innovation was largely driven by venture capitalists, and I hope the same will happen in the innovation and development of Web3.

Today, we see significant developments in modularizing open finance or financial primitives, which are advancing programmable money and services like trading, lending, mobile payments, and partial ownership of real-world assets. Secondly, there are various advancements in the Web3 space that leverage artificial intelligence, machine learning, and blockchain technology, enabling developers to build decentralized applications (dApps) powered by blockchain technology. These dApps can operate independently without centralized institutions, allowing users to have sovereignty over their personal data, thus enabling users to capture part of the value of their data.

For example, a trend is that mainstream companies or groups, such as the Golden State Warriors and Hermès, are using NFTs for brand building. These NFTs can be applied in many ways, such as paying royalties to original authors upon sale. By the end of 2020, there were already 103 unicorns among companies and 45 crypto projects, along with 23 publicly listed companies, and this trend is just beginning.

Therefore, my point is that while the industry is still in its early stages, Web3 and blockchain will completely change the existing traditional processes of other industries, thereby creating enormous venture capital opportunities globally."

Arron Liu (Singapore)

Senior Advisor at HashKey Capital

Former Head of Post-Investment Management for Asia x Japan at PIMCO

Former Chair of the CFA Institute Board

"People's current attention to blockchain and Web3 is similar to the hype surrounding emerging technologies in the past, and sometimes drastic changes and adjustments may come with the new cycle.

New cycles are usually defined by three stages: enthusiasm, hype, and ultimately merging with reality. The commercialization process of blockchain, Web3, and tokenization reflects this behavioral trend. What may be different now is that this cycle is catalyzed by the low-cost capital brought about by over a decade of near-zero global interest rates, which has also almost fueled bubbles in various fields of the capital market. The speed of technological development has outpaced the ability of regulators to assess new technologies and supervise and control them.

This is somewhat similar to the early development of derivatives, structured products, and securitized investments. People may remember how the public condemned derivatives as weapons of mass destruction, especially during instances like Black Monday (1988), LTCM (1997), and even the global financial crisis (2008). However, despite the existence of these crises, derivatives have still developed into one of the largest and most important financial instruments for achieving risk management, liquidity, and price discovery. Therefore, this double-edged sword of technology will continue to excite both proponents and opponents.

Ultimately, what truly matters is whether we understand if 'the ends can justify the means.' Perhaps this is where regulators need to maintain balance, ensuring not to stifle innovation before there is an opportunity for reasonable assessment. The industry now needs good supervisory governance, and regulators can play an important role in ensuring information transparency without compromising privacy and increasing innovation costs."

Yong Hak Huh (Hong Kong)

Senior Advisor at HashKey Capital

Former Official at the Hong Kong Monetary Authority

Head of M&A and TMT Business at JPMorgan Asia

"The hallmark events of 2022 were the series of collapses of projects and platforms like FTX, BlockFi, Three Arrows Capital, Celsius Network, Terra, and Luna, accelerating the arrival of the 'crypto winter.' Some friends outside the circle may think they have witnessed the beginning and end of the crypto industry. However, our team has experienced cycles and understands that spring always comes after winter. While this year's turmoil in the industry certainly means tragedy for affected investors, in the long run, the outcome may ultimately benefit the industry, as regulatory and financial security issues will now become themes for the industry's long-term development.

Of course, in terms of regulation and mainstream adoption, the cryptocurrency industry still has much work to do to become a competitor on par with the current traditional banking system and to become an important asset class in institutional investors' portfolios. Cryptocurrencies and crypto companies need to earn the trust of institutional investors through the following four points:

1. Regulatory oversight and compliance: Institutional investors will only trust cryptocurrencies and companies that are supervised by sound regulations to protect their investments.
2. Credit system: Investors want to invest in companies with proper credit and debt procedures in place. Companies related to cryptocurrencies need to establish compliance processes to ensure they can safely manage the capital entrusted to them.
3. Long-term vision: Institutional investors want to invest in companies they can trust and build sustainable long-term relationships with. Companies must establish long-term strategies to assure investors of sustainable long-term capital growth.
4. Transparent operations: Institutional investors want reliable and timely information about the operations of cryptocurrency-related companies to make informed investment decisions."

Through the winter, spring is still worth looking forward to.