Sinhae Lee, “Will Connect Ecosystems of Key Blockchain Markets — Korea, the US, China"
GBIC and Block72’s partner Sinhae Lee had an opportunity to sit down with Chosun Biz, an affiliation of top-tier general daily Chosun Ilbo. You can find the original article in Korean HERE.
“Top 10, 50 Projects, and 60 billion KRW”
These numbers describe GBIC, a crypto fund based in New York, Shanghai and Seoul.
Last September, GBIC has been selected as Top 10 Most Influential Crypto Fund by Chinese tech media 36kr. Others on the list include Fenbushi Capital, the China-based first crypto fund in which Vitalik Buterin was previously involved. The selection was based on fund size, investment profit, position in ecosystem, and post-investment management.
GBIC also has excellent portfolio — it has invested in around 50 global blockchain projects including ICON (#36 in Market Capitalization), Aelf (#73 in Market Capitalization), Nebulas (#77 in Market Capitalization), and Theta (#90 in Market Capitalization). Estimated size of the fund is 60 billion KRW.
How has GBIC arisen to this position just within two years since its foundation? GBIC partner Sinhae Lee attributes it to GBIC’s global footprint in Korea, the US and China, which are key regions in blockchain industry. She also explained that partners who understand the blockchain ecosystem of each region created synergy.
There are six partners at GBIC. Richard Lee, Mike Chen and Terence Che, who were classmates at Columbia University, founded GBIC and the fund began covering the US, China, and Korea with addition of Korean partner Sinhae, who is leading the Korea Office. For below interview, Sinhae discusses GBIC’s investment strategy and future plans.
Please briefly introduce yourself.
After working at McKinsey Korea and graduating Stanford MBA, I joined a fintech startup in San Francisco. The first startup I worked with was Coin, which was acquired by smartwatch company Fitbit, and the next startup I joined was Nerdwallet. Beginning of this year I joined GBIC as a partner and has been investing in blockchain projects.
How did you become interested in blockchain and cryptocurrency?
While I was working at a fintech startup I went to many conferences and there always were discussions on bitcoin. My engineer friends also talked about blockchain and cryptocurrency a lot. Naturally I developed interest in the field and began studying.
Were you interested enough to find a job in the industry?
I did give a deep thought on whether I should get a full-time job in blockchain. I originally wanted to join a traditional VC at the end of 2017, but after some consideration I chose to work in the blockchain industry.
I wanted to be involved in a job that requires me to work across Korea, the US and China, but the VC I was considering to join invested in the US, Canada, and Israel. And unlike the VC industry, which is dominated by white male professionals, the blockchain industry is open to anyone. As I enjoy facing challenges, I chose the blockchain industry and decided to become the bridge that connects the blockchain ecosystem in Korea, the US, and China.
How did you meet other GBIC partners?
Other partners are from Columbia University, but they frequently visited Silicon Valley because of their interest in blockchain. I had friends at Blockchain at Berkeley and attended fintech seminars in San Francisco, so we had many connections. I met the partners via mutual friends.
Why did GBIC decide to base the firm in Korea, the US, and China?
In order to succeed, blockchain projects have to be global. Because of the structure, it is difficult to go global after succeeding in a local market. If the project is based in Korea, the US, and China, it can cover all three languages: Korean, English, and Chinese. We are doing our utmost to help the blockchain projects we invested in go beyond their local markets.
How is your company organized?
We have around 50 employees working for GBIC globally. I’m also a partner of GBIC’s consulting arm, Block72. Block72 was established earlier this year and is a joint venture of GBIC and FBG Capital, in which Sequoia Capital China also invested.
What is GBIC’s investment strategy?
Compared to the traditional startup investment, GBIC’s role is similar to that of a VC. There are seed accelerators like Y Combinator (YC) and hedge funds that invest at a later stage, and GBIC is somewhere in between the two.
Beside investment, we are also helping projects succeed with post-investment management. Our strength is that we can bridge the three markets — Korea, the US, and China — that are key to the blockchain ecosystem.
Why is Korea important?
When you look at the trading volume, Chinese Yuan accounted for more than 90% of the trading volume of Bitcoin in 2016, and over 70% of the trading volume of top 12 coins in December 2016. Then Korean Won represented around 50% of the trading volume of top 12 coins in November 2017. Since 2017, the US has been representing around 20~30% of the entire trading volume.
Korea has the highest trading volume per capita and at one point it was 6 times and 30 times higher than that of the US and China respectively. Korea’s interest in blockchain is high and its infrastructure is well-established, so it has the potential to create the first use case. It could be one of the first countries to adopt blockchain and become a crypto nation.
What about the US and China?
Many important blockchain projects were born in the US. There is a large pool of tech-based talents in cities like Silicon Valley and active investments are being made. The US also has global regulatory leadership, shown by its introduction of Bitcoin ETF.
China is amazing. Exchanges, investors, media, and entrepreneurs are all connected and cryptocurrency futures and options are traded on Chinese exchanges. Its mobile and consumer areas are strong. There are many blockchain-related apps and new ideas like transaction fee mining exchanges from China. Innovative ideas and concepts are born in China.
Many traditional VCs are participating.
The US and China in particular are actively investing in blockchain projects. Around 8 out of 10 VCs in San Francisco are increasing exposure to blockchain by creating a crypto fund under the existing fund or changing the existing LPAs.
What kind of projects do you invest in?
Investment in blockchain is similar to angel investment or seed investment. In many cases, there are no MVP (minimum viable product), so the team and its members are important aspects when making an investment decision.
To begin with, we review the white paper and the project’s vision and decide whether the team has resilience and capability to execute. Secondly, we ask the question: “why blockchain?” Decentralization is not always beneficial or applicable to all industries, so I always ask why the project wants to decentralize. Ticket size varies from 100 million to 3 billion KRW. GBIC is a multi-strategy fund, so we invest in diverse projects including Mainnet and DApp.
What are some notable projects?
I would like to introduce Aergo, in which GBIC participated as a leading investor and myself as an advisor. It is a public blockchain project of Blocko, so its technology is credible. Blockco is a blockchain solution company that actively collaborates with Samsung, Hyundai Kia, and Shinhan Card.
Cred (Libra Credit), founded by an executive from Paypal, is another notable project. It is planning to launch product that lends US dollar in security for Bitcoin. Basically, it aims to create bank for cryptocurrency.
There are negative perceptions toward cryptocurrency and blockchain.
Some have negative views and concerns because of excessive investment, but there are many hurdles to jump through before the mass adaption of blockchain. We need to overcome a chasm.
I believe blockchain technology has great potential to turn our lives around. Blockchain is structured in such a way that not only the initial investor but also the ecosystem participants, such as developers and related companies, gain economic benefit. Eventually, I think blockchain will overcome a chasm and reach mass adoption.
What do you think about regulations?
With proper legislation, security token would be introduced and more institutional investors would join blockchain. There are some large financial institutions in the US that want to make investment but are hesitant because of regulations. NASDAQ is conducting a lot of research and is moving fast. It is the same for China and Japan, so Korea should also step up and establish appropriate regulations.
What are your goals?
When I first entered the Silicon Valley startup, the term ‘fintech’ was not being widely used. I entered the industry believing that it will largely innovate our society. I want to continue work in an innovative field and observe a new technology bloom.
