Why We Invested: HypeLab
Advertising has been one of the best performing business models in the digital era and is an integral part of the web2 economic flywheel. Yet this same success has yet to be realized in web3 largely in part due to a number of major pain points that different market participants continue to face.
Today, for instance, Google still requires all crypto advertisers to be registered with FinCEN as a money services business or be a federal or state-chartered bank. Crypto advertisers seeking to utilize Google’s suite of advertising products and services (e.g. Google Ads, Google Marketing Platform, AdMob, etc.) must resort to alternatives, none of which are crypto-native. For crypto publishers, as web3 slowly lowers the barrier to entry for more users, existing protocols and projects will need to begin monetizing these customers with significantly lower purchasing power, typically through free product offerings. Gone are the days where playing a game requires an initial purchase of NFTs worth thousands of dollars. Similar to web2, ads serve as a critical and sustainable revenue generator whose users would rather pay with attention than pay with monetary assets.
At Shima Capital, we are excited for the future of adtech in web3 and believe that ads will be a critical component of the web3 ecosystem as adoption grows. That is why we are thrilled to announce our investment in HypeLab, a leading web3 ad network that unlocks unique web3 advantages across advertisers, publishers, and consumers.
Prior to HypeLab, companies looking to advertise a product or service were under the strict, watchful eye of web2 ad network juggernauts such as Google and Facebook. This meant being held accountable to their ever-changing guidelines in terms of not only content but what could be advertised at all.
We believe that HypeLab’s proprietary data on user behavior and ad performance serves as a compounding moat — the earlier (and bigger) the network is activated, the more data the team will have to train their ML models for ad personalization and targeting. This is enhanced with building an ad network on web3 rails. Unlike cookies, for instance, wallet addresses are device agnostic and can be directly attributed to a user containing a lifetime of historical information. This data is no longer trapped behind web2 walled gardens and can be readily used to serve personalized ads while providing a comprehensive picture of ad efficacy and conversion metrics.
HypeLab will have a suite of owned and operated (O&O) assets that serve as ad delivery products for in-house publishing similar to how YouTube is an O&O for Google. The team has already developed a showcase web application called DripDripDrip with a questing module expected to be delivered soon. With a sound acquisition strategy, the goal will be to purchase undervalued decentralized applications that have struggled with a freemium product model and integrate their ad network / SDKs to generate new revenue streams.
For the last few months, we’ve had the pleasure of working closely with the HypeLab team. They are extremely well-positioned to build within this problem space given their deep experience working in adtech and prior track record of scaling early-stage hyper-growth startups. Joe Kim, HypeLab’s CEO, has been an entrepreneur and operator in high-growth startups for the past 10 years while also founding a profitable DeFi trading firm in 2017. Ed Weng, their Chief Product Officer, spent five years as a Google PM building and scaling the AdMob platform, the world’s largest mobile app ads network. During that time, AdMob saw a 5x revenue increase ($5B+). Ashod Donikian, Chief Technology Officer, was previously founder and CEO at Navisens, a venture backed startup building hyper-accurate location technology based on his own PhD research in robotics and ML.
It has been a privilege getting to know Joe, Ed, and Ashod, and we look forward to our continued partnership with HypeLab as they revolutionize web3 ad networks.
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This article was also shared at yidagao.com
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About Shima Capital
Shima Capital is a leading early stage VC firm investing in disruptive blockchain companies. The fund is deeply focused on taking a hands-on approach and working closely with its portfolio companies to provide the most sweat equity per dollar invested. As teams in Web3 push the frontier of innovation, Shima helps hire talent, build community, amplify narratives, and foster the acceleration of technical research and development. Shima is composed of seasoned investors, accomplished operators, and former founders who align on a mission to support all-star teams with building and scaling generational companies. Learn more at www.shima.capital.
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