How does the founder of CoinList invest in projects?

This article was published by BlockBeats, Naval, a well-known angel investor in Silicon Valley.

Passive income, also known as "sleeping income," generally refers to income that can be automatically obtained without spending much time and effort.

The concept of "sleeping income" became popular in the Chinese internet in 2018, but most users were unaware that it was proposed by the well-known American investor Naval Ravikant.

At that time, Naval conducted a Twitter storm, stating at the beginning that wealth is not money or status; wealth is having assets that earn while you sleep (Seek wealth, not money or status. Wealth is having assets that earn while you sleep).

Since Naval founded the equity crowdfunding platform Angellist, he is often labeled as the pioneer of equity crowdfunding, overshadowing his achievements as an angel investor.

Naval Ravikant

Venture Capital and Angel Investing are High-Stakes Games

Earlier, Naval co-founded the consumer review website Epinions and received funding from venture capital firms Benchmark and August Capital. Subsequently, Epinions merged with the comparison site Dealtime, but Naval and others did not profit from the merger. In Naval's view, the venture capital firm Benchmark, which invested in his company, deceived him, leading to the equity value of several founders, including himself, dropping to zero during the merger.

As a result, the four founders, including Naval, sued Benchmark, and after several months, both parties reached a settlement.

If you can't beat them, join them. Shortly after reconciling with Benchmark, Naval established an early-stage venture capital fund called "The Hit Forge" with a scale of $20 million. The Hit Forge has an impressive track record, with investments in Twitter, Uber, and Stack Overflow.

Due to being deceived by venture capital in his initial startup, and after gaining a deeper understanding of how venture capital operates and investing in several star companies, Naval created AngelList.

Joining them changes them. AngelList is an equity crowdfunding platform that helps startups raise funds from angel investors. Of course, this is not Naval's revenge on traditional venture capital but a complement to it, allowing ordinary investors to join the game. At its inception, AngelList received applications from over 500 startups. By 2017, AngelList had profiles of over 70,000 startups.

Eight years after founding AngelList, Naval established CoinList, now the most well-known fundraising platform in the cryptocurrency space.

In its three years of operation, CoinList received funding information from over 3,000 projects, but only a dozen projects could pass the platform's review for fundraising, with an average of one project going live every two and a half months. At the same time, projects launched on CoinList have shown good wealth effects.

This was not Naval's first foray into the cryptocurrency space; as early as 2014, Naval co-founded the cryptocurrency hedge fund MetaStable Capital with Joshua Seims and Lucas Ryan.

Naval's personal experience and reputation in the capital circle attracted funding from top institutions such as A16Z, Redpoint, USV, Founders Fund, and Bessemer to MetaStable Capital. This was Redpoint's second investment in blockchain-related companies.

Before 2018, MetaStable Capital did not participate in specific project investments but held dozens of tokens such as BTC, ETH, and XMR. Since 2018, MetaStable Capital has invested in 11 blockchain projects.

Regarding investments, Naval stated that it's like throwing darts in the dark; all investments, whether successful or not, seemed like a good business at the time (All of the companies I have invested in seemed like a great idea at the time, even the ones that didn’t turn out so great).

At the same time, Naval believes that venture capital and angel investing are high-stakes games, where losses only result in the loss of invested capital, while profits can yield returns of 10,000 times.

In other words, venture capital and angel investing have limited losses but unlimited returns.

When selecting companies for investment, Naval's systematic strategy is to choose more companies on a larger scale to increase investment coverage. As Naval himself stated, "I try to build a good system to reduce the weight of personal influence because I believe my personal decision-making ability is not strong. As an investor, my investment strategy is to select 500 companies out of 10,000 that have the potential to become big companies, rather than betting everything on 10 companies that I think might succeed out of 100."

Which Companies Has Naval Invested in the Blockchain Field?

Naval has invested in over 200 companies, more than 80 of which have successfully exited and yielded substantial returns. BlockBeats has compiled Naval's investments in the blockchain field based on publicly available information:

Naval's Investment Philosophy in Blockchain

Naval's investments in the blockchain field can be summarized in 36 tweets.

On June 21, 2017, at 3 AM US time, Naval released 36 tweets in one go, containing his thoughts on blockchain and society as a whole. Previous media have translated the original text, and BlockBeats quotes it as follows:

1. Blockchain will replace networks with markets;
2. Humans are a networked species, the first species to cross genetic boundaries and thus control the world.
3. Networks provide us with opportunities for cooperation; otherwise, we would be alone. Networks distribute the results of our cooperation.
4. Overlapping networks create and organize our society. Physical, digital, and spiritual pathways connect everyone together.
5. Money is a network. Religion is a network. Companies are a network. Roads are a network. Electricity is also a network.
6. Networks must be organized according to rules. They require rulers to enforce these rules to guard against fraud.
7. Networks have "network effects." New users can increase the network value for all existing users.
8. Network effects create a winner-takes-all scenario. Leading networks often become the only ones that exist in the end.
9. The rulers of these networks become the most powerful figures in society.
10. Some networks are run by kings and priests, who set the currency and laws, sacred and untouchable. Rules are tied to power and are not open to the outside.
11. Some networks are run by companies, such as social networks, search networks, telephone, or cable networks. These networks were originally closed.
12. Some networks are run by the elite, such as university networks, healthcare networks, and banking networks. They are somewhat open but quite savvy.
13. Some are run by ordinary people, such as democratic networks, the internet, and civilian networks. They are open but not savvy enough and inefficient.
14. Autocracy is more efficient than democracy in war. The internet and physical public spaces are abused and overloaded with spam.
15. The 20th century created a new type of network—market networks, characterized by openness and savvy.
16. The advantages of markets depend on resources. Resources are money, a form of frozen and tradable time.
17. Market networks are giants, such as credit markets, stock markets, commodity markets, and currency markets.
18. They break market networks when there is committed money at work. Otherwise, they are just ordinary networks with limited applications so far.
19. Blockchain is a new invention that allows elites in open networks to participate in governance without rulers and funding.
20. They are merit-based, tamper-proof, open voting systems.
21. Networks are driven by valuable people.
22. Just as society gives you money to obtain what you want in society, blockchain gives you coins to get the network you desire.
23. It is important to note that blockchain uses its unique currency for payment, rather than the ordinary (dollar) currency of traditional financial markets.
24. Blockchain uses coins for payment, but coins are only used to track completed work. Different blockchains require different work.
25. Bitcoin is used to pay fixed bills, while Ethereum pays (executes and verifies) computations.
26. Blockchain combines the openness of democracy and the internet with the advantages of markets.
27. For blockchain, its advantages manifest in multiple aspects, such as security, computational power, predictability, attention, bandwidth, power, storage capacity, distribution, content, etc.
28. Blockchain brings market models to places that were previously unreachable.
29. Blockchain, based on market openness and advantages, can replace networks previously operated by kings, companies, nobles, and mobs.
30. Having a blockchain without coins is meaningless, just like having a market but no money on hand is pointless.
31. Having a blockchain controlled by dictators, companies, elites, or mobs is also meaningless.
32. Blockchain provides us with a new way to manage networks. It can be used for banking, voting systems, search, social media, as well as telephone and power grids.
33. Networks do not need kings, priests, elites, companies, and mobs. They can be managed by anyone of value.
34. Blockchain-based market networks will replace existing networks. Starting from one thing, gradually expanding the scope until complete replacement is achieved.
35. Ultimately, a country is just a network (a blockchain network).
36. Thanks to Satoshi Nakamoto and everyone who contributed to his achievements.