Hey there, welcome to “OPL Boba Time” at OnePiece Labs! Join us for a monthly chat over boba and afternoon tea with Web3 experts from various fields to gain insights on the market. I’m Elva, an associate at OnePiece Labs, and today, our special guest is Paige Xu from the OKX Investment Team. We’ll discuss investment trends in the crypto world, her Web3 career choices, her VC investment thesis, and Web3 ecosystems.

Disclaimer: The views in this podcast do not represent the guests’ organizations, and mentioned projects are not investment advice. Sip some boba, enjoy afternoon tea, and let’s chat Web3! 🍵🌐💼

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Elva: Can you share your journey of transitioning from a role as a Business Analyst at McKinsey & Company to become an Investment Manager at OKX? What motivated you to pivot into the Web3 industry?

Paige: My journey was a natural progression driven by my passion for the Web3 industry and the opportunities it presented. Working at McKinsey was an incredible experience that provided me with a strong foundation in professionalism, exposure to various industries, and valuable expertise in fintech and oil and gas. However, I realized that I wanted to explore a more dynamic and high-growth sector, and that’s where Web3 caught my attention.

While consulting at McKinsey offered a fast track in career growth, I noticed that, without extensive industry experience, it was challenging to directly engage with key clients, particularly in sectors like fintech and oil & gas. Currently, I find myself at the forefront of the industry, collaborating closely with visionary founders and influential decision-makers, among other exciting opportunities.

Elva: What factors do you consider when evaluating potential Web3 investments? In your opinion, what makes a good investor in the Web3 industry?

Paige: As the corporate venture arm of OKX, we not only look for high-potential projects but also projects that align with our core business and synergies.

When it comes to investing in Web3 projects, my primary focus lies on the founder’s vision and product logic. I assess whether it addresses a gap in existing infrastructure and its potential to integrate with established protocols. Evaluating the viability of their tech stack and how they plan to tackle mass adoption, including their go-to-market strategy, is crucial. Understanding the design decisions, such as launching tokens, SaaS models, or targeting B2B, B2C, or B2B2C markets, depends on the founder’s vision and logic, and it forms the foundation of my decision-making process.

Next, I delve into the project’s valuation and Tokenomics plan. While absolute numbers can be adjusted, the thoughtfulness and logic behind their approach reveal how well the founder has strategized the business aspect of their project.

Moreover, I closely observe how the projects are gaining traction and liquidity. This aspect varies depending on the project type, but having an initial bootstrapped traction and liquidity plan is essential. Projects that already have promising strategies in place for achieving traction are particularly attractive.

In order to become a good Web3 investor, I believe that it requires a profound comprehension of gameplay and the nuances of tokens, which are specific elements unique to Web3. However, it’s equally important to leverage pattern recognition from traditional investment mindsets, encompassing aspects such as go-to-market strategies, operational efficiency, financial fundamentals, team background, and intuition, which are key in making informed investment decisions in this dynamic space.

Elva: Given your background and expertise, do you see any specific areas within Web3 where investment opportunities are particularly promising? Are there any emerging trends or sectors that you find particularly intriguing?

Paige: GameFi and DeFi are indeed fascinating concepts. SocialFi projects can be challenging, especially if they don’t have a big name like Elon Musk backing them. Regarding NFT and NFT infrastructure, I don’t consider it as my primary focus because it’s already a mature market.

When it comes to GameFi, it’s an ingenious concept that seamlessly merges gaming elements with payment and DeFi technology. The rising trend of migrating casual mobile games to the blockchain to create a “win to earn” model is truly captivating and gaining significant traction.

Elva: How do you navigate the evolving regulatory landscape in the Web3 industry, and what impact do regulatory considerations have on investment decisions?

Paige: The regulation on cryptocurrency in the US is unclear. However, looking abroad, in places like Hong Kong, there are notable players such as Hashkey Capital, which is still providing significant resources and expertise to the Web3 industry.

Elva: What advice would you give to aspiring professionals looking to enter the Web3 investment space? Are there any key skills or knowledge areas they should focus on developing?

Paige: For young investment professionals in Web3, my advice would be to keep your eyes on the bigger picture instead of getting fixated solely on token prices. The market is highly sensitive to crypto-related news and institutional adoption,especially when it comes to more structured products involving blue-chip tokens.

Elva: In your view, how does Web3 challenge traditional investment models and practices? Are there any notable differences or unique characteristics that make Web3 investments distinct from traditional investments?

Paige: Now, it’s just Web3 back to normal Web2 VC success rate, and some people find it hard to handle. In the past, we were accustomed to projects yielding 50x returns and incredibly high ARR (Annual Recurring Revenue), with almost one promising project out of every 20 investments. However, in the current Web3 landscape, it’s more like one in 200, which is the norm for web2 Venture Capital investments.

Crypto winter seasons like these separate the real survivors from the hype-driven projects. It’s a time for organic growth and a chance to bridge the information gaps that exist in the Web3 space.