As one of the world’s biggest cryptocurrency exchanges, Huobi’s goal is to help other innovative projects succeed. Technology and creative communities appear to be the transformative force behind digital assets and financial reorganization disruption.
However, while they celebrate visions of different projects, the applications have struggled with the lack of recourse and know-how. Huobi Ventures is a wholly owned subsidiary of Huobi Group that invests globally in blockchain and crypto projects and helps them to overcome these challenges.
Funding has always been one of the big problems small companies have faced, especially in disruptive technologies like crypto, where products can seem too technical and hard to understand for traditional investors. Traditional financing for an early-stage company happens most often through commercial lenders, venture capitalists, crowd-funding and angel investors. However, loans usually include significant interest rates and increased risk and as such, are not the best strategic move for new projects. On the other hand, while private investors can help the project succeed, they are usually hard to find and demand significant project ownership.
Crypto and blockchain ecosystems have made project financing easier. In addition, they are not as dependent on central authorities and wealthy individuals or organizations as the traditional funding world is. Instead, crypto projects often allow anyone to buy their tokens in a process called an Initial Coin Offering (ICO) or its different variations, such as the Initial Exchange Offering (IEO) and Initial Dex Offering (IDO). They are fundraising methods whereby investors receive tokens in exchange for their investment.
Now, people worldwide can buy the tokens of various projects, express trust in the project and possibly, enjoy high returns if they succeed. These fundraising methods give projects more flexibility and better support their long-term strategies.
But even accessible ICO financing models are usually unable raise enough funds from public and traditional investors to solve the biggest problems in the traditional financial system: high fees, centralization, and rigid systems.
Since this is familiar territory for Huobi, Huobi Ventures will take advantage of these projects’ rapid innovation and high returns by deploying $100 million in three years into early-stage blockchain and DeFi projects, as well as strategic acquisitions.
Huobi’s strategic partnerships will help spur new blockchain companies to reach mass adoption and recognition, while helping them build their products and services to meet the needs of the future of finance. Huobi Ventures consists of four business lines: Asset Management, Strategic Investment, Strategic M&A and Global Cooperation.
Huobi Ventures divides its investment focus between corporate mergers & acquisitions (M&As) and venture capital (VC). The M&A unit researches the blockchain industry and finds opportunities to add to Huobi’s product offering. Huobi then integrates these acquisitions into its array of blockchain-powered applications and services to expand the business to serve new markets. In turn, the VC side focuses mainly on investing in early blockchain use cases and DeFi projects.
It is essential to establish that Huobi Ventures has a financial goal with the primary purpose of driving growth to Huobi Group. However, it does incentivize both parties to be on their best behaviour, something that is mutually beneficial. As the number of projects increases, Huobi Ventures aspires to build a global ecosystem that solves problems and provides recourse as a community.
Gaming the system
In contrast with the finance industry’s typically rigid ways, crypto provides fun, innovative money-making methods. It has also been claimed that nothing drives the adoption of a product as well as game-like features. It should therefore be no surprise that Huobi Ventures has established a dedicated $10 million investment fund for early-stage GameFi projects. For those not familiar with GameFi, it is a combination of digital assets and gaming. It is based on “play to earn” functionality that enables users to earn dividends by playing games. It is still in very early days, but it has awakened significant interest in the public, and many users even play them to earn their living.
In addition, Huobi Ventures has dedicated $10 million to NFT investment. This will be invested in not just the collectibles themselves but also emerging NFT projects, such as marketplaces and mining. NFTs are now the pre-eminent way to prove the authenticity and ownership of digital assets, providing individual creators with new ways to earn money. Even amid all the speculation, NFTs seem to be on an up-trend, representing the beginning of something bigger.
The future of finance will probably look very different from what we used to expect. We might be in a similar situation as we were in the beginning years of the Internet, where everything seemed confusing. Crypto projects are still a risky investment option that prune many traditional investors from the crypto ecosystem.
Still, adoption rates indicate that it is just a matter of time before the mass adoption of decentralized products based on cryptography, with better functionalities. In fact, many people have already started using crypto products without realizing they are crypto-powered.