Episode 103 of Season 4 of The Scoop was recorded at Converge in San Francisco with The Block's Frank Chaparro and Asymmetric Founder and CEO/CIO Joe McCann.
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In a market known for mantras such as "irresponsibly long," Joe McCann has been taking a more prudent approach to crypto venture capital investing.
The former head of systematic and algorithmic trading at Passport Capital launched his latest venture, Asymmetric, in the spring of last year and started deploying capital this past summer in the wake of the Three Arrows Capital meltdown.
On this episode of The Scoop, McCann explained that his firm's approach to venture capital investing in crypto means it will take money off the table and hedge its exposure.
"The liquid nature of crypto, especially at the early stage, is actually a feature, not a bug of crypto, but you actually need to know how to manage a liquid portfolio," McCann said. "So if you have 150 vol asset in your portfolio, you may want to manage that, right?"
Indeed, McCann said traditional venture investors don't have experience with the necessary trading tools — such as derivatives and other financial contracts — to hedge risk in liquid assets, which cryptocurrencies inherently are relative to early-stage startup equity. This difference is a major impediment to VCs operating in crypto, according to McCann.
"There is a fragile reputation that a lot of folks in the industry may have concerned with, 'hey, I'm going to invest in this startup and we're in it for the long haul, and we're not going to ever take profits or sell the token,'" McCann said. "The problem with that is that's great for traditional venture capital, where typically you don't have a liquidity event for 10 to 12 years ... with crypto, we know that it becomes liquid in months. So the way that you manage a traditional venture capital portfolio isn't relevant anymore — you're actually managing a liquid portfolio."
During this episode, Chaparro and McCann also discuss:
- How to use tokens effectively;
- What on-chain structured products are gaining traction;
- The macro picture and why Asymmetric is in a heavy cash position.
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