William: Hello, Megan is my partner at Magnetic Capital. She’ll be walking us through Magnetic’s framework for how we view and find investment opportunities for crypto. So Megan, share a little bit about what Magnetic does.
Megan: Magnetic’s focus since 2012 has been purely crypto and distributed ledger technology. We’ve watched the market evolve. The changes in technology, the experimentation, the tax, the regulatory, and the market changes. Our background is investors, company builders, and merchants. Using blockchain technology gives us insight that few investors can buy in this asset class. Our investment approach is experience-based and research driven.
William: So what is special about crypto that makes it a compelling investment opportunity?
Megan: The fact that it’s not yet a mature asset class. You can see this from the relatively small market cap of crypto compared to other asset classes. You also see this in the small user base. And we’re still at a very early stage of enterprise adoption. And yet whether you look at the past 10 years, the past 5 years, or even the past 3 years crypto as an asset class has generated the highest return of any asset class globally.
William: So Megan, is it too late to invest?
Megan: No. The crypto market opportunities are indicators for why we believe these are still the early days of crypto. In the last decade the crypto market achieved a return of 90,000x. Today, more developers, companies, and governments are building blockchain solutions than ever before. Over the next half a decade alone we can easily see a 5x market growth. So no you’re not late to the game because you didn’t buy bitcoin at $100
William: Are there specific opportunities you’re looking at?
Megan: Yes of course. Since the crypto market is in its nascent stages, we take a long-term investment horizon approach. And in that approach, we look at five main themes that are real world use cases for blockchain. In the top 5 best use cases there are several sectors that we look at such as payments, cross-border settlement, decentralized finance, stablecoins, cloud wallets, tokenized real-world assets, data collection and transfer, and gaming.
William: How do you invest in these use cases?
Megan: To invest in these use cases we look at the optimal way to participate in any one of these global opportunities that I’ve laid out which is influenced by the blockchain technology value creation stack. We clearly do not use a simple heuristic approach. For instance, as an investment approach we would not just invest in bitcoin and other top 10 protocol networks based on historical value. Most managers have used this investment methodology. It worked a few years ago but it won’t be a successful strategy going forward. This is because the focus is now on practical business applications.
William: So Megan, thank you for coming here today and sharing your insights about investing in crypto.
Megan: It’s my pleasure, thank you William, and thank you for watching.