Update on FTX situation

FTX, the world’s second largest cryptocurrency exchange declared bankruptcy last week after allegedly misusing client funds leaving it unable to cover customer withdraws. The knock-on effects are still reverberating around the crypto, wider Web3 and VC ecosystems but like the summer turmoil surrounding the failures of Celsius, Terra Luna and 3 Arrows Capital, these events?serve as a justification of the more transparent system that Web3 delivers.

Despite dealing with cryptocurrencies, it is important to note that?FTX is not a Web3 company,?it is a centralised financial exchange. Instead of utilizing blockchain technologies and smart contracts for their intended purpose, allowing?traceability, transparency,?and?ownership,?it appears FTX used its centralized status to facilitate a series of hidden internal transfers away from consumer deposits. This is completely against the ethos of Web3, and the complete antithesis of what Web3 aims to achieve.

AngelHub’s position is unchanged, Web3 is the future of the internet.

The power of blockchains, decentralised systems and smart contracts allow a new form of ownership that has?not been possible before, which leads to an?unparalleled opportunity?for users, for companies and for investors:

• Users demand ownership of their data, transparency, and less dependency on third parties
• Companies and creators understand that this new ownership model opens-up completely different business models and can leverage communities and network effects to spread and scale???
• Investors can now own the whole technology stack, and like the previous versions of the internet before, this represents a?generation investment opportunity

We are not alone?– amidst the drama unfolding over the past two weeks, Nike launched a new digital venture called?.Swoosh, a Web3-enabled platform where users will be able to design, buy and earn royalties from virtual products. Shortly before that, the world’s largest bank,?JP Morgan utilised Decentralised Finance (DeFi)?to create a cryptocurrency overcollateralized loan.?Corporate adoption is accelerating, which was the key theme of our first whitepaper focused on NFTs.??

Events like these also?make us reflect on our process?as investors in this space. It has been well documented that some VC Funds have been badly hurt chasing after the fastest growing companies with little concern for corporate governance.?This approach is not compatible with our process.

We have spurned the opportunity to invest in numerous “exciting” companies over the past few years because of issues uncovered from our due diligence discovery and from the feedback of our?Investment Committee?(IC). Having an excellent IC with a?vast range of domain-expertise?allows us to take a step back when conducting analysis and reflect deeper on the companies we want?to?invest?into. We are also delighted to announce the expansion of our IC with two exceptional new additions:?Blake Larson?and?Vincent Chan.

We are?resolute on our strict vetting process?(which you can read about here:?AngelHub Vetting Process), we will not invest blindly into companies we do not understand, and?we will continually study and process the lessons of others in this space.?This approach is used across all of the AngelHub investment verticals: FinTech, ESG, Industry 4.0?and?Web3.?

The?effects of FTX on our portfolio remain very contained,?Animoca Brands stated that damage is “limited to a non-material trading balance” and NeoSwap have accelerated deployment onto the Polygon blockchain.?

Finally, we?believe in the power of the crowd,?and in the power of new technologies to unleash new business models and revolutionize the way we live not just in Web3, but FinTech, ESG and Industry4.0 too.

We are committed to being an?active participant and supporter of the whole Web3 ecosystem. Our philosophy of?democratising access to investments?is an embodiment of this, while operating in a manner consistent and?compliant?with regulatory authorities. We will continue to use our position and platform to provide thought-leadership (view our?NFT Whitepaper) educating and enabling more people in Web3, and utilise our capital, both human and otherwise, in?helping companies grow?in this space.

#wagmi

Karen Contet & Tristram Miners-Jones

AngelHub CEO & Co-Founder / Head of Digital Assets