For blockchain investor and unicorn builder Miko Matsumura, it’s always about investing in a team rather than a project. Matsumura is a managing partner at Gumi Cryptos Capital (gCC), a San Francisco-based early-stage blockchain investment fund worth $500M.
One of the latest projects that gCC invested in is the strategic partnership between Greek-founded web3 infrastructure company Mysten Labs and Ethos, the creators of the Ethos Wallet product, which enables users to discover and experience next-generation decentralized applications (“dApps”) on the Sui Layer 1, a blockchain that redefines asset ownership.
In an interview with The Recursive, Matsumura shares his thoughts on gCC’s latest investments, their philosophy, how the fund chooses where to invest in, what is next for the blockchain and crypto space, and more.
The Recursive: The Mysten Labs and Ethos partnership on Sui – what is it going to bring to the industry?
Miko Matsumura: We are very excited about the Sui ecosystem – the thing about the Ethos wallet that is exciting is that their approach to wallet is with a much more deeper integration to the ecosystem. So the idea becomes maybe closer to an app store model than just a wallet. In a sense, the interactions, the games, the applications become really integrally, both discovered through the wallet, but also kind of integrated in the wallet.
Therefore, your interactions with the Sui ecosystem are really very kind of native – so you just flow, you’re going through this kind of collection of applications and I think one of the things that we’ve noticed about the launch of the Sui platform has been that they really have focused on delivering very high quality, kind of a gaming experiences.
We do feel that an app store model and the concept of a gaming store is a very popular idea – whether it’s something like stream or these kinds of browsing experiences that make a lot of sense.
When you look in places like Google Play Store on mobile, or if you look at places like Apple App Store for iOS, you definitely end up seeing a lot of stuff related to entertainment. And I feel like that will be a pretty big part of the Mysten Labs ecosystem.
We’re definitely excited about it – which is why gCC made our investment into this project, which is related to the domain thesis, around what we think is going to happen, but obviously we also just think that this team is very world class and super amazing as well.
What is gCC’s investment philosophy and strategies when it comes to blockchain and crypto?
We’re basically a very strongly builder-centric fund. We only really invest in the early stages of web3 projects and startups and in this particular case we definitely lead more than we follow.
Because we see ourselves as a builder-aligned – all three of the partners have founded and scaled and built and exited companies, including M&A or IPO or different kinds of outcomes. And because of this we as a fund are very loyally dedicated to finding these builders.
One of the things we like to call them is “Gumicorns” which is a bit like a unicorn, but in a way, it’s more like a specific type of individual. So, you know, we definitely saw that with Nadia (ed. note – Nadia Eldeib), who is the CEO and founder of the Ethos Wallet, and we definitely feel like that’s a pretty amazing achievement.
How do you identify the potential investment opportunities in early-stage early companies?
One of the absolute kinds of critical factors is very much the sort of team – so we’re definitely super team-centric. The other thing that we really look for -we’re sort of focused on builders and building. And we see the crypto winter markets as being best for builders, so we are really focused on this very, very simplistic rubric of looking for people who are building essentially software that other people want to use.
So in essence, we’re really looking into themes like mass adoption, it brings us into themes like financial services, gaming – so we just look for these people. We’re definitely excited to have very sophisticated and professional product people, coupled with sophisticated engineering people to deliver. So our main focus is sort of rapidly delivering very powerful, very usable software.
And in a sense, part of our criteria is really looking for that, and we love to see that combination. So, if you look at the kind of founding team like at Ethos Wallet – sort of a builder engineer coupled with a product person, that is the combination that is really powerful for us.
The building software part is really the engineering part, and the product part is the one that people want to use part. So in a sense, those two characters are a really key part. For example, if you go back to the founding of Apple, you really could see the classical Steve Jobs and Steve Wozniak.
In essence, you have sort of a product, visionary person, and then you have like an engineering type person So those are the things that I think we find sort of the most compelling and attractive.Because when we think about these two things like making software, and people wanting to use it, those are the two sides of that point.
What type of sectors or projects would you say are most interesting in the industry right now?
I would say that in the vertical industries, we tend to focus on financial services, including DeFi. We also tend to focus on things like gaming and game-related projects. I think that obviously one of the exciting things about wallet infrastructure is that it definitely is horizontal.
We think that just the basic wallet functionality is pretty commoditized. But we do feel that an approach that Ethos is taking, where you really see more of an app store with application discovery, becomes a little more differentiated.
Especially with the sort of new ecosystem like Mysten Labs, you do tend to see it as a really good opportunity for new players to show up and offer new infrastructure.
How has the behavior of investors in blockchain and crypto changed over the past few years?
I think one of the biggest changes in the infrastructure investment paradigm is that we really are moving towards modular infrastructure. So we’re excited about this kind of modularity, and it becomes more venture investable. I think the average time to become a unicorn in Web 2, according to the book “Super Founders” is about four years, median time, and then it starts to taper around seven years.
In essence, if your project will take about four to seven years to get to scale, then you might be a suitable target for raising venture capital. Whereas if your project takes 10, 20, or 30 years to ship, or just start showing results, it’s probably a bad candidate for venture capital – because the funds don’t operate on that timescale.
One of the things that we’ve seen in terms of the changes in the industry is that this idea of modularity creates an opportunity for new money to go to new places. And it takes something that’s monolithic, like a Layer-1 that breaks into L1, L2, or it breaks it into bite-sized pieces that can all independently be financed.
Which I think gives those chunks a better granularity to be more compatible with venture investing – whereas I feel like the traditional model really borrows a lot from open source.
In light of current market conditions, what advice would you give to investors looking to enter the blockchain space?
It’s very, very important to have sufficient diversification because I feel like there’s plenty of risk in this market. So my advice to anyone who’s jumping into this market should definitely be that you need to try to remain diversified.