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Below is our recent interview with James Nguyen, Co-Founder of Anti Hero Capital:
Q: What’s your elevator pitch? How do you describe Anti Hero Capital to people you meet for the first time?
A: Anti Hero Capital is one of Australia’s first investment funds that focus exclusively on investing in crypto assets and digital currencies. By leveraging our experience in technology and evaluating investments through fundamental analysis, we’re focused on providing wholesale investors with exposure to the highest profit potential cryptocurrencies often overlooked by the market.
Q: How do you use evolutionary science to select cryptocurrencies to invest in? Is it a manual process, or do you have an algorithim that does it? And how do you keep track of all of the cryptocurrencies that are released to market?
A: We have a multi-modal approach to evaluating our investments that combine a unique intersection between technology, big data and evolutionary science. Given the market can be quite noisy right now, we will utitlise proprietary algorithms that track specific data points in early stage and maturing cryptocurrencies. The purpose here is to automate the intelligence gathering process to allow us to focus on the evaluation stage. Our algorithm will signal the tokens with the highest growth potential by analysing characteristics such as network effects, meritorious governance, value creation and more. These specific attributes are the same power laws that are present in the most adapted decentralised networks in nature such as ants and honeybees, and thus represent leading indicators of the cryptocurrencies poised for strong growth.
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Q: What opportunity is Anti Hero Capital addressing?
A: There is a significant disconnect that exists in the market right now: wholesale investors want exposure to the returns of a potentially generational asset class but they don’t know exactly how to do so effectively. By virtue of informational and experiential asymmetry, the ability to profit from investing in cryptocurrencies is prohibitive for new investors entering the market. Anti Hero Capital is aiming to bridge this knowledge gap by launching an institutionalised fund that focuses on investing in crypto assets and digital currencies. There is an emphasis on professionalism, experience and intelligence to afford investors who are intimidated to invest themselves a means to realise the sizeable profits of this industry.
Q: What is your founding story? How did you come up with the idea for Anti Hero Capital?
A: Matthew and myself (James) have been heavily involved in the tech and startup scene for nearly a decade. In 2014, Matthew was writing a book about decentralisation that focussed on the implications of blockchain technology, cryptocurrencies and the patterns that were appearing through evolution. The more we deep-dove into the technology and its disruptive potential, the more we were fascinated. That was the start. Ever since, we’ve been studying where this industry might potentially take the world. With the accelerated enthusiasm for crypto in 2017, we saw a lot of public excitement for the space disproportionately weighted against insufficient understanding of the underlying asset. There was a glaring gap in the market for an institutionalised, professional and accessible vehicle for people to invest in the space. Anti Hero Capital Fund is that vehicle.
Q: What kind of interest have you had from investors to date? Have you experienced some resistance from old-school investors who are hesitant to put money into this new asset class? If so, what has been the deciding factor for them when you’ve pitched the fund?
A: The fund raise has been overwhelmingly positive. The timing for our fund seems to match very nicely with the appetite for the market. A big part of our discussion with investors is around the education piece. The returns of cryptocurrencies are largely publicised, so for investors the focus has been less about acknowledging the possible profit potential, but more about understanding how these returns can be justified. Investors from traditional business backgrounds outside technology are transparent about their trepidation to invest in the asset class because of the knowledge gap. This initial hesitancy is understandable, given the space can be esoteric. But what we’ve found to be one of the most attractive aspects of Anti Hero Capital, and what buoys many interested investors with confidence to back us, is our focus on establishing one of the most institutional and professional Funds worldwide. We’ve built a vehicle for large institutions to be confident to invest in because it is backed by some of the industry’s leading service providers and industry tested procedures. We anticipate heightened attention and forthcoming stringency in the space, so we’ve built a Fund that is more than prepared for when that comes.
Q: How does cryptocurrency compare to other asset classes?
A: Cryptocurrencies are not financial products. That’s a big misconception. The common question we get asked is about how to value cryptocurrencies, especially when they don’t have ‘traditional’ cashflows. This is a lagging indicator of misunderstanding. Ultimately, cryptocurrencies are technoloies and innovation. Attempting to squarepeg these assets into the round holes of legacy asset classes such as commodities, securities or financial products misrepresents them. We see cryptocurrencies in the same way we see technology and we structure our investment process to reflect that.
Q: How are you doing things differently to other cryptocurrency funds? What mistakes are they making that Anti Hero Capital is addressing with its own approach?
A: There’s two aspects that differentiate our Fund in a significant way. The first is that we are fundamental investors looking at this industry with a long term lens. We’ve seen many trading funds, short term focussed funds, index funds. These players stand to profit in the short-term but their long term viability isn’t clear. Because of our background in technology, we focus on what makes cryptocurrencies unique — their technological characteristics. It’s very difficult for a fund without strong technical expertise to be able to identify the sort of cryptocurrencies that stand to appreciate the most over time. After all, cryptocurrencies themselves, are technological innovations.
The second differnetiator of our Fund is our institutional approach. We have been meticulous with the procedures that we will implement to ensure the safety, security and professionalism of the Fund. Even though there is much regulatory evolution to come in the space, we have structured the Fund with the guise that these policies exist. We have surrounded ourselves with some of the industry’s best service providers to ensure that we offer our investors institutional grade exposure — something that doesn’t yet exist properly in the market.
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Q: How do you get around the perception that cryptocurrency as an asset class is too volatile to invest in?
A: Volatility shows us that people are entering the market. This is a natural part of the evolution of the industry and we welcome it because we understand it is a leading indicator of future development for the eco-system. It’s also primarily relevant for investments in the short term and ones that are subject to the most speculation. Over the long term this speculation dissipates. Because we focus on organic growth through fundamental analysis, our fund is largely inoculated against such short-term volatility.
Q: What are some of the challenges with investing in cryptocurrency?
A: There’s a lot of noise in the market. When there are over 1500 cryptocurrencies to invest in, it can be both intimidating and potentially dangerous to enter the market without having done your due diligence. Given the learning curve for cryptocurrencies is also steep, many investors don’t necessarily have the time to invest in becoming versed in the space before they allocate a part of their portfolio to it. That’s why people are turning to our Fund to take over an otherwise prohibitive process.
Q: Is Anti Hero Capital working with any other startups or industry bodies in Australia or overseas?
A: We spend a lot of time abroad and on talking to people in the space. A big part of our investment philosophy is to be intentional and meticulous with how we evaluate token investments. This often involves meeting the founders, the engineering teams and the actual community of cryptocurrencies before we invest in them.
Also, it’s a small world in the crypto space. Naturally, you end up meeting and working with a number of the key players in the space.
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