Draper Dragon, a cross-border venture fund that connects Silicon Valley and Asia, sees the most opportunities in PayFi, zero-knowledge (ZK) solutions and GameFi within Web 3, according to its partner.
“Payment is one of the hot areas. Around one or two years ago, a lot of people said they wanted to convert Web 2 users to Web 3. But in the next few months, some will want to convert Web3 users back to Web2,” Richard Wang, Partner at Draper Dragon told TNGlobal in an interview at Cyberport Hong Kong.
“ZK project was hot then, say about two years ago. But its technology was not that matured at that point of time,” he said.
According to Wang, as the technology related to ZK solutions and GameFi gets more matured, he expects they will come in the limelight within the Web3 sphere.
“GameFi was pretty hot around three years ago. But there’s no real case then. The technology and the ecosystem are getting more matured now. So gaming will be another hot area,” he explained.
PayFi (Payment Finance) integrates payments with on-chain financing and blockchain technology to enable the free flow of value on-chain. By building on the foundation of Web3 payments with Real-World Assets and decentralized finance (DeFi), PayFi unlocks new and affordable financing opportunities, information from The Stellar network showed. The Stellar network is an open-source blockchain used for a variety of payment and remittance applications.
ZK technology has become some of the hottest property in the blockchain sphere over the last few years, powering an entire ecosystem of Layer 2s that bring scalability, lower fees, and many other features and enhancements to the Ethereum landscape, according to Forbes.
GameFi, meanwhile, is a combination of the terms gaming and decentralized finance (DeFi) and describes the integration of blockchain applications in the gaming sector for monetization purposes, among other things, information from PayTechLaw.com showed.
In October last year, Hong Kong-based Cyberport announced the signing of a Memorandum of Understanding with Draper Dragon to jointly establish the “Cyberport x Draper Dragon Web3.0 Accelerator Program”.
By integrating Draper Dragon’s Silicon Valley incubation experience with Cyberport’s thriving Web3.0 ecosystem, the collaboration aims to accelerate industry development across talent cultivation, project incubation, and investment, connecting Silicon Valley and Hong Kong’s related industries.
Draper Dragon will also select suitable projects from Cyberport start-ups that completed the Accelerator Program to invest in, enhancing innovation efficiency and aligning Hong Kong Web3.0 innovation with international standards.
Cyberport is Hong Kong’s digital technology flagship and incubator for entrepreneurship with over 2,100 members including over 900 onsite and over 1,200 offsite start-ups and technology companies. It is managed by Hong Kong Cyberport Management Co Ltd, wholly owned by the Hong Kong government.
Challenges in Web3 investment
Commenting on what are the challenges to invest in Web3, Wang identified governance and compliance as key challenges.
“Legal compliance is especially challenging as compared to Web2,” he said. “For Web 3, there are some weaknesses at this point of time. Governance is difficult for some projects,” he said, adding that equity matters are more complicated in some of the Web3 projects.
On how does Draper Dragon manages risk, Wang said legal services from lawyers, working closely with the founders play important roles.
“For the legal compliance, we always engage lawyers to do assessment about the project. From time to time, you’ll also need to watch the project status closely,” he said.
“We just have to keep close to the founders and the team. Meet them frequently to know how they manage the project, based on what is planned,” he added.
Established in March of 2006, DFJ DragonFund was the joint venture between the internationally recognized venture capital firm Draper Fisher Jurvetson (DFJ) and DragonVenture, which helped pioneer venture capital in China in the late 90’s.
Since its inception, DFJ DragonFund managed two US Dollar funds “DFJ DragonFund I & DFJ DragonFund II” and one RMB fund. In 2014, the DFJ Global Network rebranded as the Draper Venture Network. With the launch of its 3rd US Dollar fund in 2016, DFJ DragonFund henceforward became known as DraperDragon.
Draper Dragon is headquartered in Silicon Valley and have management and consulting offices in Shanghai, China.
As a member of the Draper Venture Network, it draws upon the substantial resources and capabilities developed over two decades of venture capital investing, information from its website showed. Telegram, Vechain, Ledger, Yeepay.com are among the companies it backed.
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