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Deep Dive with Rick Marini

Rick is a serial entrepreneur and the Managing Partner of Protocol Ventures. Protocol is the first fund of funds focused on crypto assets.

posted 4 years ago

with or if you'd like to join the discussion.
Soona
Hi Rick! What are the top 2-3 things you evaluate when reading a white paper?
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Rick Marini
@soonaorlater Several factors in reviewing a white paper:
1) Is this a marketing paper or a technical paper?
2) Is this pitch solving a technical problem that needs to be addressed?
3) Is there a need for the token to exist? What is the utility of the token?
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Erik Torenberg
What are the non-obvious skills that separate the crypto fund managers you invest in from those you don't?
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Rick Marini
@eriktorenberg 1) Reputation among the early Crypto adopters, specifically the technical advisors and what they have to say about any particular manager
2) Past investments demonstrating skin-in-the-game. So not just someone who's been a "thought leader," but someone who has actually invested in the space.
3) Founder-market fit. Is the person best suited for the type of investment strategy they're pitching. e.g. someone pitching a deep technical diligence strategy should have in-house team members who are qualified to evaluate protocols while someone pitching a trading approach should have a background in trading commodities or cryptocurrencies.
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Neil Deramchi
Hey Rick, would love to hear about what altcoins you're a fan of!
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Rick Marini
@NeilDeramchi I'm interested in "altcoin" themes:
1) Platform Cryptocurrencies (e.g. ETH, Stellar, etc.)
2) Decentralized Exchanges (0x, Kyber, etc.)
3) Privacy coins (e.g. Monero, ZCoin, & ZCash)
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Harry Garrett
What are some blockchain projects you’re excited about?
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Rick Marini
@Harry-Garrett The 0X ecosystem and the ICOs working to build out an alternative to centralized services for Crypto investors.
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Linda Xie
Hi Rick! What do you get asked about the most when talking to institutional investors?
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Rick Marini
@ljxie Institutional investors often fall into 2 buckets: those with crypto experience and those without. For the newbies, I spend time discussing the core tenants on blockchain technology such as distributed ledger, decentralized protocol, mining, tokenization, etc. Then, we discuss the practical applications for blockchain technology and what that means for the future of many industries, etc. For those investors that are experienced, the questions are more specific around fund strategies, tax implications, tokens vs equity, etc.
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Avichal Garg ⚡
What is your strategy for rock, paper, scissors?
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Soona
@avichal haaaa
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Rick Marini
@avichal hahaha - for some context, Soona and Erik T hosted an awesome crypto dinner last week. We started with an ice breaker of rock/paper/scissors... and somehow I won! My strategy was to go with paper because everyone seemed to want to smash with their rocks. Maybe the dip in crypto last week played a part. ;-)
1
Rick Marini
Hello everyone, it's Rick. I'll start by answering the questions that are listed below. Please feel free to add more questions. Here we go....
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Rick Marini
Thanks everyone for the great questions. Take care!
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Ahmad Bhatti
Any tips for risk management specifically in the crypto space?
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Neil Deramchi
And what factors do you place most weight on when considering how promising a project is?
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Rick Marini
@NeilDeramchi I look at it in a similar way to how I assess angel investments. You do a deep dive on the quality of the team, the market need that project addresses, the ability to scale and the competitive situation. Specific to crypto, you also look at the realistic need for a token (for an ICO). Of course, you can also look at secondary signals such as the quality of the investors and advisors.
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Ben Lang
Hey Rick, who are 2-3 people in the crypto space you deeply admire?
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Rick Marini
@Ben-Lang I have to start with my good friend Naval Ravikant, especially since he got me started in crypto about 4 years ago. He is a true leader in the space and huge advocate for the community. Next, Vitalik as the founder of Ethereum, which could be a hugely important platform for crypto to rise to the next level. He is incredibly smart and a true visionary. And a tip of the hat to Satoshi!
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Alessandro Giordo
I'd like to have your view on what to use for trading (or investing rather) for altcoins.
Bear in mind I'm quite new to this. I'm documenting myself and avoiding FOMO patterns but I'd like to have a nice workflow to start investing on altcoins like Ripple and Verge.

I'm not sure of the workflow and I'm patient enough to ask first, act later.
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Ahmad Bhatti
@Alessandro-Giordo check out binance too!
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Rick Marini
@Alessandro-Giordo One of the exchanges with the most available alt coins to trade is Bittrex. I use/like them. In terms of research, I would look at emerging alt coins that have a clear use case, scalability, a solid team behind them and strong support from the developer community. Please be aware that some alt coins are very thinly traded so there could be a meaningful discount when you try to sell. The upside for certain coins may be higher than BTC or ETH... but I think a balanced portfolio makes sense.
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Stanley
1. What do you look for in a team?
2. What projects have the best team in this space?
1
Rick Marini
@stanleyhataria I like technical teams that have a asymmetric understanding of the applications for blockchain technology. I like teams that not only dissect the white paper but actually get into the codebase in assessing an ICO. In a diversified approach like we have with Protocol Ventures, I also like fund managers with a financial background such as Ari Paul at BlockTower. I think that could be increasingly important as Wall Street infrastructure comes into play in 2018 with BTC futures / derivatives.

In terms of the best teams, there are many. Obviously, Ethereum. Also, Stellar, 0X and ZCash. And many more!
1
Zack Onisko
Hey Rick! How about them Pats?
0
Rick Marini
@zack415 Zack knows that I'm a huge Boston sports fan. The Pats are killing me with these come-from-behind wins. I'm on the edge of my seat for 90% of the game.. and then they comeback again. I think the Eagles will be tough. Should be a great SuperBowl. Go Pats.
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Ben Tossell
How did you get into Bitcoin?
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Rick Marini
@bentossell My friend Naval Ravikant fell down that rabbit hole first. We had dinner about 4 years ago and got into a discussion about the technology and potential applications and it was fascinating. I felt like I was back in 1993, when I first realized the opportunity for the Internet. I feel like we are right there today with blockchain. Not everyone sees the vision yet (like Internet in 1994) but the opportunity is huge and it's still super early days. So much more to come!
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Ben Tossell
What's your advice for people who are just starting out in crypto?
0
Ben Tossell
Have you found anything particularly helpful or advantageous?
0
Nathaniel Whittemore
Hey Rick! Been a minute - excited to see you here! Based on your answers below, you're obviously spending a lot of time in the core Altcoin infrastructure areas. I'm interested in whether you're also spending time with specific domain blockchain companies trying to leverage the power of decentralization/smart contracts etc for very particular industries or applications (think Enjin for gaming/esports)?
0
Erik Torenberg
Hey Rick! Can you walk us through how you became a fund of fund manager?
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Rick Marini
@eriktorenberg I started by investing in crypto directly. Then I realized that it's really hard because crypto trades 24/7 and half the trading occurs in Asia (Korea and Japan, formerly China) so doing this on my own would be really hard. I also realized the issues around custody. I also started to see how the best hedge fund managers have informational advantages which could drive huge returns. For all of those reasons, I decided to move my crypto capital to funds like Metastable and Neural Capital. Once I started to diversify my own crypto holdings across funds, I realized there was a need in the market for a fund of funds model. There are 200 crypto hedge funds now and trying to do the research and get access to them is difficult for most people. I was already doing that work for my personal investments... so I decided to institutionalize the idea and create Protocol Ventures.
1
Erik Torenberg
What is your advice for those looking to start a crypto hedge fund?
0
Rick Marini
@eriktorenberg Well, this is harder than most people realize. Researching and trading crypto is the fun part. But all of the administrative tasks in running a fund are difficult and distracting. Such as the fundraising, accounting, administrator, taxes, IR, etc. It's far more work than most traders realize. And the biggest part of that is fundraising - it's a huge distraction which takes you away from the fun stuff for you.. trading! Please know what you are getting into when you make the move from independent trader to professional hedge fund manager.
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MARA
Hello Rick! Why do you think the value of coins are dropping right now?
0
Rick Marini
@MARAOHORO The crypto market is highly volatile. It grew from an aggregate market cap of $17B on 1/1/17 to about $600M today which is 30x in a year! There will be plenty of wild swings, up and down, in this asset class for a while. A lot of this still centers around FUD, especially around regulation -- Korea, SEC in US, Germany/France, etc. If we had more clarity on all of these issues, the crypto market might stabilize which probably means lower potential for these huge returns in the short term. That said, we need to get there on clarification on regulation. Right now, most of the gov't agencies are still trying to figure it out and then make informed decisions. That is probably the right approach.
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Erik Torenberg
What has your fundraising strategy been for protocol ventures?
0
Rick Marini
@eriktorenberg We are targeting high net worth individuals and family offices that want some exposure to crypto assets. We offer a diversified approach so a single LP investment immediately gets exposure to a basket of the best hedge fund managers in crypto. We believe this is a smart approach to gain exposure to an existing but volatile asset class.
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Kartik Mandaville
While you are investing, how much do you care about the token being usable as soon as you get it? (utility tokens only)
0
Rick Marini
@kartik-mandaville In an ICO, the timeline could be several months to a year or more. In those cases, it's a bet on the team, utility and scalability. If all of those factors line up, then I would be willing to wait a year. But in this dynamic market, I don't want to wait too long as things seem to be highly accelerated right now. This is a time to run, not walk!
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