Oct. 23, 2020

How a student study group evolved into a decentralised venture capital? By Poseidon Ho.

How a student study group evolved into a decentralised venture capital? By Poseidon Ho.

Poseidon Ho, Founder and General Partner at Outliers Fund talks about investing in deep tech and the real moonshots. We've also talked about crypto investing and how Outliers Fund was started and how it became what it is in 2020.

Poseidon's LinkedIn: https://www.linkedin.com/in/poseidonho/

Outliers Fund: http://outliers.fund/

Episode of FR on working with the US department of defence: https://www.fundraisingradio.com/Ellen-Chang/


Transcript

And today is a guest speaker with beside who founder and general partner at outliers fund and this episode will talk about how a student study group evolved into an actual decentralized venture capital and. 

We'll also talk about their initial extreme growth how that happens. What happened to cryptocurrency now? 

What does outliers fund invest in now and what was going on in their organization so saying, let's he called by you giving us some background on yourself and on the outliers fund. 

Sure, thank you. Constant in. Thanks for having me Matt is decided and I'm currently run hours 1 for 4 years. 

As a solo GP, so.
About myself, I, I, I would say. 

I've always been thinking myself as someone out of track, no matter in student career, or my professional career, for example, back in. 

On 2016 I have been. 

Studying ants eliminates for several years originally it was just for fun or out of curiosity. 

Basically, I built a lot of cities using. 

For my eliminates observing their collective behaviors. 

And that actually ended up helping me to publish several papers no matter on computer science. 

Or material signs and. 

Essentially shaping my work view. 

About avison on decentralization. 

Including my future interest in blocking. 

And auto fields that it's something I call curiosity based research. 

And some people also see as a radical research, and back in MIT and Harvard in Boston. 

I had the lock to meet a lot of this kind of. 

Students mostly undergraduate students. 

So, during the summer of 2016. 

I create a group, a special interest group on Slack. 

I temporarily call it hashtag hours. 

The hashtag means basically variable. We, we have students coming from a background of mathematics. 
Basics aerospace material, science and many of us. 
We're working on something. 
That is radical enough that we couldn't be able to get any sponsorship. 

For research funding from our professors for the industry. 

At 1st, many of us was struggling. 

So, we use this online step to basically discuss. 

How can we push for it? 

With this obstacles, and we, we were talking a lot about. 

Different ways of generating capital. 

Well, when we were students. 

Nearly none of us could meet the, the bar of being an angel investor. 

In the United States, nearly none of us. 

Half the starting capital to start our own company. 

From scratch, but quite luckily. 

Many of us have observed the trend of. 

Theorem or a cryptocurrency as a whole so we. 

Luckily put a gather 2M collectively as a, as a students. 

And me as a solo to. 

To read collectively read 880 high papers. 

And we rated over 600 papers. 

Decide to invest city to top rated papers. 

Are our projects and it ended up. 

Turning 16.2 X, so making our 2M to 2.4M. It was when. 

It was how the. 

The hashtag allies started, and 4 years later, it became the allies fund. Right now it's a research. 

It's a collective of research given accelerator fellowship. 

And funds nice. That's interesting. And sounds very complicated. So I'll do my best to avoid all those technical parts. So, maybe maybe our listeners will. 

Will be protected from that stuff. So let's start with the positive start off outliers fund. When you were starting, you mentioned that you went to raise a few 100000 dollars to start investing, but instead you've raised multiple 1M dollars. 
How how did that happen? 
Yeah, it was by end of 2016. 

When many of us realize that we were individually. 

Reading white papers of blockchain and trying to invest into different token opportunities. 

And 1 day, my best friend, um. 

Hashtag mentioned me in the slack. 

By saying beside introducing them. 

We are a lead on structural, so we actually nominate someone. 

To be a general partner, I'm not the general partner in the industry. 

But, basically just help everyone. 

To collect the capital decide which. 

Token projects to invest and then help transfer those kind of administration process and. 

I did create a serum wallet and a Bitcoin wallet. 

Wishing to receive over 100 K and ended up receiving. 

Actually, over 5000000. 

From 40 students. 

That make me very nervous because it was totally beyond. 

And out of my comfort zone as a, for his time, while still added students. 

So, I have everyone back immediately on that day. 

Saying that that's forget about management fee and I don't want to myself to be perceived as a professional general partner. 

I also don't want to trick you guys as limited partners.
Could we actually work hand in hand?
All the way from the sourcing due diligence, investment decision proposal management. All the way to exit, just how we did.
In early 2016, more like a students study group. So we.
After I post this message out.
Honest the over 3M was being restore immediate and then it left.
It actually exactly taught. 
The group of people were still interested in to have so only 20 people left. With around 2M, but I.
It was the single fast.
Decision that I've made at the beginning. 

Of this entire investment group, because. 

It basically feel that herself very naturally. 

About people who were interested in, not only the. 

But also learning reading. 

And I'm spending time. 

All again from those who were only interested in financial return. 

Yes, that's. 

Very interesting and very, very uncommon. 

Story right there. So that's stuff. That's awesome that you actually mentioned, you know, that you want to you basically, for some people to withdraw to narrow down your investor audience, that's. 

That's great move. Love it. So, what do you think back, you know, looking back at your growth of large funds? What do you think was the major? What was the best move that you've done with that fund? 

I think is to. 

Democratizing the entire process from and. 

Due diligence, investment decision all the way. 

To how we exit so although. 

In the structure side, I was classified and nominated. 

A, so, but I. 

I don't think I had 100% decision. 

Actually, everything that's based on the centralized consensus, just like the underlying consensus algorithm of washing. 

Every single week we will find a classroom. And then discuss 5 to 15.
Different white papers everyone.
Did to get it. Everyone do. 
Did due diligence process to get it. 
And that is why I call ourselves a decentralized VC.
Most of the VC in the industry.
The matter in the United States and China at peace.
I sing our construct by probably 1 to 4 general partners. Those are the people. Called investment committee making the making the call. 

Pulling the trigger that is 1 way of running a VC. That could be more efficient. Um, but us as, like, 20 different students.
Coming from all different backgrounds.
Doing all decision in a centralized fashion. 

I think also brought us. 

A, very different perspective, um, to look at things like. 

They token atomics back then, which was very new. 

And that's, I think the, the biggest difference. 

That I'll call ourselves and that's that's honestly really huge huge difference, which I don't think I've seen. 

More than a couple of times in my entire life. So the outliers fund is definitely an outlier itself. A great name choice their employee. So moving on now that we've touched on to move. 

Let's talk about the biggest mistake that you've done with the outliers fund. What do you think, you know, now, looking back at that experience, you're like, okay, if I didn't do that, then probably we would. I know. 

Yeah, much more money or, you know, get their outcomes. Yeah, honestly looking backward by the.
All the decisions and process.
As a very good learning curve and resource. 

It the entire crypto fund 1 if we.
View from the summer of 2016 to and of 20. 17 within 2 1.5 years.
Honestly, I think it was the.
The best time.
In many of our lives, it could.
It could actually surpass a program. 
In terms to the activity, but if we really want to.
Pick out something that we have done Ron honestly too many. I would say the exit.
Back in December.
Of 2017, I remember what a Thanksgiving.
Many of us were gathering in the Bay area.
And we just met up.
Some of them have graduated some of us.
We're still students and.
When I walked into Thanksgiving gathering, many of my old friends from MIT asked me, hey, beside. I remember that we.
We have put together a fun.
And invest in several cryptos.
How how is that going? And I said, I don't know, I haven't checked it for a while.
That's how our computer and then.
See, can we figure out that originally the 880 projects.
End up 154 out of them.
We're listed on the change.
The city to out of 32 projects, we invest in.
We're all on a change and we pull.
Basically created a Google spreadsheet.
And trying to to see.
What are the, the prices for each token and found that.
Wow, it couldn't be possible nearly impossible that.
If we press the market order, sell bottom.
That would actually turn the 2M into.
Study 2.4M. Nice.
On that moment, I think we were too high.
Because we have never sold this big amount of millions. 
Uh, in front of our eyes and that, the only way to find out, whether it's. 
Real or not is to press the sale button. So we did we, we pushed the sell button and. 

1, by 1, from all the way to. 

Auto crypto currencies and liquid that U. S dollar. It was only. 

Seeing a year later or 1 day if when I feel. 

Curious what? If we sell the entire portfolio a months earlier or a months later. 

And I have realized if we. 

The the entire portfolio 1 months earlier. 

1 months later, it would it will make the 2M over at 15000005. 0. 1. 

So, you can say that in terms of financial outcome. 

We didn't do a good job on. 

It was almost funny that for it. 

Evaluating of projects or sourcing a projects. 

We spend, like, a year reading every single word on any every single slides. 

Are from 180 white papers. 

Why, and how did the. 

End up being so rough when it comes to. 

And I think it was the last thing, and actually we were still joking about. 

Uh, this process when we, when we meet these days, but it was. 

Purely fascinating. Well, you still got insane returns on the funds, so I think there's nothing to complain about here. Great exit where your insurance so congrats. Congrats on that. 

So, now that you've exit all your positions back, then, would you invest in now? Would you invest in 2020? 

Uh, I also want to give a little bit contacts about the transition. From Washington to a more general deep tab.
Or radical research journey, so, after we exit plan up 26017. Over 60. 

Out of the student group.
To try to drop out many of us jumped out.
To start on startups many of us we can venture capitalist. 
And some of us ended up some back in.
Pass a, or professor these days, but the common.
Scenario that many of us was confronted.
In 2018 was that.
Many blush and startups ended up.
Coming to find me or the early members.
To be an advisor to their team.
Helping them to Jeff white papers, decide token economy, and helping them fundraise given that. We have fund raise several 1M within.
A straight amount of time it ended up.
We've found out oh.
From the 88 people student group.
The, the projects were sitting on board as advisors.
We're over 160 projects.
And 1 day a girl from that group mentioned.
Hey, why don't we put together all the projects.
And then some of the best we essentially select 9 up.
And it became the initial idea.
And structure of allies accelerated so last year.
We actually started an accelerator.
We didn't mean to be restricted.
Or to focus on blockchain, but it ended up that most of the.
The projects we were advising.
When we were students or a fresh dropped out.
Um, we're all about blockchain, so we decided to associate that ours accelerator.
And bring that as 1 of the most research given blockchain accelerator.
And up to these days in 2020.
I think washing is still around 100. 
Of our deals, but we have been tapping into. 
Not only to centralize computing, but I was with quantum computing and infrastructure level invention. 

Or commercialize space travel, or. 

In a more high level, or general sense. 

Basically averaged in that. 

Are in the process of turning science fiction into scientific facts. 

Nice that's really interesting. I think just this morning, I talked to someone investing in quantum computers. She tried to I think he tried to explain me something. 

No, nevermind, I did my best avoiding that topic again hate the technical part of it, but let's talk just a little bit about science fiction. What's. 

Can you recall something from your portfolio? That's just like crazy. Crazy, but might actually work out. 

Yeah, I.
I don't know, it's a good time to definitely ties and market somewhere. Some of our deals, but I would say, okay, in terms of.
Commercialized space travel or the market hiding space.
There were 2.
Startups that we are.
Right in the 1st chat as the 1st, institutional ambassador in their 1st. Most of their founder and CEO are currently 19 years old.
1 of them, um.
Is trying to ship.
Over a 20000 satellites cube sets.
As personal satellites.
You believe that in the early days.
Nobody can imagine everyone to be given a personal computer later on. We couldn't imagine everyone to have these.
Amount of mobile devices and.
Wearables just like.
These days, and if I tell you. 
Very soon everyone would have at least.
1, to satellites, in the space.
For communication purpose, or for you to deploy.
Develop and deploy your own space apps.
That sounds very radical that.
And it's essentially.
Democratizing space and it will.
Yeah, I think it will make us a huge jump.
From 4, G5 g that we were talking about these days.
In the AG, it's given us.
I'm boarding into a whole new platform and other team.
Back in Taiwan, so this team that I just mentioned.
Was a team of only 1 person he has only.
Himself he jumped out from from school around 16 years old.
As an extra rally and have been working on this.
Actually, his entire lifetime, he was 1st propelled.
And attracted into the concept of to.
Wi, Fi and.
Over the past 10 years, although you was only 19 years old, but over the past 10 years. He has been very determine on.
Making the science fiction.
Into a scientific facts and actually.
What about his prototypes are already.
Currently orbiting the, the space and another team.
Just a brief intro as working on.
Something equally exciting it's cost spiritual motor.
It's a essentially.
A key component for satellites and rockets. 
They, they want international. 
Signs for from this student research. 

When 3 of dam were high school students. 

And they they got the entrance ticket. 

To I think the most technical major. 

And department from Taiwan to you after the engineering. 

But before they finished their freshman, they decided to jump out from nation telling University. 

And and run this full time. 

So, they just spin off, um. 

From University, and we sparked them very luckily I would say. 

And we ended up. 

Lead in their, their, their 1st round, I think. 

These 2, 9 years old. 

Group of founders really had my respect. 

Because they were really shipping in their early days in their child for. 

Some science fiction to them into a scientific facts that could potentially shape. 

The future for the majority. Great. That's actually super exciting as. 

It's really impressive that they are 19. that's that's impressive. Great great. Where they're finding those people. 

So, speaking of finance sourcing, these kind of deals, where should people who have this big dreams, big moon shots that require a lot of technical development. Where should they go? 

1st, should they go and try to win some grand funding? Or should they try to winning some actual competitions with other so that someone at least will notice them? Or should they go directly to investors? Like yourself to investors? 

Like a large fund?
Yeah, I would say the latter 1 is.
Some seeing that many on.
Generation founders my field.
We need to get ready. We need to.
Have a very polished pitch deck before we pitch to Peter 2 or. Or we need to. 
Have a very structural legal entity. And phone structure and.
All the documents before we.
Put ourself in the market, um. 

I don't know, um, I, myself.
Personally, I think had this kind of mental.
Obstacle to reach out.
To the people that might actually accelerate.
Several years of my initial struggle.
Um, I would say that.
From an opposite perspective.
You were really, really not ready.
And the investors venture capitalist.
Weren't that interested in.
But in you a check, you have nothing to lose some years, 20 years. So it's, it's essentially not about age as if a VC or if an investor pass. On your deal.
It has nothing to lose for writing an email.
And, but I did see a lot of cases which investor.
Ended up, not investing, but you successfully got his interest.
To be your advisor.
Mentor, I think everyone as a human.
Will fundamentally want to help people.
That are like, minded.
And that they could see themselves.
Um, they.
On a very similar path no matter before a feature.
As in most of the investors were. 
Some sort of founders entrepreneurs themselves. They, they would really understand so.
Yeah, I think just very upfront straightforward directly. Reaching out to the people as high. 

And as impossible as possible. What I ended up getting, you. Some surprising outcome. 

Yeah, go ahead. So, at this point, it's time for us to move on to last question of today's episode and it's going to be a call to action. So, what's the 1 thing you want the insurance to do? As soon as the episode is over. 

Oh, do you want it to be more aspirational or do you want it to be more concrete? More concrete is preferable 100 preferable.
I would say after listen this episode.
If you feel like, you have a world change an idea. 

That could potentially shape our feature.
Especially in the road in the path.
More like, turn in science fiction to sign Derek backs.
Don't have to write an email.
To P, at our stuff fund, we actually.
Half a research fellowship hours fellowship.
It's a nonprofit right in check in the range from 100 K to 2, 100. K.
To support.
Individuals to essentially, it's a great.
That we are not taking equity, but just to support.
Those individuals that we think are.
In their early days of making a big big move.
Boat moves on changing the lives.
Or the majority, so.
That's it that's a great.
Break alteration my cold section is usually is going to be go to the description of this episodes. I'll 
leave a few links in the description of it. I'll leave a link to a large fund. 
Of course, I'll leave a link to and probably to something else maybe deep tech. Really? So, if by any chance, your deep tag developer deep tech founder. 

Definitely check out to the description and definitely take your time to reach out to. If you think you have something good and as usually have a good date.