Searching for Asia’s ‘hidden treasures’ in NFTs and GameFi

Why is Axie Infinity so popular, and what is the potential of play-to-earn gaming? Two venture capitalists share insights on Asia’s special place as GameFi’s hub.

Game finance (GameFi) and non-fungible tokens (NFT) have been on an unstoppable rise in recent months, with collectibles and play-to-earn superstar Axie Infinity leading the way. 

Global venture capital firm True Global Ventures (TGV) recently raised over US$100 million for  its TGV 4 Plus fund, which is seeking what could be the next blockchain unicorn. 

Kelly Choo, who is one of the TGV partners, observes huge potential in play-to-earn games such as Axie Infinity — especially to players in developing nations. 

“In Europe or the U.S., that could only mean maybe just a week’s worth of living expenses,” Choo told Forkast.News in a video interview. “In Asia, one of the exciting things about this whole play-to-earn is that a lot of these players are actually putting food on the table.”

Earlier this year, Hong Kong-based blockchain gaming company Animoca Brand raised US$88,888,888 to achieve a valuation of over US$1 billion — or unicorn status. The non-fungible tokens (NFT) and GameFi innovator, which already has a seat in TGV’s portfolio, followed the funding by adding another US$50 million to its chest. 

Animoca Brands will likely not be the last blockchain unicorn coming out of Asia or the world. In fact, Choo notes that some of the Asia’s “hidden treasures” will be discovered in how companies develop services on top of NFTs. 

“NFTs today are very limited in terms of use cases — mostly arts, mostly games, sometimes ownership of domain names and some utilities,” Choo said. “But there are a lot of opportunities for companies to actually create all the fringe services that are on NFTs, beit pricing  it, trying to get loans out of NFTs [or] trying to create a whole ecosystem of financial services around it.”

But with the rise of NFTs, unscrupulous users have found ways to take advantage of the unregulated environment. 

“You can create your own NFT and at the same time, use 100 ETH to purchase it to create a fake transaction,” TGV partner Bowie Lau, who is also founder of venture development and education group MaGESpire, told Forkast.News in a video interview. The NFTs are then sold for a cheaper price to create a perception of a discount, she said. “That’s how they pump and dump.”

The Wild West nature of cryptocurrencies is now drawing global regulatory attention. China has been in the headlines earlier this year, for banning cryptocurrency mining in key regions such as Inner Mongolia

But from a venture capitalists’ perspective, Lau still sees a bright future for blockchain startups in China. 

“A lot of big companies or startups benefited from government support,” Lau said. “But I’m also mindful of the fact that there could be another potential challenge, which is that they have to be centralized.”

Watch Bowie Lau and Kelly Choo’s full interview with Forkast.News Editor-in-Chief Angie Lau to learn more about Asia’s hidden startup “treasures,” how NFTs can create financial freedom for the unbanked population in developing countries, and why venture capitalists are excited about how Asia’s blockchain ecosystem is creating excitement among venture capitalists. 

Highlights:

  • GameFi and NFT for credit ratings: “Imagine that if you have that wallet that you’ve been working so hard on Axie Infinity or any other pay-to-earn games. And it shows you like, your reputation, or creditworthiness, ability to earn. Then I can, as a new next-generation financial company, I could then obviously extend to you maybe some credit, maybe some insurance, because these are all what we call the next-generation jobs. It is similar to… Grab, Uber or even FoodPanda. You have all these gig economy workers, a lot of them cannot buy insurance or they cannot buy certain types of products that maybe someone like a white-collar worker could do. Because they don’t have a constant income. So this is also an opportunity for these new kinds of jobs to generate this kind of credibility, or credit score, so that they can actually consume these new types of financial products.”
  • Killer apps to solve the unbanked issue: “They call this the scholarship method. So basically people with money funding those without. And this created a lot of financial inclusion. So you don’t have to spend $1,000. You don’t need to take the risk. You just have to take the risk in terms of the time and the skills of playing the game. If you ask me, this is actually one of the killer apps if you call it the killer app for solving the unbanked problem.”
  • Game, art, music and entertainment: “There are many if you talk about the investment opportunity in the gaming, art, music and entertainment. The blockchain technology/NFT really is the enabler to further develop all of these startups in the field. In the past, for example… the artists were basically getting ripped off by all these publishers or studios. But now with the NFT/blockchain technology, they basically can take most of the ownership and they can monetize the most.” 
  • India’s hidden treasures: “The treasure is startups — that’s what I refer to. That personally excites me the most. But I’m mindful of the fact that it is a bit challenging as a foreign investor. Investing in the country, there’s a lot of regulatory and taxation challenges that you have to overcome, especially with the current situation, all these Chinese capital are banned from entering the Indian market. So I guess you just need to get yourself educated more before you get into the market. And if you’re Chinese, then you have to put it on hold for now.”

Transcript

Angie Lau: Where are venture capitalists looking to catch that highly coveted blockchain unicorn? How does Asia fare to the rest of the world? And to innovate or regulate — who will disrupt and who will fold?

Welcome to Word on the Block, the series that takes a deeper dive into blockchain and the emerging technologies that shape our world at the intersection of business, politics and economy. It’s what we cover right here in Forkast.News

I’m Forkast.News Editor-in-Chief Angie Lau. True Global Ventures, a global technology equity fund out of Singapore, has reserved its $100 million TGV 4 Plus Fund for blockchain companies. And they are now in search of what could grow to be the next blockchain unicorn. We’ve already seen one coming out of Asia and Animoca Brands, the play-to-earn blockchain gaming and NFT specialist is also in TGV’s portfolio. 

With GameFi and NFTs continuing its unstoppable rise, something tells me that Animoca won’t be Asia’s last blockchain unicorn. Definitely more to come from Asia and around the world. So where are they?

Today, I’m joined by two of TGV’s partners who will be taking us through the VC landscape in blockchain in Asia. The founder of venture development and education group MaGESpire, Bowie Lau, the co-founder of the networking platform ReferReach Kelly Choo. 

Bowie. Kelly, welcome to you both to the show.

Bowie Lau: Thank you, Angie. Glad to be here today.

Kelly Choo: Thanks Angie, for inviting us.

A. Lau: I’m super excited because there are so many people who know that they need to pay attention to Asia, who know that the role that Asia is playing is integral to the innovation and the acceleration of blockchain in the space, who know that this area is just like a giant petri dish of blockchain innovation.

But it’s really a dark spot for so many people. So I’m super excited to have you both on because you have been making waves in this space for a while. You’ve just closed your $100-million fund and you’re ready to put that capital to work. But I want you to share just a little perspective with everyone who might not be as familiar with the landscape here. What’s happening in Asia? Why are you so excited as VCs to be here, to be in Singapore, to be in Hong Kong, to be in Asia and put your money to work? Kelly, I’ll start with you.

Choo: Thanks, Angie. I think one of the most important things about Asia is that it’s always a high-growth region. Number one, a lot of youngsters here in Asia are gamers by when they were born. When they came out, they were like already on the mobile phones and already playing games. So there’s a leap there. A lot of the Asian countries, they leaped across the PC gaming world. They went directly to mobile. So they’re all really into this kind of games, mobile games and whatnot, entertainment often on mobile phones. So we’re really excited because these are the group of people that will be adopting new technologies really, really quickly. So that’s number one. 

Number two, there’s this whole thing on GameFi and play-to-earn. For example, one of the breakout stars in recent months has been Axie Infinity. So they have like led the way in terms of this whole play-to-earn revolution that’s happening now. Players can earn anything for U.S. dollars or over thousands of U.S. dollars. And I would say in Asia, that amount of money actually makes a difference. You can actually pay for the whole family in terms of the monthly expenses. Well, in verses like say, for example, in Europe, or U.S., that could only mean maybe just a week’s worth of living expense. So I would say that in Asia, one of the exciting things about this whole play-to-earn is that a lot of these players are actually putting food on the table. They’re actually changing their lives because they’re playing all these games and basically earning a living out of it.

So we’re extremely excited over that growth. So I think it’s the young generation that’s coming out mobile-first. And number two, a lot of these games, these play-to-earn games are now changing their lives. We are extremely excited over that.

A. Lau: Bowie, what do you think is the differential in Asia, why are you excited about the space that you’re seeing in Asia?

B. Lau: So Asia generally has the traditional culture, and most of us have traditional parents, and we always have a conservative way of doing things. So with the advent of blockchain and cryptocurrency, it was a liberating experience to the younger generation of millennials and Generation Z. This finds its way through how traditional finance can be redefined in a more free and decentralized way. And this gave birth to the DeFi movement, and this is a exciting new place that is trying to define access to financial products and leverage for people who are not necessarily rich.

However, even though DeFi looks attractive with very high interest rate, it is still quite risky and is undergoing a lot of evolution to improve and mitigate risk. So innocent DeFi investors can lose 100% of the money they invest. There could be many risks that are associated with DeFi — smart contract bugs, developer oversights, flash laon attacks, rug pulls and scammers committed by a few players, just to name a few of the potential risk.

A. Lau: Both of you touched on something so integral here, which is this convergence of demographic and emerging developing nation kind of sensibility. So you have this hunger coming from a young demographic to leapfrog. You also have emerging markets from Vietnam, Cambodia, Thailand, across much of Southeast Asia and a significant part of Asia that’s also looking to leapfrog with that innovation.

It’s an exciting time to be in this space. Kelly, I totally hear you on Axie Infinity. This is a story that we’ve been covering for a while now. And suddenly play-to-earn is the next hottest thing. But it really is that triangulation of economic need. You could literally put food on the table. We saw it emerge out of Vietnam. It caught fire in the Philippines where 70% of that adult population is unbanked. Economic realities of that country, there’s such an inequality. Much of the country has to leave the country to make money, to send money back at home.

How do all of these things, these kinds of demographic sensibilities, these kinds of geographical and geopolitical sensibilities in Asia, fraud up into how you make your decisions to put bets on certain things? Obviously, you’ve got play-to-earn, but what else kind of inspires you to put your money to work?

Choo: Yeah, that’s a great question there, Angie.

First things first is that every region, every country is very, very different. So if you’re an entrepreneur and you want to target a particular region or a particular country, I guess you really need to understand what is happening in that particular country or region. You cannot take the same technology that maybe works in the U.S. or Europe and then just try to transplant it wholesale into Asia. You probably would not work. Things like affordability, culture, even risk tolerance, all these things are factors within that particular country itself.

So I think, number one, a lot of these innovations that we see are also coming up from Asia. They are not necessarily just coming up from Europe or U.S., although those are the countries that are leading the way in terms of innovations. But we see a lot of other innovations in Asia itself. One of them is this YGG — Yield Guild Games. They are basically a community that works around all the play-to-earn games, be it Axie Infinity, Sandbox or any other games that are basically play-to-earn.

So they are really creative because there is a need. Specifically in the Philippines, if you’re asking someone to pay like $1,000 just to play a game, nobody would play. Even in the West, nobody will pay that kind of money just to play a game. So what they’ve done is that they created a community and they’ve created such a structure that basically those with money can actually fund those without money. Those who are willing to play for, or those who have the capability to actually fund those little Axies.

It has created a community where I think actually is thriving now. Where those who have money, are working with those who have time. And this synergistic relationship has created this whole guild, or this whole community that can function. So they call this the scholarship method. So basically people with money funding those without. And this created a lot of financial inclusion. So you don’t have to spend $1,000. You don’t need to take the risk. You just have to take the risk in terms of the time and the skills of playing the game.

If you ask me, this is actually one of the killer apps, if you call it the killer apps, of solving the unbanked problem. Because people now are very motivated to start a wallet, to start a crypto wallet to actually use it to put food on the table to pay for the bills. And as a result of having that wallet now they are banked, or so-called banked. And in this way you can actually obviously put on other financial services like insurance, like home loans, everything else on top of that. So this is I think, one of the interesting parts about this whole area. That innovations are also grown up from Asia. It is not just happening in Europe, all in the US.

A. Lau: This is really interesting. You’re telling me that in metaverse, Axie Infinity, you’ve got investors backing players in the game. The gamers are earning money. They’re earning tokens, they’re earning NFTs. They send a bit of their cut back to their investor. They keep some of the funds. Second layer, what you’re talking about, that just piqued my interest. You’re talking about financial services for these gamers who have been disenfranchised from the system, from pretty much day one. Insurance products, banking exchanges, wealth generation in the metaverse. And all of this is happening in the metaverse?

Choo: Yes, absolutely. Because they have been disenfranchised. They never probably had a bank account or even if they had a bank account, there wasn’t much money there. So, they were not seen as targets for these financial companies. Because you obviously would not offer a credit card to someone who may be not the most creditworthy. But imagine that if you have that wallet that you’ve been working so hard on Axie Infinity or any other pay-to-earn games. And it shows you like, your reputation, or creditworthiness, ability to earn. Then I can, as a new next-generation financial company, I could then obviously extend to you maybe some credit, maybe some insurance, because these are all what we call the next-generation jobs. It is similar to like, Grab, Uber or even Food Panda. You have all these gig economy workers, a lot of them cannot buy insurance or they cannot buy certain types of products that maybe someone like a white-collar worker could do. Because they don’t have a constant income. So this is also an opportunity for these new kinds of jobs to generate this kind of credibility, or credit score, so that they can actually consume these new types of financial products.

A. Lau: Where do you find this deal flow, Bowie? You got a great thesis. Where’s the deal flow for them?

B. Lau: Well, the uniqueness of this fund is there are over 40 partners globally across 20 cities. Each of us, we are serial entrepreneurs. We have our own network. I myself enjoy, direct investments to different startups. Kelly is based in Singapore [and] all of us are based all over the world. And I get deal flow almost every day. And I get to see the pitch deck and get to have a phone call with them almost on a daily basis.

So deal flow is not a challenge at all. I really like the fact that I joined this fund because I’m strong in Asia Pacific but I also have partners that cover other regions in Europe in U.S.-time areas. And to elaborate a little bit more, then we have four specific verticals that we are highly interested in, one is in financial services, second is in infrastructure, third is in AI/data analytics, and last but not least is gaming and entertainment

A. Lau: And all integrated back into blockchain technology?

B. Lau: We have high interest in blockchain. But then I think most of our portfolio companies are with a blockchain element, but it’s not a must. But they’re also two more specific policies that we apply. First, the startup has to be a serial entrepreneur. This has to be your second startup or third. And second is that as a founder or co-founder of your startup, you got to invest heavily, a substantial amount of money back into this startup. So if you hit those four verticals and match these two criteria, feel free to come to us.

A. Lau: I love it.

As people are kind of listening in and learning a little bit more just based on your experience, what would surprise them if you shared what knew about Asia? What do you think would surprise your fellow VCs or your peers in in Europe and the U.S.? What surprises them about Asia?

Choo: Maybe I can answer that. One of the things that surprises a lot of, not just our partners, but also I guess other VCs about Asia is that sometimes they think Asia is one big continent just like maybe in the US, or maybe it’s like in Europe. I mean, what is Europe? There are so many countries in Europe. So they think Asia is very homogeneous. It obviously is not. And, I guess they think that’s only maybe three or four different languages, which obviously is not. There are so many different languages. So I think that if they don’t have experience in Asia, they realize that it’s so fragmented. Even if you deploy a solution here, it doesn’t mean it will work in every part of Asia. So I think that generally surprises them when I speak to some of my partners or some of other VC firms, if they have never invested here before. So that is the surprise there.

The other thing that I raised up just now was the innovation that’s happening here. They think that, obviously, blockchain is something that only happens in the West and maybe in Singapore and Hong Kong, where there is some innovation. But actually, there’s a lot of innovation that’s happening in other parts of Asia, not just, Singapore and Hong Kong, just like the example I gave you in YGG. These are really from the ground up. And because it’s a pain, there’s a need there. They have innovated.

A. Lau: Well, Axie Infinity is a great example. Born out of Vietnam, but I think all of us who have been, in the region for this long, we know that is a young demographic, highly literate in technology, in the Internet, in developing and in kind of like that ease of that developer mindset. They’re just super well-versed. They’ve been connected despite it being a communist country. They have always been connected to the world wide web and to the internet. And then you just have very interesting economic, investments on the ground opening up to the global economy.

And then again, to your point that you’ve both made, which is this hungry young demographic is very literate in technology and ready to put it to work and leapfrog and join the global economy. Axie Infinity kind of taps into all of those sensibilities, but most importantly, that play-to-earn sensibility. What else can we see out of Asia that is going to take the world by storm, in your view?

Choo: Yeah, I think to add on that point is that when you mentioned that, I think one of the things that at least I observed — this is just my anecdotal observation, I don’t have enough data to pick it up yet — Asia in general, or Southeast Asia, and plus Asia, you see a lot of returnees. These are people who probably made it in the U.S., or in Europe, or some other parts of the world where is more developed. And then when they came back into this part of the region, they’ve contributed back. They’ve started their own companies because they have the kind of experience that they probably wouldn’t have gotten in Asia itself.

Like in Axie Infinity’s case, one of the founders being a local Vietnamese. He has a lot of experience not just in Vietnam, but also externally. So I think these kinds of experienced entrepreneurs experience corporate leaders who come back and then start businesses here. This will be the boom for Asia, because you have to be trained somewhere else, learn the hard lessons, the hard knocks, come back to Asia and study the game. We’ve seen that in China. With all the unicorns from China. I’m sure we will see that also in Southeast Asia in the coming couple of years.

A. Lau: Bowie, we talk about GAME —  G-A-M-E — also an acronym for games, arts, media, entertainment. The use and participation of blockchain technology in these industries have been booming this year, powered by the rise of NFTs and DeFi. How important, in your view, are these key industries to the early stages of blockchain technology? What investment opportunities are you seeing, particularly right now in this space?

B. Lau: There are a lot. There are many if you talk about the investment opportunity in the gaming, art, music, and entertainment. The blockchain technology/NFT really is the enabler to further develop all of these startups in the field. In the past, for example…  the artists are basically getting ripped off by all these publishers or studios. But now with the NFT/blockchain technology, they basically can take most of the ownership and they can monetize the most. So music is definitely one of them. Others like art, there’s still quite a lot of value for physical art products. But there’s a huge boom in the art space using non-fungible tokens. And we have all seen the biggest expensive NFT cost over $69 million just for one piece of token. 

A. Lau: Look, we’ve been covering the NFT market cap, and it is incredible to see the kind of trading volume growth even in just the past couple of months, really superceding what we’ve seen traditionally in the space, including, altcoins, Bitcoin and Ethereum. This is the speed of growth. That is extraordinarily interesting. So you’ve got two groups here. One group, that says: ‘Yes, all in, this is the next wave.’ Another group is still scratching their head and saying: ‘What is the value of NFTs? This is made-up stuff. This is digital. We created something out of nothing.’ And all of a sudden, these things are worth millions, have a market cap of billions, trading volume of hundreds of millions a day. What’s going on? So, guys, what’s going on?

B. Lau: I think the first thing you got to do is to understand and get yourself educated. I think this is the key. This is my personal opinion. I wouldn’t ask anybody to jump. Even if you want to learn stuff with a very little bit of money. I consider it as a fee to pay to get to know what it is, having an NFT wallet. How does it work? Or buy a little bit of token or Bitcoin as they experiment. But throughout the whole process, you got to understand a lot, the private key, public key, the whole transaction, which are the safest or with the highest volume of exchange.

Every single thing that you do, you actually learn. You got to understand a lot. But one thing we wanted to clarify is True Global Ventures is a 100% equity fund. At the end of the day, if we believe in a company, we do not invest in a cryptocurrency. We only invest in equity. But if they give us the token as a bonus, we wouldn’t say no. That’s all

Choo: And just to add on to Bowie’s points, I’ve talked a lot of traditional investors and they’re like, ‘Kelly, tell me, what is this whole NFT about? Is this just one big scam? Is it going to be money laundering?’ All the typical kind of doubts come to me. So I think the best way at least for now we found to explain this is really that it is about the revolution of digital ownership. 

Because NFTs represent digital ownership. And it could be your house. It could be some digital assets. It could be even a domain name. It could be anything that’s offline or online. Anything that you have to prove your digital ownership NFTs can affect. So in a way, it’s crypto, but not really. And we see that, there is actually a divergence in terms of adoption of NFTs, because today you can go to any projects, not any yet, but most projects, you can sign up using a credit card. They don’t even ask you what is your crypto wallet, they will not seek for Ethereum or Bitcoin. And I think it’s getting more and more mainstream.

So we will see a lot more NFTs being adopted in various parts. Some that we cannot even imagine right now. And I think that’s where the innovation would come. And that’s when NFTs, blockchain or these will show true value. So I think today a lot of people are very speculative. Because artists are very speculative in nature, whether it is offline or even non-digital art.

But we see things like digital ownership of game assets. This has been billions of dollars in terms of value in the traditional game market. It’s just that now. These true digital ownership, you can trade it and the IP owners can actually generate a fee out of it. So basically they can generate monthly recurring revenue. So this is a new revenue source for the game companies. So that’s why they’re adopting this very quickly. And they’re seeing value in this.

A. Lau: Familiar to all of us in the space, Yat Siu, who’s the chairman of Animoca Brands and a prolific leader in this space talking about NFTs and gaming and all the rest. Really, a decade before anybody else was really paying attention. But talking about just what that ecosystem, the value of the metaverse ecosystem actually is when it is about community. And people are there and there is an integrated ecosystem that supports that, which is the game. And how do we find value in these relationships? And then therein lies NFTs or tokens. Because if you think about it, at the end of the day, the underlying security of an NFT is what you and I create. So it could be music. It could be content. It could be art. It could be really anything. We are seeing it in K-pop right now. We’re seeing it engaged in sports right now. But you’re totally right. The future is still being defined as we speak.

But I think what’s really interesting about NFTs is that next level of finding value in this space and getting rid of the middleman. I could still just directly participate and leave pretty much without having to deal with somebody’s music label or manager or branding group, whatever the case is.

Choo: Absolutely. And I think creating these opportunities also creates some threat, because now for NFTs and for crypto in general, it’s going back to the users’ responsibility. In a bank, you put money in and you assume the bank will keep your money safe. In this case because you own the wallet, you own a NFT, if you have a lapse of security, it is your fault? Because it’s basically yours. So I think even though, yes, it gives a lot of benefits here, but it goes back to the user again. This is now your security. You have to take care of it yourself. No one is responsible except yourself.

And this creates also some opportunities, like, for example, would there be computer security companies that just target this. “I just want to defend your wallet. I want to defend your token. I want to defend your NFT.” How can a company or companies out there create solutions for users? To kind of go like, “Now I’m bank-grade security. I’m not just having a very weak password in my computer. I can be hacked any time. I would just give away my passphrase any time.” So these are all dangers out there. The scams.

A. Lau: Yeah. Don’t use your birthday or your phone number. Please don’t use that.

Choo: Don’t use your password as password. I think that’s the worst.

B. Lau: To add to Kelly’s point, one of the current problems is the market is hot and there’s a lot of pump and dump, especially in the NFT space. To give you an example, you can create your own NFT, for example, one picture you created. And you at the same time use 100 ETH to purchase it to create a fake transaction. Now your NFT is worth 100 ETH. So at the end, you can actually sell it at 50 [ETH] and people will buy because they saw: ‘Okay, the previous price was 100 ETH. I’ve got 50% off.’ So that’s how they make money. That’s how they pump and dump.

A. Lau: Those are the things that the space really screams out to — the need for regulators. How do you view the role of regulators in Asia as they even compare globally as well? How do you view the regulatory space?

Choo: The Singapore side of things first, because we see a lot of innovations here. I think regulators should be very clear about what is possible and what is not possible, just like the MAS in Singapore, the Monetary Authority of Singapore. They’re very clear. This is allowed, this is not allowed.

It helps a lot if the authorities themselves are innovative in the sense that they’re trying new, different projects, like, for example, I think the MAS in Singapore are trying some of these CBDCs, central bank digital currencies. So this is a signal to the private, entrepreneurs, private investors that they are willing to try, which means that if you go to this or that direction, you probably would not be getting into trouble. And you can sleep well at night, probably.

So regulators should definitely show some sort of leadership or at least make it very clear what is possible, what is not possible, so that innovation can actually thrive, because if the signals are not strong, or at least the signals are not clear, it’s very risky. Some people may try it. People may not. And you will not foster an environment of innovation. But at least this is from, I would say, the Singapore point of view. But Bowie, I don’t know if any others cross the list. 

B. Lau: Well, the spotlight is in China because everybody is keenly watching all the developments in the China space. The regulators have been actively clarifying their stance in detail for different industries, which is a good thing. Well, overall, the regulation seems to be well-intentioned. It will take some time for people to adjust and adapt. And China is anyway leading the blockchain space like the government-backed CBDC, pilots and lots of fintech applications.

But another interesting country is India. India is another market that has neither clearly stated that crypto are allowed and supported nor completely banned. So there are lots of legislative and regulatory dialogs still happening to define the way forward. A change in regulation is not unique just to Asia. Recently, just Binance has been facing some challenges in U.K. and in Singapore with regulators discussing requirements in order to be regulated.

A. Lau: Binance in Singapore, and Japan, Hong Kong. All of those things, absolutely.

To your point, India, I want to just quickly pick up on that. It is a very kind of ever-changing landscape. There’s oscillation, of course, we’re seeing it in other countries as well. But I wonder, as VCs, does this turn you off or does this excite you about India?

B. Lau: That excites me. I do have a deep connection to India because my husband is from there. So through that, I got to expand my network a lot. Basically, there’s lots of hidden treasures in the country. The treasure is startups — that’s what I refer to. That personally excites me the most. But I’m mindful of the fact that it is a bit challenging as a foreign investor. Investing in the country, there’s a lot of regulatory and taxation challenges that you have to overcome, especially with the current situation, all these Chinese capital are banned from entering the Indian market. So I guess you just need to get yourself educated more before you get into the market. And if you’re Chinese, then you have to put it on hold for now. 

A. Lau: Well, it kind of opens the door for anybody who is actually an invited foreign investor into India paying attention to what you’re seeing and what excites you. I’m curious. You said there’s a lot of hidden treasures. You don’t have to name any names, but describe them, what do you see that’s a diamond in hiding.

B. Lau: You have to look for it. It is very time consuming, as is hard work. As a matter of fact, I did an event called ‘The Hidden Treasure of India’ last year, just to focus on this topic. Startup-wise, I guess I wouldn’t name their companies, but they are offering a cold storage solution for the country, as you know, is a really hot place. And the challenge to be able to deliver fresh dairy products, as well as medical items maintained at certain amount of temperature and also to be able to deliver on time is a major challenge that the country is facing. And this company is providing this solution so and doing really good jobs.

A. Lau: Literally cold storage. Not wallets, literally keeping something cold in storage.

B. Lau: Exactly.

A. Lau: And using blockchain, assuming to keep that kind of supply chain.

B. Lau: That could be a potential for them to develop by using blockchain to I guess record all the data. Yeah, the supply chain. Absolutely.

A. Lau: So from India, let’s talk about China here. China is such an incredible space for blockchain, very specifically not in love with cryptocurrency itself. Tolerates it to a certain degree. But when we talk about the regulatory environment, that can switch and sometimes it switches within days or even suddenly. And we’ve seen that. For those of us in the region, we’ve seen that, this is not a stranger to us. Does that concern you, though? As you invest in this space, how do you regard China? What’s your feeling? What’s your thoughts on the opportunities in China and potentially the challenges?

Choo: Maybe I can go first on this. So I think China has a very deep link into Asia itself. So when we look at some of these technologies out of of China, actually a lot of the teams are based in Singapore and they’re also based in other parts of Asia. Because the team, you can see that fully from China itself.

I think a lot of the technologies that they are looking at, especially in blockchain, solves a lot of the problems that they have faced in such a large country. And I think some of these are transferable to like markets like in India or even like Indonesia, where the population is vast. There are a lot of islands in between somewhere or a lot of borders.

A lot of these are technologies from China. They are definitely replicable in this region. And those are the kind of companies that we would like to look for, and sort of invest, because they are not only solving the problems in China, but also solving the world’s problem. And I think those are the technologies that will probably stand out. And one day probably also become worldwide recognized.

A. Lau: Bowie, we how about you,

B. Lau: As you know, China is in the leading position in terms of blockchain and CBDC. So a lot of big companies or startups benefited from the government support. So that’s still a bright future for them, especially for a lot of fintech applications. And those fintech applications can be used outside of the country. So still have quite a lot of potential. But I’m also mindful of the fact that there could be another potential challenge, I would say, which is that they have to be centralized. So they perhaps would not be considered having a decentralized model.

A. Lau: And so therein lies the interesting parallel about blockchain in China. There’s domestic policy and then there’s an international one, which they’re building out with the international version of Blockchain Services Network. So we talked about India and China. And we kind of covered the big two in the region. And before I let you guys go, I got to ask you, in the region right now, from Malaysia to Philippines, Vietnam, Cambodia, Thailand, et cetera, et cetera, in Japan and South Korea, all of these countries that kind of exist within our territory. What’s the most exciting space right now? What are the hidden treasures? Bowie, I’m going to borrow your phrase, the hidden treasure in the Asia-Pacific region. And I’ll let both of you share some hidden treasures with us.

Choo: So maybe I’ll go first. I’m not really a treasure hunter.

A. Lau: Well by default, as a VC, you’re a treasure hunter.

Choo: Sometimes treasures do come knocking. So it depends on who finds who first. And it’s all about warm referrals. When people come in and say, ‘Hey, I know TGV helps companies in this space, why don’t you have a look at these guys?’ Because it’s not possible for everyone to know every startup. But it’s possible to have a very strong network in order to get the best deals. And I think that’s how we position ourselves.

So some hidden treasures, I wouldn’t support any particular country because they could really come from anywhere. But I think some of the hidden treasures out there will definitely be how companies could actually develop for the services on top of NFTs. I think NFTs today are very limited in terms of the use case. Mostly arts, mostly games, sometimes ownership of domain names and some utilities. 

But there are a lot of opportunities for companies to actually create all the fringe services that are on NFTs, beit pricing it, trying to get loans out of NFTs, trying to create a whole ecosystem of financial services around it, a little bit of what I touched upon just now.

So I think there is going to be a lot of opportunities here, because I think Asia has a lot of — still some — unbanked. And it’s still developing. So I think there will be a lot of localized kind of heroes that will come up. These are the hidden gems that we are looking for. And I think these are the ones that we are very keen to explore more.

B. Lau: It’s an interesting question that you asked, Angie, because if we talk about gaming, people can have all these fantasy in the metaverse space and in there, they can be whoever they want, whenever they want and wherever they want. But when they get into these space and actually be able to play and earn and manage to bring food to the table like what Kelly mentioned, that really changed their world big time, especially during the pandemic, because lots of people lost their jobs, they lost the business. So I wouldn’t name a specific country, but I would say all the developing countries have huge potentials to grow big time. So, yeah, I’m excited.

Choo: Yeah.

I think there’ll be a lot of games coming, NFT games. Because NFT gaming market is still in its nascency. It’s still very, very early. I mean, none of the triple A titles are out there. In the traditional gaming market, all the big boys are there. They have loads of money, loads of budgets to to do great artwork, great storyline, great games. But none of these are in NFTs yet. A lot of them are still, I would say, single A or double A kind of titles.

So it’s still very, very early. There are a lot of great studios, I’m sure, in Asia and other parts of the world who are going into these NFTs. So it’s still nascent. And we’re very excited. I’m sure there will be a lot of new NFT games and entertainment that are going to be coming out from Asia and beyond.

A. Lau: That’s truly the kind of coverage that keeps us busy at Forkast. It’s thick with innovation. It’s thick with startup founders. And what I find most interesting being in this space is that it is not just a technology story. It is a developing nation story. It is an emerging market story. It is a demographic story. It is an individual story. And all of those things combined that uniquely exists in Asia, which is fertile ground for hidden treasures.

A. Lau: Well, you two are hidden treasures, but hidden no more. And for all the world to see and hear from Kelly Choo, Bowie Lau, it’s such a pleasure to invite you to the show. And thank you so much for sharing some secret sauce with the rest of the world. I’m sure there’s going to be a lot of piqued interests and raised eyebrows and a little bit more attention paid to this part of the world. Thanks for sharing a little bit more as to why this region is so exciting and also what more needs to be done. It was a pleasure to have you both on the show.

B. Lau: Thank you, Angie.

Choo: My pleasure. Thank you.

A. Lau: And thank you, everyone, for joining us on this latest episode of Word on the Block. I’m Angie Lau, editor-in-chief of Forkast.News. Until the next Time.

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