Harnessing the Power of Networks in the Crypto Ecosystem

Asia Blockchain Review
October 31, 2019

It takes a village to get a project started and on its way to success, especially in the field of blockchain and cryptocurrency, where the technology is still struggling to gain wider adoption in many countries. Melody He and Casper Johansen, Co-founders and Partners of Spartan Group, an advisory firm with an extensive network across the crypto ecosystem, talked to Asia Blockchain Review (ABR) about leveraging its networks to help companies build decentralized financial applications and blockchain protocols, form partnerships, and accelerate growth.

Asia Blockchain Review: Can you tell us about founding Spartan? What was your inspiration for the company, and who are your clients today?

Melody He & Casper Johansen: Spartan Group was founded in 2017. The three of us, including Kelvin Koh, the Chief Investment Officer of Asset Management Business at Spartan Capital, started our careers in traditional finance. We worked together in different capacities at Goldman Sachs in Hong Kong, Beijing, London, and Singapore in Investment Banking and Equity Research with a combined experience of over 30 years. After Goldman Sachs, Melody went into early-stage venture investment, Casper founded a tech start-up in China, and Kelvin moved to a hedge fund.

We came across Bitcoin many years ago but made our foray into the crypto space in early 2017 when the ICO wave started. During that period, Facebook, Google, and other tech giants were scrutinized for their disregard of users’ privacy, and we saw the promise of blockchain technology in creating a more trustless and open network, where users would be able to control their own data and assets, free of any middleman. We also believed strongly that crypto will eventually become an investable asset class like equities, commodities, and fixed income, even though many, especially those in traditional finance, were highly skeptical. Armed with this conviction, we set about working with some of the best startups in the space to help them with capital raising and community building in Asia. We also invested our own capital into these projects. 

Two years later, Spartan has become a leading Asia-based blockchain advisory and investment firm. Our advisory business provides services to promising startups across the digital asset space, including fundraising, deal structuring, advice on strategy, partnerships, and community building. We also provide corporate consultancy services to Fortune 500 companies that are expanding into the blockchain industry. Our asset management business, Spartan Capital, focuses on investing in the leading startups and projects in the digital asset universe. We combine our strong expertise in financial markets with our in-depth knowledge and extensive network within the digital asset industry to generate superior returns for our investors.

ABR: Can you tell us how does Spartan Group differ from other advisory shops? 

MH & CJ: Spartan offers a strong value proposition by combining its deep connections in both the crypto and traditional financial industry, professionalism, and no pre-fixed template in its approach to clients. We see each client relationship as a strategic partnership, and we customize our services to fit our client’s priorities. You could say that we ‘invest’ in our clients and are invested in their vision. Our approach is collaborative — we insert ourselves into the client’s team and become their ‘extra arms and legs’. This, in turn, allows us to work with a few but the very best. 

This approach is complemented by active relationships with key ecosystem players across all relevant Asia markets, including token funds, VC funds, sovereign wealth funds, family offices, miners, exchanges, OTC and market makers, community builders, and projects. 

As the name suggests, Spartan is known for its loyalty and bravery — we didn’t want a name that’s too Bitcoin or blockchain-esque. Instead, a universal value that everyone understands and aspires to. We want to create a place where every member feels a strong sense of a common mission and honors teamwork. 

 

ABR: Can you tell us more about your current mandates, including Blockstack, IBM, and Origin Protocol? Moreover, as Blockstack is the first project approved by the SEC for its token offering, what are the prospects of Blockstack in your opinion?

MH & CJ: Indeed, we are excited to be working with these projects. We have been working with Blockstack since early 2019. Blockstack is a US-based decentralized computing platform which has raised $75 million from leading venture capital funds, blockchain funds, and tech angels. Spartan has been mandated to work with the project on all aspects of its Asia business, including structuring, fundraising, regulatory compliance, ecosystem building, and business development. We consider Blockstack to be a very ambitious project that sets out to fix the flaws in the design of the Internet we know today. It started in 2013 as a research project to build the next generation of computation. It is aiming to create a fundamentally better way to develop applications: easier and cheaper backend infrastructure, universal log-in secured by private keys owned by the users, universal data standards, and storage controlled by the users themselves. Unlike most other blockchain projects, Blockstack targets the blue ocean of the non-blockchain developers. Since launching the mainnet at the end of last year, it has attracted over 210 apps to build on it and is growing at 20-30 more a month. 

The SEC’s qualification for its public offering has been a game-changer for the industry, as it officially acknowledged a new asset class that is a utility sold under an existing security offering framework. We have been strong believers that Blockstack would be the first SEC-approved Reg A+ token offering and were delighted to see this happen. Simultaneously, we have been working with Blockstack closely in their expansion into the Asia region and helped them build key relationships with both the most influential institutional investors and community leaders. Blockstack is unique in that the offering in Asia has a one-year legal transfer lock, which reflects the fact that all the investors are true believers of the technology and of the team. They will be our partners when Blockstack begins to build teams on the ground. 

Spartan Group has been mandated by the IBM Systems Division as its business development partner across APAC. We are working with the IBM team to establish and execute a brand-building strategy and achieve synergistic partnerships with crypto and blockchain networks. Our mandate involves corporate consultancy, seller enablement, and marketing. IBM is one of the most underrated brands in the space — they have always been the first in discovering and even experimenting with groundbreaking technologies — AI, machine learning, and, of course, blockchain. The team we are working with focuses on general-purpose digital asset security — so in a nutshell, digital asset custody. Custody, especially institutional-grade custody, has not been widely adopted in crypto. Regulators, insurance, enterprises, and users are all waiting for a brand that they trust in to say “hey, we got this!” and for us, IBM really has got this.

Origin Protocol is one of the highest regarded projects in the Ethereum ecosystem. They are laser-focused on creating user experiences that are 10 times better with the tools from the decentralized tech stack. They are solving one of the biggest problems we are facing in the industry — frictionless and magical user experiences. Unless we can create amazing experiences, users won’t switch! 

We connected with Origin’s founders Matt and Josh when they just closed their seed round and came to Asia to meet with potential partners. We worked closely with them for a year and helped them build a foundation for future growth in Asia. Following which, Origin has raised over $38 million from the top crypto funds and more than 200 private investors globally. We also helped bootstrap Origin’s Chinese community through offline events and group AMAs and worked to map out their China growth strategy.

ABR: How do you see the general landscape in Southeast Asia in terms of the blockchain ecosystem? What is significant or unique in this region compared to other parts of the world?

MH & CJ: We believe that SEA as a market requires a tailored approach. Each country differs in what it can offer to foreign projects. SEA holds an incredible potential, but is difficult to break into it, unless you have trusted partners who are in a position to decipher the nuances of each market. China has the entrepreneurs, Japan has the big corporates, Singapore is the financial hot-spot, Vietnam has the developers, Indonesia and the Philippines have large populations in need of innovative banking and payment solutions — we could go on.

One unique element of the region is that with regards to new technology, the adoption is always two steps ahead. In other words, projects and users are not afraid to leapfrog the traditional systems and instead tap directly into the potential of transformative technologies such as blockchain. Look at China as an example. China never had an orderly and functioning credit card systems. Instead of emulating the West and developing one, they leapfrogged the traditional payment railways and adopted payments via social apps. Now, try going to China and pay without a WeChat account. 

Generally though, we do think it is still very early for the technology. The potential is there, but we are still at the beginning of a slow revolution.

 

ABR: What advice would you give to a project wanting to have a strong presence in Southeast Asia?

MH & CJ: To get in touch with Spartan Group! On a serious note — a reality check. Projects often come to SEA and think that hiring one BD for the region or visiting the region once or twice a year will do the trick — whether their aim is adoption, development or fundraising. We have seen projects do this and fail, each time. Anyone who is serious about tapping into the SEA region needs to realize a number of things. 

First, we are still at a very early stage of building the necessary infrastructure — be it the infrastructure for open finance or open internet. Before you enter the market, ask yourself — does it have the necessary infrastructure? Are there projects that we can partner up with and leverage their technology? 

Second is adoption. We cannot emphasize enough the importance of educating the market, going the extra mile for your future users and focusing on grassroots support. 

Third, the incentivization of developers. Projects should ask themselves — how do we incentivize new developers? How do we support them? Figuring out the incentive game and making sure that developers have a real incentive is the only way forward. It is essentially a competition for mindshare. If you are not ready to compete for talent, there are another 10 projects or blockchains who will do it.

We would strongly advise against projects coming to SEA with an attitude of conquering the region. Look at China for example. No traditional foreign tech company has been able to compete with the local players; the barriers of entry are high. But we do believe that things are a bit different in the blockchain space. Bitcoin and Ether have penetrated the Chinese market and accomplished much more than any other traditional tech company ever has, which is why we are so excited about the region and want to help projects succeed. 

ABR: According to research from Fidelity Investments, 22% of institutional investors are already exposed to digital assets, with 40% being open to future investments. It appears that the market is getting more interested in digital assets investments. Where do you stand on this matter? Do you think there exists a gap between institutional and retail investors? 

MH & CJ: Institutional investors in the US have shown genuine interest in the asset class, with all the major college endowment funds such as Yale, Harvard, and MIT having made investments into a crypto fund or directly into a blockchain project. Other institutional investors have been waiting for larger financial institutions such as CME, Fidelity and the Intercontinental Exchange to build regulated infrastructure that will allow them to invest in these assets directly.

In Asia, we are seeing interest from high-net-worth investors to get exposure to crypto. Most Asian endowments and family offices tend to be more risk averse and are still a few years away from investing in this asset class. Nonetheless, they are keen to learn about it and meet with funds like ours.

Asian retail investors jumped onto the ICO bandwagon in 2017 and understandably so. Crypto assets offered the type of risk-reward that early-stage VC investments offer, without the accreditation status required to invest in VC funds. Easy onboarding onto exchanges also helped fuel the retail interest. However, post the ICO bubble, retail interest has generally been tepid, although some interest came back during the recent new wave of IEOs.

 

ABR: Can you tell us about your community-building initiatives such as the Dappers’ Meetups? How long have you been acting as a community builder, and what kind of changes have you experienced in this space?

MH & CJ: Yes, we are very excited about The Dappers! The Dappers is a non-profit, community-led group in Singapore with a long-term vision to expand to other cities in Asia. We started The Dappers as a direct response to a lack of quality events being organized in Singapore. We wanted to create an open platform for projects and crypto-enthusiasts alike to share knowledge with the wider public. We have a strict non-promotion policy!

We hold monthly meet-ups with presentation topics suggested by the community, mainly based on their interests and passion. Topics typically focus on consumer-facing use cases, with live demos and vibrant Q&A sessions and discussions. Some of the meetups we hosted include Decentraland, Binance, Enjin, Facebook’s Libra, and Proof-of-Stake consensus. Our next event will be on Loom Network, a project focusing on interoperability of blockchain networks, so do check it out. We also have some very exciting plans for the Blockshow week, so stay tuned!

ABR: What is the roadmap for Spartan going forward?

MH & CJ: Our vision is clear: 1) advise and work with the best projects to deliver a Web 3.0 future, 2) help build a vibrant blockchain community in Asia, 3) educate corporates and governments on the potential of digital assets, 4) accelerate the institutionalization of crypto as an asset class, and 5) continue growing our AUM and investing in the top projects. With that in mind, we are open to partnerships and are constantly striving to stay ahead of the market.


About Asia Blockchain Review

Asia Blockchain Review is the largest initiative for media and community building in Asia for blockchain technology. It aims to connect all blockchain enthusiasts on a regional scale and facilitate the technological foundation of blockchain through a range of group discussions, technical workshops, conferences, and consulting programs.

Our goal is to cultivate and encourage a collaborative community for our members to gather, share their experiences and endeavors in the blockchain space, and brainstorm the potential uses of blockchain technology.

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