Hamiz Awan, Founder and Partner at Plutus21 Capital, discusses Blockchain infrastructure and platforms.
Sramana Mitra: Let’s introduce you to our audience. Tell us a bit about our background as well as about Plutus21 Capital.
Hamiz Awan: I grew up in Pakistan. I spent my entire life there and then moved to the US to go to school. I’ve been involved in a few different entrepreneurial ventures before, but Plutus is my first venture in the investing space. Plutus21 is an alternative asset management. We focus very heavily on Blockchain investments. We focus on infrastructure within Blockchain – protocols, marketplaces, platforms. We try to make sense of those and invest in those.
Sramana Mitra: Where are you operating out of?
Hamiz Awan: Dallas, Texas.
Sramana Mitra: What is the scope of Plutus’ investment from a geographical standpoint?
Hamiz Awan: One of the great things about Blockchain is it’s been a global movement. There really isn’t a center of Blockchain. It’s always been a very global thing. Our investments have no real borders. Some of them don’t even have headquarters. We look for problems that need immediate solving. A lot of times, these problems are outside the US. A lot of the financial infrastructure issues and governance issues are outside the US. Naturally, the user base that we look at is usually outside of the US but the companies are global in nature.
Sramana Mitra: What is the structure of Plutus? Is it structured as a regular venture fund?
Hamiz Awan: We’re an open-ended fund. That’s possible because we’re in Blockchain markets. Largely, we invest in very liquid assets. One of the interesting things about Blockchain-based assets is that a lot of the assets in the space are liquid. They’re not the traditional private equity that you would buy in these early-stage companies. Because we had liquidity on our end, we can do venture-like investing but do it with liquidity. That’s where we’re able to have an open-ended structure.
We do invest in traditional private equity. These companies are structured mostly as special purpose vehicles that are close-ended. For most of our investments, we have an open-ended structure. It looks like a marriage between a hedge fund and a venture fund. We have the liquidity of a hedge fund, but the investing is venture.
Sramana Mitra: Let’s do some case studies. Maybe that would be the best case for us to understand. Pick one or two of your investments and walk us through what they do and how you have invested in those companies.
Hamiz Awan: One of the things that people misunderstand about Blockchain is that the only disruption in Blockchain is how they’re going to disrupt business models. That’s just one part. In my view, there are two separate pieces here. One is the disruption of the business model. Two is the disruption in how capital is being formed.
A lot of these companies are not going down the traditional path of fund-raising. They’re not raising capital from VCs or angel investors. They’re either pre-selling their service or they’re raising money through loyalty programs. Some of them look like a loyalty program. Some of them might look like equity.
It is a little bit more difficult to understand why these assets would have value. Essentially, there is a new part in the capital stack. I have debt, equity, and then digital asset. It’s a whole new piece of how these companies are raising capital. We have to think about it from that perspective.