A look at China's most prolific crypto venture company

Who is the most active cryptocurrency investor in China? Neo Global Capital Ventures, according to CB Insight's latest blockchain 2020 report. But who is NGC Ventures? And why did you reach the top of the ranking?

The history of NGC

The venture capital firm is known for its deep ties to NEO, an aspiring Ethereum killer, popular in the Chinese market. From Hong Fei and Erik Zhang, co-founder of NEO, joined their tokens after the ICOs and established NGC as a NEO risk business.

NGC Ventures subsequently invested in projects such as the "high-performance public blockchain" ontology, which – not surprisingly – was co-founded by Da Hong Fei himself.

Critics questioned the legitimacy of both projects because, in contradiction to the spirit of decentralization, the two projects are centralized under one founder with one team of developers. Born with a golden and somewhat controversial perspective, NGC Venture's mandate was to invest in projects that fueled the NEO ecosystem.

However, as NEO has retired from the blockchain front, NGC has started to diversify its investments considerably. Indeed, his 2019 investments have little to do with NEO.

Investment thesis by NGC Venture

Although registered in the Cayman Islands, NGC is made up of a team of Chinese investors, half of which are based in China and the other half in Singapore and the San Francisco Bay Area. The fund invests globally with "almost half of its investments in China," says Wayne Zhu, founding partner of NGC.

"For us, the key is not the use of blockchain technology. We are only concerned with resolving a sore spot in the industry, "said Zhu. NGC's Babel Finance project doesn't use blockchain at all.

It is a loan company that uses a proven but centralized financial model to meet a huge unmet need in the world of cryptocurrencies: lend money to miners and traders.

The spray and pray model by NGC

Despite doing most of the business in China in 2019, NGC hasn't invested in any of its major peers' major cryptocurrency projects. Instead, he adopted a "spray and pray" model, writing small checks for a wider variety of deals.

And there is a reason behind this strategy. As everyone knows, 2019 was practically the death of the ICO, an important source of revenue for NGC. With limited funding and no immediate exit, NGC could afford to write small checks to startups that have a relatively more "realistic" rating.

Riding the IEO wave

Like many Chinese investors, NGC paid particular attention to the success of Binance's IEO. This is not unusual among non-resident investors in China because a good project tends to attract more investors. But the fact that so many Chinese funds chase projects listed on Binance's IEO is revealing. For NGC, IEOs are simply a continuation of ICOs.