Investment Thesis v3.0

In 2018, we first wrote about investing in technology during an era where populism was on the rise and how that may impact the direction of certain industries – from finance and crypto to AI, manufacturing, defense, and even space. In 2020, we wrote a follow up thesis covering this topic in more depth.

Since then, we have maintained a top tier IRR of over 60% in our VC fund with multiple seed to unicorn investments and over 10 realized exits.

Visary Capital is also among the top performing funds in the crypto market from a realized IRR perspective, with hardened experience through multiple market cycles.

Now here we are, seven years after the original post, half way through the 2020 decade, writing once again about this broad theme with some updates, what we got right/wrong, and where we may go from here.

We'll start off with the below clip from a 2024 episode of the Colbert Report. This clip is perhaps the perfect encapsulation of a kind of fatigue the public has with the media establishment and something we predicted 7 years ago would continue to rise. This phenomenon is no longer partisan and much of the public actually aligns on many issues between all the noise and culture wars.

As shown in this clip, the crowd laughs at the notion of CNN being "unbiased" – which was not supposed to be a joke or laugh track. The mistrust, or at least the questioning of institutions has spread into even more metropolitan circles. This is a major change from just a few years ago.

There are plenty of other examples of this and there is now a seemingly visceral reaction to the assumed trust the public is supposed to automatically have in many current established institutions (media, academia, D.C., healthcare, etc).

Below is a passage from Slate Star Codex regarding institutional trust that encapsulates this well.

Some may want to romanticize the old way information was disseminated throughout society, in the Cronkite-era of media, or even just pre-internet days, when society was higher trust. Indeed, higher trust societies are something to strive for, but objective truths are also important. There are many reasons why society has become low trust, from cultural to civics to demographics, but perhaps that one is for another time.

For better or worse, here we are. With social media and independent voices, opinions, and analysis accessible at scale, there's likely no going back to the old era of institutional trust. Instead, there is a growing expectation in governments, markets, finance, and technology to improve transparency in the hopes to replace or improve some of these institutions. For media, there is a long way to go to regain that trust, but we think there is a slow realization that something has to change, and that independent voices and longform content are picking up steam because they offer something new. We predicted that the 'woke era' would peak after a few years and the radical parts would largely be rejected by the general public. Although there are remnants of absurd ESG and DEI policies across the West in government and corporate world, these things have largely peaked and begun to taper off.

An example of government improving transparency is DOGE – an initiative which would have been praised (and similar programs have been praised) in other administrations to expose and cut government waste, but is now being seen as an automatic evil. That is not to say there may not be specific criticisms, but directionally, it should be a favorable endeavor to cut waste. This era in a nutshell: "If it's our war it's a good war, if it's our gov't spending, it's good gov't spending, and if it's our gov't cuts, they are good gov't cuts". Both ends of the political spectrum have this going for them.

The public will become more aware of the politics of power and the obvious hypocrisy that has always existed in politics. This is likely how politics continue playing out for at least the next decade. However, we are likely approaching "peak distrust" and populism may find a flattening or moderating period after that. What exactly that looks like or when that happens, is less clear. There is first likely to be a reactionary left-wing populism that rises at some point, but so far that has been largely rejected. That could change by 2028, however. Once these movements play out, the hope is that a common sense, rational centrism emerges that is primarily focused on real solutions with the help of technology, and removes the noise.

Although we are big critics of many aspects of populism, we can acknowledge there is a lot of catharsis and change that occurs in these eras, and likely a time where major growth happens in select areas. These are the kinds of areas we discussed 7 years ago and have been focused on – where acute technology shifts are happening with maximum tailwinds (political, cultural) and attention in growing markets.

Below are some examples of areas we have been investing in and will continue to invest in. These are areas we believe are propelled by more secular trends and technology breakthroughs, but also accelerated by some kind of populist zeitgeist.

American Spirit

For years, it has been hip to have a negative attitude towards the US, with every think tank and academic superficially drawing parallels to an imminent Roman Empire-style collapse. This archetype has always existed in society and much of this mentality more recently grew from things like post-9/11 foreign policy, coupled with public sentiment in issues such as healthcare or wealth inequality. Much of this sentiment is also driven by tons of conspiracy theories, most of which are built upon the public's poor understanding of how things work at the upper echelons (and some which admittedly end up containing plenty of half-truths).

Most can admit there are legitimate problems in these areas and wish for solutions, but instead of going with the intelligentsia's defeatist socialist dogma, or "downfall of the US" narrative, or class warfare – we support finding ways to fix these problems in new pragmatic ways. When there's a will, there's a way. We see countries like El Salvador rapidly fix their record crime and gang problems because there was a will to do so. We believe the US has hundreds of solvable problems that just require the will and drive to do so – which has been largely lost on the Washington D.C. class.

The contrarian bet to the popular defeatist mindset all along was to double down on American growth and the belief that the US still has far more gas in the tank and far more leverage on the global stage than most want to admit. Palantir is somewhat of a posterchild for this mindset and we now see hundreds of companies focused on improving American systems with better infrastructure, manufacturing, defense, and AI (including our rapidly growing portfolio company OneBrief).

We will see massive investment in chips and data centers over the next few years, which will drive major private capital to enter markets. In parallel, we hope the US can stay off its addiction of central bank money printing, at least for a few years (this is less likely, but at least it can be supplemented by growing private capital investment).

As of writing this thesis, the tariff mania of 2025 happens to be in full swing. We believe in a few years, we will look back at this mania as a hiccup in a broader economic reset, that actually ends up going well and improving the health of markets. Every good negotiation has very uncomfortable moments and the US has more global leverage than most understand. The only sticking point will be China, but it's likely most other countries end up aligning on new trade deals that generally favor the US in the long run, which we believe is better for the world, despite any flaws. We also do not believe inflation will rise due to tariffs and is more likely to end up coming down due to many other factors, with interest rates following (*this part will be easy to go back and check on in a year or two).

With all that said, there will certainly be reactionary forces against the above approach. It won't be easy, but in our eyes, it is a bet worth taking.

We have never invested in the equity of a company outside of the US. Never short America.

AI

When we discussed the concept of disintermediation in our original thesis, we thought it would come in the form of some kind of blockchain-based system. While that could happen on a smaller scale, in hindsight we were wrong to think "Web 3" (crypto) was the way to disintermediate business models or institutions at scale.

The reality is that AI is the real "Web 3" if we had to define something with that term (begrudgingly). At its core, there is nothing more populist than the individual citizen being able to utilize simple software and prompts to create complex code, outputs and content, massively flattening technical requirements across all kinds of fields over time. In "Web 2", social media was the ultimate populist tool (and still is) — and we think the same of AI (consumer).

AI in the enterprise, where we have many of our investments, will also have a huge impact on business models, how talent is utilized, and the types of jobs companies prioritize hiring for. We say this not as AI doomers, but with a realization that the value and net jobs gained from this technology will vastly outweigh any perceived job loss. We have always believed the AI story would play out much differently and more iteratively than the doomsday theses.

We are still making investments in AI companies and have many from 5+ years ago (e.g. Turing, Cribl, etc) that have performed exceptionally well. The best vintage for AI startups likely began 4-5 years ago, but we are still seeing exceptional startups rise, particularly more recently.

There was a lot of noise in the AI space (e.g. glorified wrappers) in the ~2023/24 vintage, but for the 2025-26 vintage and beyond, we are open to start investing in AI startups again.

Crypto

The venture capital grift is largely done in crypto – perhaps the most populist industry of all because of how inherently political the technology is in trying to reshape systems. We saw this coming, which is why we announced shifting to a liquid portfolio strategy for crypto back in 2023 and banning SAFT investments before that. We invested in the original wave of SAFTs when they were first invented, with different hopes and aspirations in mind. Although this vintage of SAFTs (~2018-2020) performed exceptionally well, this investment strategy has largely not replicated in future years. We saw far too much noise in the "crypto venture" market after 2021/22, and believe we stepped aside at the perfect time.

Memecoins are a direct result of the VC game in crypto being called out by the masses and are the purest form of retail internet populism next to meme stocks. The entire pump.fun meta was really a reaction to the broken crypto VC mechanic of raising at high FDVs, landing market makers and exchange listings, and propping up token prices as best possible until vest periods came. We also started seeing more founders and insiders selling on secondaries before the actual token listing, which is peak corruption that the public is now aware of. We don't believe this will ever be forgotten.

The memecoin meta itself eventually became corrupted by insiders and an arguably worse cabal of schemers – but at the heart of it is a bigger point. The vast majority of tokens are unnecessary vaporware and outside of Bitcoin, some stablecoin use-cases, and maybe a handful of smart contract L1s that offer transaction rails / app building. Memecoins are ironically more honest in that sense – they are what they are and they rarely claim to be more. They will likely have multiple waves and resurgences.

VC coins will try to repair their image through more generous public sales, "community sales", bigger airdrops, more transparency, and more "fair" ways to raise and launch at relatively lower FDVs – but we think the image has mostly been soured and won't ever return to the 2017-2021 "techy" alt mania. We may see some new creative metas rise over the years but think they will more closely resemble NFTs and memecoins than VC altcoins.

In the FTX era, the "crypto VC" market became far too saturated and it broke the game, as seen in the most recent market cycle. The vast majority of VC token launches have gone poorly this cycle. There were astonishing gains to be had in the memecoin meta and we took advantage of the situation. In the liquid fund, we look for trends where we can pour gas on the fire and drive returns – which happens to be crypto today – but we are no longer religiously tied to the space like many of our peers.

We continue to hold Bitcoin and Solana as core positions in the fund and have consolidated any other crypto trading gains back into these for the time being. We will continue to invest opportunistically in liquid opportunities and support some of our existing equity holdings in real Bitcoin/crypto businesses (e.g. Fold, Kraken, Unchained, etc).

After many years, we sold our core Ethereum position which was accumulated at prices as low as $15. By every metric, this is still an exceptional realized return, especially when factoring in yield, staking, and other trading activities on the chain over the years that ultimately added more ETH. Unfortunately, we now believe we can perform better elsewhere and no longer see eye to eye with where Ethereum wants to go. We believe Ethereum suffers from serious inertia – but not in the good ways that Bitcoin does.

There are still areas in crypto such as RWAs and stablecoins which may have merit, along with some potential areas in AI around agents or micropayments. With stablecoins, we see it as a red flag that every single VC now has a bullish stablecoin thesis that we believe is now largely overstated and will become oversaturated. We are still open to venture investments in these areas but no more "crypto VC" in the old sense. It's possible we also deploy into some equity plays, where there is actually a business powered by crypto, but we will remain as a primarily liquid fund for the foreseeable future, and utilize our gains to rotate back into core crypto positions we see fit or bridge it into venture, equities, or other assets.

So far, the thesis from 2023 of staying liquid and nimble in crypto has been far superior than being weighed down by SAFTs. We will see how it plays out in the next 5 years.

Fintech

For context, over the last 2+ years, I have served as an EVP for Giftsoft, a payments and AML software company. I co-led the sale of Giftsoft to Aquila Software, a Constellation Software (TSX: CSU) company. During my time at Giftsoft, I have gotten a front row seat to the banking industry and where it's headed.

The main takeaway is that in 'traditional' banking, we see more of an onus ever in real-time settlement and with the addition of the new ISO 20022 payment standard, new expectations on transaction data, reporting, and compliance. There will also be more automation in fraud detection and AML. In this sense, we do not see banking itself directly changing a whole lot for the end user, outside of efficiencies – but absolutely for the back-office. We may see some more integration from banks to stablecoins but that will also compete with other payment types like Zelle and other RTP services. However, there is an expectation for more user choice in payment types, remittances, and faster settlement. As stated above, we believe with all this other competition in payments, stablecoins are not a panacea by any means.

In consumer fintech, however, we see more of an onus in transparency with users, new incentive mechanisms, and access to new types of assets and yield opportunities. Some of our portfolio companies like Alto, Percent, and Fold (which recently IPO'd on Nasdaq) have done these things very well and have performed well as a result. These areas in fintech have more of a populist tailwind to them, along with things like tokenizing assets or democratizing yield opportunities, alternative investments, and equity crowdfunding to the masses.

We will continue to invest in Fintech, primarily in consumer apps that uniquely empower users or in B2B opportunities where automation can reduce costs for financial firms. We see a real drive for that, validated from our experience at Giftsoft.

I plan to continue running operations for Giftsoft for the foreseeable future in parallel to running the fund.

These are the primary areas we will focus on in the next 5+ years. We also hold interest in other certain areas in deeptech (space, bio, energy, chips, etc) and if we meet standout founders, we will move on these areas. Over the years, we have grown a very keen sense for identifying good founders first and foremost. Our fund thesis is still broadly focused on the digital economy, and that's where the lion's share of our current profits and future will likely be.

You can read more about our aforementioned liquid strategy here, which shows our reasoning and highlights some of our historic VC IRR, which is still top notch ~16 months later to writing that piece and counting. Our realized IRR for the liquid fund is also in the top tier since writing our piece.

We got a lot of things right and some things wrong. For what we got wrong, we believe we have adjusted accordingly for the coming years to widen the thesis in some places but also tighten it and get harsher in others.

Until next time.

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