Investment in cryptocurrency and blockchain startups is booming.
In Q1 2021, VC investment in this space hit a record US$3 billion across 239 deals, according to PitchBook data.
Along with this increasing investor appetite, crypto is fast on its way to being recognised as an institutionalized asset class across the globe.
Just this month, Singapore took a big step towards institutionalising the cryptocurrency market by granting operating licences to several crypto firms. These moves are bringing blockchain technology closer to the mainstream, as well as cementing the city’s status as one of Asia’s leading crypto-financial hubs.
When Alpha Impact co-founders Hayden Hughes and Austin Chaird first started trading crypto in 2017, one thing that stuck out to them was how confusing it was. Despite having extensive experience in investment banking as well as wealth and asset management technology, they found a real dearth of reliable information and high barriers to entry for aspiring crypto traders.
I remember my first crypto trade - a profitable BTC (Bitcoin) trade around $1,200. When BTC tripled and then started to decline, I sold at a panic. When I read the news, consulted YouTube and asked friends, everyone told me that due to new regulations, crypto was ‘game over’. Much to my surprise crypto was not ‘game over’, and rebounded to $20,000 that year.
After connecting via the Antler platform, the pair knew they wanted to build something to tear down these barriers and democratize crypto investing. Alpha Impact is a social media copy trading network built to give a crypto trader with $25 the same tools as one with 25 BTC. Customers can find, follow, and learn from over 1,000 top crypto traders while leaving their funds safely in their own exchange account.
"They are a great team with complementary backgrounds and have a good understanding of the space. In addition, they have an interesting business model and it seems like the right timing to do this," says Markus Bruderer, Associate Partner at Antler, and team coach.
At the very heart of their business is the power of social. Their platform gives everyone - traders and non-traders - the ability to not only find a crypto expert, but more importantly to understand why the crypto expert trades the way they do.
In line with this social-first mission, they’ve recently launched the Alpha Impact Academy, the first tool for future crypto traders to be rewarded for completing educational tasks to learn crypto. They’ve successfully gamified the process, with simulation accounts that allow customers to practice copy trading without risking any money and prizes for the best traders.
We sat down with Hayden Hughes, CEO & co-founder of Alpha Impact to discuss his journey building in such a rapidly evolving space, their impressive traction so far and his advice for entrepreneurs looking to get into crypto.
Hayden: Austin and I met in 2019 socially, when he was honing his crypto investment skills after more than 10 years of successfully trading equities. When I saw him in the Antler cohort in 2020, I wanted to hear his thesis for several cryptocurrencies that had been in the news. After having done thousands of hours of research on a small basket of coins, Austin had developed an ability to predict asset prices. Being much less inclined to do research and more inclined to copy, I asked Austin if I could just give some money to him to invest. We decided (with Antler’s encouragement) to conduct a survey of 100 people, asking simply: if you could copy a top crypto trader where you could see their real track record before investing, would you? The responses were resoundingly positive, with 94 saying yes. Over 75 of those respondents asked if they could begin right away and make a deposit.
As we moved from planning to execution, we identified the best way to operate would be as a tech platform - not as an exchange. This means that users give us limited permission to execute trades from their exchange account. We can never touch their funds, but we can execute trades for them. This combines the convenience of following an expert trader without ever asking customers to trust us with their investment funds.
Hayden: Unlike EToro and other platforms, we are not a brokerage or exchange. We are a technology platform designed to connect directly to our customers’ exchange accounts. This gives us two benefits. First, we don’t ask customers to deposit investment funds with us. Second, we do not need to settle trades on the back end meaning that, unlike EToro and Robinhood, we will never need to disable buying of specific investments under volatile market conditions.
Hayden: After our initial investment from Antler, we had the opportunity to raise from VCs, but rejected the VCs who had offered a term sheet in favor of proceeding with a non-dilutive token fundraise*. Our $3.1M USD token fundraise was the highest amount raised by an Antler portfolio company within three months of inception.
Hayden: At this stage, blockchain adoption has not yet occurred. Banks and MNCs run tiny test cases mainly for PR purposes, but the actual adoption of blockchain (for example in logistics, supply chain management, and other verticals) is just getting started. For entrepreneurs looking to ‘blockchain-ize’ their businesses, it’s important to distinguish between verticals within blockchain that are pre-adoption and those where adoption has occurred, such as crypto trading, DeFi, and NFTs. For entrepreneurs wanting to ‘get into crypto’, the advice would be to solve a problem where you can get funding (Trading, DeFi, NFTs), or don’t try to use crypto in your business in the first place.
Hayden: The first milestone was financial, and we’re fortunate to be supported by great investors. We’ve hired our first 11 team members and are growing rapidly.
We’re very excited to be announcing our Beta which is launching in late August followed by our trading competition launching in September. With over $100K as prizes for the top crypto traders, we’re very excited to be working with our existing community of 20,000 crypto traders and identifying the best trades across the four categories of Plankton, Shrimp, Lobster, and Whales.
We’re rolling out copy trading in the coming months, and are super excited for our launch during Q3. After Antler Singapore’s Demo Day, we were grateful to receive many expressions of interest from VCs who are now offering us the ability to expand our runway so that we can grow more aggressively. Given that no one has become a leader in the crypto-native copy trading space, and that we’re using social to get there, we see this as a winner takes all opportunity. We’re eager to expand our runway to go to market and become the leader even faster, and our current equity capital raise is designed to help us do just that.