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Investment Bank on Hedera! Hashfarms & Pary Fund and King Solomon (Part 1)

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HashFarms

This interview was originally published by Genfinity.

King Solomon interviews HashFarms as part of the Hedera Corner in the LightHouse by Genfinity! Brought to you by LightHouse Report sponsor Hedera Hashgraph and in collaboration with our partner and Hedera wallet provider HashPack.

Transcription

Genfinity – King Solomon – Founder & CEO
What is up, everybody? Solomon here. I hope you guys are having a fantastic day. As you guys know, within Genfinity, we are doing multiple interviews across the Hedera ecosystem in collaboration with HashPack. And today, I'm super excited to say that we have David lane from the Pary Fund and HashFarms. How's it going today, David?

HashFarms / Pary Fund – David Lane - Founder
Going great, thanks again for having me, King.

Genfinity – King Solomon – Founder & CEO
So, I would love to hear about what you guys are facilitating in the Hedera ecosystem. I guess first and foremost, can you provide a little bit of a background about yourself and your team in web 3.

HashFarms / Pary Fund – David Lane - Founder
Definitely. So again, thanks for having me. My name is David Lane. I live in Connecticut, just outside of New York City. For the last 20 years, I've been working in traditional finance, with the last six years being at a Japanese institutional fund of funds. Our focus is investing in alternative investments, specifically venture capital, private equity, and private credit. When covid hit, I didn't have to commute into the city anymore, which saved me roughly three to four hours a day commuting. Along with my two neighbors, who both have kids the same age, we found ourselves in the street talking every day just trying to kill time during covid. So, we decided to start an investment group, just the three of us. We called it the Pary Fund. It's an aggregation of our kids' initials and there's a little buddha there to remind us to be patient. It was like a blessing in disguise. We went from seeing our kids for an hour and a half a day to seeing them 24 hours a day. It was definitely a time shift with family dynamics and everything with covid. So, we started the Pary Fund. My two neighbors work in traditional finance as well. The idea was we would invest as a collective, to capitalize on our synergies, but it was more just something to give us something to do. It was only a small part of our personal accounts. We split half of it between traditional finance and the other half between DLT. Within DLT, we looked at all the different blockchains and fell in love with the one blockchain that's not a blockchain, Hedera. We set aside about a hundred thousand dollars to invest directly into the ecosystem. One thing I noticed by using Discord was that everyone was going broke doing all these different mints, playing Hbars for this minute because they bought too much of this. So, what I did was start what's called the Hashgraph fund. It's a community-driven fund. We pulled together their Hbar and created a little token on Hedera, an HTS token called the Hfund. The idea is to, in a risk management way, try to get exposure to as many projects as possible and keep them in the treasury long term. It's not like a pump and dump by any stretch. The idea is to hold these long term and grow with the Hedera ecosystem. My thought was that for people who wanted to get exposure to the whole ecosystem, they could own the token and that would give them fractional ownership to everything. As the Hash fund began to grow, I decided to take it another step further. It's my belief that for the Hedera ecosystem to grow, you need organic adoption. I know it's a buzzword that everyone likes to use, but if you want your Hbars to grow in price, you need people to actually use Hedera. So, we started Hashfarms. Basically, what Hashfarms is, it's a free service. Think of it as like your career counseling service at your college. It's really resourceful and totally free, but no one ever uses it. So, what we encourage people to do is, if you're building on Hedera, stop by Hashfarms, and we will do our best to help you, whether it be with business development, marketing, a lot of people have been asking about legal and tax, so we've been doing a lot with that. The one thing we can't really help you with is coding. I'm not a developer by trade, but we do have a network of Hedera enthusiasts within the Hashgraph fund that we try to team up projects with. Our hope is that we can strip away as much startup cost as possible, as long as you're building on Hedera. Once you've got that prototype built on Hedera, we've got you, right? So, the idea is you can grow your project from there, and it would stay on Hedera. We would like to partner with these guys, we like to partner with the projects long term. And when I say partner, I mean we're here, we're not just going to get you off the road. As you grow, feel free to use us for different stages of your growth. It's a very simple philosophy: try to encourage people to build on Hedera by doing it for free. And ultimately, that supports our underlying investment thesis, which is in Hedera, the technology, and Hbars. I tried to keep that under five minutes. That's us in a nutshell.

Genfinity – King Solomon – Founder & CEO
No, that's fantastic. I mean, I would love for you to even expand upon some of the services that you guys are providing that are free. So, from the Hashfarm standpoint, I mean you talked about advisory and discussions around lending and capital markets. And all of this is free of charge. As far as the incubation aspect, I think it's going to be massive moving forward because there are so many projects in the space, and they don't necessarily have any outreach into people that could potentially help them with some of these services. So, can you just expand a little bit on that? And how do you guys plan to gain more people to use it? How can we get people to understand what you guys can really facilitate, whether that be advisory aspects or talking about VCs and the potential to get funding and stuff like that?

HashFarms / Pary Fund – David Lane - Founder
Yeah, definitely. So, with regards to incubation, with my primary form of employment, we work with an accelerator called the triple bridge acceleration program out of Tokyo. It's in collaboration with Keio University, and we work with startups within Japanese universities. What we do is try to encourage university-driven IP and professionalize them. What I mean by professionalize them is get them ready to approach seed and angel investors and encourage them to bring their IP out of the university setting. It's a very tenured environment in Japan, so there's a kind of fear to come out of the safety of the university. So, what we do with the accelerator is work with them on everything from business development, getting them set up structurally and legally, foundation, we look at their marketing plan, we help them with their pitch books. Basically, their pitch when approaching investors. We try to make sure they're ready. I should take a step back. With the triple bridge program, it's primarily health tech. However, the process for getting startups is kind of similar. It's accounting for your runway, managing expenses. It's a lot of little things that a lot of projects just don't tend to focus on. I see a lot of creativity, but when it comes to business development, there's just some inexperience. So, what we try to do is help fill that gap with the inexperience with regards to fundraising. We can provide an investment through the Hashgraph fund. For lack of a better term, it's more of a token investment. We try to add value through our assistance So, the well, the capital itself isn't check, so the check sizes aren't all that large. We try to make up for that by partnering with you and you know, stripping or trying to alleviate costs that you can incur, primarily you know, throughout startup. So, a lot of this we're seeing a lot with accounting, we're seeing a lot with tax concerns and a lot with legal, and we're able to help with that directly. Now, should your projects hit a level of critical mass and you're looking for more institutional funding, we have a network of venture capitalists that we speak with. We also have a network of angel investors that we can syndicate with, but that's a more formalized process. A process which I like is when you start getting into those discussions, it means that you're on to something right. You've passed proof of concept, there's general interest in the community, and what we want to make sure you do is we don't want you to take one step real quick and then have to take two steps back. We want to help you grow in an appropriate manner. We want to help you have a runway to anticipate market cycles. I mean, this is crypto, we're in a bear market. You never know how long it could last. Just a lot of little things, kind of try to help handhold projects to a point where they can go off on their own, as long as it's on the Hashgraph.

Genfinity – King Solomon – Founder & CEO
I think it's fantastic, even from this point of, and this is why I would love to get the services that you guys are providing out there to as many people as possible because, like, even within, if you're starting a project on Hedera, the natural progression would be to potentially reach out to the HBAR foundation to get a grant. But, to get into that grant process, a lot of like projects, I don't, I'm sure that a lot of people know, but some people don't know going into those discussions, that they are very structured discussions. You need milestones and benchmarks, you need to have a minimum set of criteria to go into that discussion successfully.

HashFarms / Pary Fund – David Lane - Founder
Yeah, they're gonna look at KPId, key performance indicators, there's milestones, there's a growth plan, do you understand the market segment that you're in, what's your competition look like? One thing we're really seeing a lot of projects come to us, and they have, they don't know what they don't know, where they want to go with it. There's no utility behind the project, and they're wondering why there's no value to it. So, I mean, if you are an artist, that's great, but you know, you're only limited to your audience. But, if you're trying to define utility, we're seeing a lot of utility through NFTs, like revenue sharing, you know, how is the revenue coming in, like, what is your path to profitability, and we work with a lot of companies, a lot of startups on that.

Genfinity – King Solomon – Founder & CEO
I think it's fantastic. I mean, that's across the board, because, I mean, super into, like, the empowerment of artists and things like that, but to even grow out from a brand standpoint, like, there's tons of different things you can get into a discussion with, but, like, with, how do I really grow this? Yeah, so I think the service that you guys are providing is fantastic, and you know, when you talk about collaborations and partnerships, so how many projects would you say that you guys have worked with thus far, and what do you think that that's going to look like moving into 2023 as far as what you guys are doing through Pary Fund and Hashfarms?

HashFarms / Pary Fund – David Lane - Founder
Yeah, so the Hashgraph fund itself has invested in over 25 projects so far, starting back in June. We are about 33% deployed capital one, so we still have a lot of dry powder to deploy into 2023. We would like to do this on a selective basis, because, I, as long as from a traditional finance background, Jerome Powell just said he's going to keep raising rates, like, a week ago, so, you know, rates go up, dollars come down, prices come down, valuations come down. So, until we start seeing numbers really come down on inflation, we're anticipating that it's going to be a tough environment, so we're just selective in the deployment. As far as growing, as far as growth, I'm not a social media expert. I haven't really used Twitter all that much. I've always used it for the news, so I'm still getting used to kind of the web 3 social marketing. So, right now, we've been going on word of mouth. As someone who provides a free service, we also have to maintain costs on our end. It's entirely, the Hashgraph fund does not, we do not take any money out of the fund to, you know, if the fund invests, that's one thing, but as far as operational expenses go, like, setting up meetings, everything, I pay for that out of my own pocket, because I have an underlying investment. The Pary Fund itself has an underlying investment era, so, I don't mind doing it, but, if we do hit a point of critical mass, maybe I don't, I don't know, maybe we'll figure something out, but for now, I have the bandwidth to do it as myself, my two partners, we have a network, and then, within HashFarms, we have the Hashgraph fund, and that's made up of about 20 limited partners. All Hedera enthusiasts, and they all kind of have their own little, everyone's got their own competitive advantage, so to speak. They've all got their strengths, and we just try to team people up with that. One thing we really try to do when we encourage partnerships is, I try to get to know both parties, because I want to make sure that a project, when they partner with someone, that divisions are aligned. Now, there's only so much I can do with that, but, as a project owner and an owner in any business, when you start taking outside capital or bringing on a partner, that is another cook in the kitchen, for lack of a better analogy, and that's someone that you are going to wind up having to work with long term. So, we want to make sure that that fit is right, and we always encourage projects to take their time developing those relationships. And, if it's a matter of costs and runway, let us help you extend that runway, and we'll do it in a manner that's not going to limit your creativity or your capacity. Just, there's a lot of little things, like, I don't know, obviously, I've seen some funny expenditures going, people paying for marketing when they don't have a product yet, not kind of utilizing what they have, but little things. But, these are all minor corrections that can save money in the long run.

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