Building the Blockchain with Fenbushi Capital and Wanxiang Blockchain Labs

By yBitcoin Magazine / March 16th, 2016

You’ve built your own company. You enjoy trailblazing work that takes you around the world. Your business contributes to both the economy and the social good, and you recognize how the two are intertwined.

You are an entrepreneur.

And a quintessentially successful one at that.

No one can say you haven’t stretched yourself. But you’re still a bit restless. (Because all entrepreneurs are restless—it’s a defining quality.) And you think: What more might I do? How else can I do something useful for this world?

Your name is Dr. Feng Xiao. Your name is Bo Shen. Your name is Vitalik Buterin.

And you think you might want to work together.

Those were just a few things on the minds of the three entrepreneurs last October when they gathered in Shanghai, China, each with an intense interest in blockchain technology. The idea was to put their heads together, throw some ideas around, and see what might suggest itself about this
increasingly intriguing new protocol that was turning heads in the financial world.

So the Russian-born, Canadian-reared, Switzerland-residing Buterin, a blockchain technical guru and founder of decentralized contract platform Ethereum, flew to Shanghai to meet with Shen and Xiao. Shen is co-founder of Invictus Innovations (the team behind the financial contracts platform BitShares), and Xiao is the founder of Chinese mutual fund giant Bosera Asset Management. He also serves as vice chair of China Wanxiang Holdings, which is the financial arm of Wanxiang Group, one of China’s largest auto parts manufacturers.

Think of it as a kind of consummate summit meeting of the digital era, with the collective brainpower and business acumen in the room surging off the charts, final landing place unknown.

A few days later, the threesome had sketched the broad outlines of what was to become Fenbushi Capital, a $50 million for-profit venture capital fund dedicated to supporting startups across the blockchain world. (Fenbushi translates as “distributed” in Mandarin.)

Appended to that was its nonprofit affiliate, Wanxiang Blockchain Labs, a fund designed to provide a steady stream of grants ($300,000 annually) to support research and education projects in the blockchain domain. The nonprofit arm, unlike the startups seeking VC funding from Fenbushi, aren’t about bringing financial return to their developers, but are instead intended to contribute to the collective knowledge of the blockchain and its potential applications across a broad swath of human activity.

“None of the three partners had the time to start new companies directly in the blockchain space either together or by themselves,” says Remington Ong, who also has a partnership interest in Fenbushi and serves as a spokesperson for the company. “But they also agreed the industry is in the very early, nascent stages, and just creating one company within a specific niche of the blockchain wouldn’t have enough impact on the ecosystem as a whole. So they decided the best use of their resources was to pool them and invest in others who could advance the industry.”

“No industry limitations. Just as long as it helps build the blockchain. We tell applicants to give us a good working demo, present it well, and sell the story.”

Besides which, Ong adds, “What they didn’t want to do is create just another Bitcoin wallet or mining tool; there are plenty of good ones and lots of competition out there already. They were looking for innovation, for ideas that will help grow the industry at large.”

That means moving beyond the internal Bitcoin industry—producers selling to insiders and enthusiasts—to the wider blockchain world and its many vertical applications, such as
financial and legal services, supply chain logistics, and auditing.

Both Fenbushi Capital and Wanxiang Blockchain Labs, Ong adds, are designed to support those efforts, the former by funding worthy product and service development, the latter by funding the best research and code that grant money can buy. “A lot of work needs to go into building infrastructure, and though the blockchain world is open source, that doesn’t mean it’s free. Developers still need to be fed, but where does that money come from? Wanxiang Blockchain Labs wants to help answer that question.”

The grant program awards up to $50,000 every two months, entertaining proposals literally from around the world, some for just a few thousand dollars, up to the entire $50,000 if one project proves worthy. Most, however, tend toward smaller sums, which suits Wanxiang Blockchain Labs just fine.

The first awards in December 2015 generated such intense response from multiple qualified applicants that the award was doubled to $100,000, which was dispersed among nine projects.

Then in early January, Wanxiang Blockchain Labs spiced up the whole enterprise by joining with co-sponsor Deloitte to host the “Shanghai Blockchain Hackathon,” a spirited affair drawing teams of blockchainheads from around the world who worked feverishly through a long weekend to draw up and then present plans for blockchain enterprises. Fueled heavily by caffeine and substantial cash awards of $30,000/$20,000/$10,000 to the top three pitches, some 100 participants represented 23 teams. The winning proposal addressed a far more efficient and accountable means of tracking transactions in world trade.

“We place very few limits on the projects we want to support,” notes Ong about both Fenbushi Capital and Wanxiang Blockchain Labs. “No industry limitations. Just as long as it helps build the blockchain. We tell applicants to give us a good working demo, present it well, and sell the story.”