J ulia Zhou, Partner at AlphaLab Capital , is on a mission to find and cultivate the next big ideas in finance, tech, and Web3.
As an operator-turned-investor, Julia is dedicated to supporting portfolio companies through AlphaLab Capital, a technology-driven trading group that transacts over $2 billion in crypto assets each day across 40 exchanges.By using strategic and data-driven due diligence, AlphaLab Capital and its portfolio companies have consistently generated exceptional returns since its founding in 2017.Today, Julia and her team have established themselves as trailblazers within quantitative trading and regard blockchain as the foundational technology of this generation.
We asked Julia about the experiences that have honed her skills as an investor, the ways AlphaLab Capital operates differently than other funds, and the advice she would give founders looking to pitch.
Q: What past experiences have contributed to honing your skill set as an investor?
A: Having been an operator for most of my career, perhaps it’s my own bias, but I just genuinely believe that operators make the best investors.At AlphaLab, we are both investors and operators at the same time, so that gives us a uniquely “boots-on-the-ground” perspective that allows us to help portfolio companies in very concrete ways.
Our technical teams are not part of a dedicated platform team like many other VC’s, but work in other parts of the technology business.
They are constantly being exposed to real-world applications.
Q: Tell us a bit about your fund.
What are AlphaLab Capital’s core theses, and what types of companies do you invest in and at what stage?
A: Born from a long-standing trading firm, AlphaLab Expeditions focuses on the innumerable and constantly evolving cutting-edge opportunities in the nascent crypto space.Our focus is in infrastructure, decentralized finance, analytics, and security, as this is where our operational background enables us to contribute significantly in advisory and growth with our portfolio companies, not just investment.From venture capital to market making, from liquidity provisioning to validator services, Expeditions is able to capitalize on the experience, technology, and liquidity of AlphaLab Capital’s successful prop trading activities.With a focus on the longevity and sustainability of our portfolio and partner companies, as well as the industry at large, we invest in pre-seed and seed-stage companies, incubating and advising passionate founders during a key period of growth.
Q: In what ways does AlphaLab Capital do things differently than others?
A: We really have a long-term perspective and try to focus on projects that will build thriving businesses for years to come.Especially in crypto, where there are very strongly cyclical markets, many VC’s are comfortable investing in projects that will be profitable short term, but don’t necessarily have staying power.
That can be a lucrative strategy, but because of our deep belief that blockchain is a revolutionary technology, we are really searching for the companies that can transform the industry in a lasting way.
Q: What is your procedure to get to an investment decision? How long does it usually take to arrive at a decision?
A: I think process is a very important and often overlooked part of investing.Our process is designed to balance speed and accuracy, both of which are important.
Usually, the best deals close quickly, so being able to arrive at a decision quickly advantages investors.
Our process is to underwrite a 10 times or higher return on our invested capital.We ask ourselves, “What has to be true in order for an investment in this project to give us a 10 times return? How much does the market size need to grow, how much of that market does this particular project need to capture, what do the unit economics and profit margins need to be, and do we believe this team has the ability to execute on all of that?”
Q: How much of your process is due diligence vs.gut feelings vs.validation from your colleagues or network?
A: We always do our own due diligence.
My approach is to be as systematic and data-driven as possible when investing—gut feeling is not a strategy!
The absolute hardest thing for investors is to not get caught up in market hype, FOMO, and cycles of greed and fear.This is doubly true in venture, where feedback cycles are very long and it can take years before you know whether any particular investment will be successful or not.
Q: What advice would you give to a company or founder wanting to pitch you?
A: Feel free to reach out via Twitter! As a firm, we are always open to receiving messages from founders and builders.
One thing I’d like founders to understand better is how to talk about your background.A lot of founders have the misconception that VCs want to see work experience at brand-name companies, so they put together a “team” slide that’s basically just logos of where they’ve worked before.
I think it’s so important to dig deeper than that.For example, I always like to see founding teams who have a history of successfully working together, as founder disagreements are a common reason why projects fail.Founder-market fit is also really important, where the founders have some work experience that gives them special insights into the market problem they’re addressing.If you’re a relatively inexperienced founder, you can make up for that with a really great team of advisors.
Julia is a member of Dreamers & Doers , an award-winning community that amplifies extraordinary women entrepreneurs and leaders by securing PR opportunities, forging authentic connections, and curating high-impact resources.Learn more about Dreamers & Doers and get involved here .
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc..
