HIC Fund II: Bringing Capital, Applications, and Liquidity to Polkadot!

In the Polkadot ecosystem, there is a type of investor who does more than just "throwing money around" - they use capital to leverage application landing, activate on-chain liquidity, and tell the ecosystem's story to global investors.

Harbor Industrial Capital (HIC) is such an entity.

From the first fund established in 2022 to the current second fund backed by the Web3 Foundation as its first LP, HIC has not only invested in star projects like peaq, Mythical Games, Mandala, and Xcavate, but also personally runs nodes, provides liquidity, and participates in liquidity pools to activate DOT assets.

In their view, Polkadot is standing on the eve of a "Cambrian-like explosion" - the Polkadot Hub is about to launch, the JAM upgrade has not yet been priced by the market, and tracks like RWA, gaming, and government services have "ceiling-level" potential, with Asia being the next growth engine.

In this 'Space Monkeys' dialogue, the two partners Mario Altenburger and Max Rebol shared their investment logic, lessons learned, observations of the Asian market, and why Polkadot's capital narrative needs to shift from "subsidies" to "investment".

Mario: Mainly due to work. After completing my master's at Columbia University, the Bank of China was looking for someone to help them develop international capital market business, such as financing international companies with RMB. Later, we expanded our product range to convertible bonds, like projects for Cathay Pacific and so on.

At that time, I met Max, who was working at Morgan Stanley and Deutsche Bank, primarily focusing on research and due diligence. I felt our skills were highly complementary.

Jay: I see, so you also moved there for work?

Max: Yes. I've been in the Greater China region for 15 years, completed my PhD in Shanghai, then moved to Hong Kong, first working at a research company, later at Morgan Stanley and Deutsche Bank, still mainly doing research work. Around 10 years ago (2015), I was introduced to Bit through the Hong Kong Bit community. The Bit crypto circle in Hong Kong was very active, and I invested some - of course not enough, haha - but from that time, I've been actively following this field. I later bought Ethereum early on, and then Gavin left Ethereum to create Polkadot, when he came to China to do roadshows introducing Polkadot, visiting Beijing, Shanghai, and also Hong Kong. I met him then, heard his vision for Polkadot, felt very resonant, and invested a bit in the private sale. This investment performed well, though I was still working at Morgan Stanley at the time.

But since then, my focus has increasingly concentrated on the crypto field, especially Polkadot. During the pandemic, we could only hike in Hong Kong's countryside parks, chatting while walking, and discovered that many investors were interested in Polkadot, but few truly understood it. So we thought, why not establish a fund that accepts private investors' funds, specifically investing in Polkadot ecosystem projects.

Jay: Impressive. So you started preparing in 2021 and launched the first fund?

Mario: The first fund was established in January 2022, but we had been privately investing in Polkadot much earlier. What attracted me were the many crypto-related stories Max told me, and he even advised me to buy Ethereum in 2017, which was also a successful investment.

But when I heard the Polkadot story, I truly thought "Wow, this is different". Look, it has a very reliable founder Gavin, who was Ethereum's co-founder and CTO, wrote the technical whitepaper, built the Ethereum virtual machine, with solid technical background; his team is equally strong, and their vision is to create a system that can truly be implemented, serving real-world applications and ordinary people. This really moved me.

For instance, the Hong Kong Monetary Authority passed a new stablecoin bill a few weeks ago, making it easy for stablecoin issuers to obtain licenses and issue Hong Kong dollar stablecoins in Hong Kong. So through PolkaPort East, we want to encourage these issuers to use Polkadot technology - I think this is a huge growth opportunity.

We are also working on ETF-related matters (can't say too much at the moment), and some over-the-counter trades to bring investors in. At the same time, we regularly host meetups, hackathons, and collaborate with local businesses in Hong Kong to help them better understand Polkadot and apply the technology to their enterprises.

Mario: In Vietnam, there's OpenGuild, managed by Cris and Patricia, which is doing well. For example, at large conferences like GM Vietnam, we've had many great exchanges. In Indonesia, there's Mandala.

You can see that Polkadot has several good "outposts" in Asia. Currently, the layout in Japan is somewhat lacking, but we are focusing on a Japanese company that might become an important breakthrough for Polkadot there.

Jay: Haven't you invested in Astar?

Mario: Privately, I did invest before its first version was launched. But unfortunately, they later went in a different direction.

Jay: I wonder if they'll turn back. I heard they shut down zkEVM, right?

Max: It's possible they might come around, but I don't have any insider information.

Jay: I'm just speculating.

Mario: However, Japan has great potential, not just in terms of developers, but also in capital markets. For instance, some chains (like ADA) sold 90% of their tokens in Japan back then, so this could be a market with huge demand, especially from retail investors.

Jay: Japan is such an unpredictable variable. Everyone knows something needs to be done, and I feel they're under a lot of pressure.

Max: Interestingly, our largest single investor is from Japan.

Jay: Wow, that's cool. Let me ask one last question - you've invested in so many projects, so you must have rich experience. Have you ever had any setbacks? Like initially thinking an opportunity was very tempting, but then discovering it was a trap. Can you give listeners some non-investment advice to help them when choosing projects?

Mario: I remember a quote from a professor at Columbia - often, simple things work. Projects are best when they first focus on solving a core problem and then gradually expand to other areas. Among the projects that performed poorly in our first fund, most were those trying to "change the world at once" but ultimately achieved nothing.

Jay: That's a good experience.

Max: Indeed. We are optimistic about several niche areas, and Polkadot, as the AWS of Web3, can support all these areas, so we don't need to bet on just one direction. Especially Polkadot JAM, which is essentially a decentralized supercomputer that can do many things - we're just beginning to explore its potential.

Specifically, I'm very optimistic about DePIN (Decentralized Physical Infrastructure Network), like peaq we mentioned earlier, which is a huge growth area. Then there's RWA (Real World Assets) - I believe that in the future, every stock, bond, commodity, invoice, artwork, real estate, and even vehicles will be tokenized. Of course, RWA belongs to the real world and must comply with various regulatory requirements. This is why I agree with the earlier point about "not trying to do everything" - first focus on doing one thing well.

Polkadot has strong interoperability. You can succeed in the local market, collaborate with local regulators, and then gradually integrate with other modules and scale up. There's no need to bite off more than you can chew. We strongly approve of the modular approach, which is very important. The potential of RWA is almost "ceiling-level", and we're just getting started.

Another important area is gaming, such as Mythical Games that we invested in, which is a very interesting track.

Another underestimated area I think is government services. For example, Mandala Chain is doing an excellent job in Indonesia, which is actually a huge market. If you consider Polkadot as the AWS of Web3, it can also serve governments. Web3 and governments are not opposed; instead, they are increasingly integrating. For instance, in citizens' daily affairs - identity, driver's licenses, health records, transportation, housing - Web3 technology can be used to improve efficiency and make interactions between people and government smoother. Indonesia's Mandala chain is already leading in this aspect, and other countries have similar projects in progress, so this is also an area waiting to be explored.

Jay: That's excellent - maintaining an open mind. Today's conversation was very interesting, and I'm glad we finally got you here. Wish your second fund success, and hope we all walk better together in Polkadot's future. Thank you for sharing today, we all look forward to the future. Thank you!