Dialogue with Hashkey Capital Partner Xiao Xiao: The Story and Key Insights Behind Raising $250 Million in 3 Months

Introduction: Recently, HashKey Capital announced the completion of the first close fundraising for its fourth fund, HashKey Fintech Multi-Strategy Fund IV, with a scale of $250 million. This also marks the highest single fundraising amount in the crypto VC industry since June 2024.

With outstanding investment performance, HashKey Capital has been listed in the RootData's Top 50 Crypto VCs for three consecutive years, becoming one of the most notable and highly regarded Asian VCs in today's crypto market.

So, why was HashKey Capital's fundraising this round so smooth? Which areas will future investment strategies prefer? How will the primary market evolve in the future? ChainCatcher recently had an in-depth conversation with HashKey Capital partner Xiao Xiao to try to reveal the answers to these questions. Here is the full dialogue:

ChainCatcher: In the winter of the primary market, HashKey Capital completed a $250 million fundraise, which sends a very positive signal to strengthen market confidence. Can you share the specific process of this fundraising round?

Xiao Xiao: This fundraising round started in mid to late September last year and took about three months to complete the $250 million. The background of the investors includes institutional investors, family offices, and high-net-worth individuals from both traditional and crypto circles.

The progress of this fundraising was indeed fast, but it wasn't that we completed it quickly without preparation. Many investors had previously invested in our earlier funds or other products from HashKey Capital and were satisfied with the performance and team management, so they came back for reinvestment. This is a relationship built over the long term.

Our total fundraising target for this fund is $500 million, so we will continue to push forward with fundraising. During the process, we also received quite a few customized requests, especially from institutional funds. Therefore, the remaining $250 million may not all go into this fund itself; some may be converted into customized products.

ChainCatcher: Reports indicate that this fund from HashKey Capital will combine public market investment strategies and liquidity-creating cross-investment opportunities, selectively engaging in private market investments. Does this mean the focus of the new fund is on secondary market investments?

Xiao Xiao: It can't be simply understood as a secondary fund. Our entire investment structure will be different from previous funds. Previously, it was common for primary funds to invest in primary and secondary funds to invest in secondary, but this fund is a multi-strategy fund that may invest in some liquid assets through primary means, such as participating in PIPEs or CBs of listed companies, and also purchasing assets of already issued projects through OTC.

Why adopt this strategy? On one hand, our early VC funds are still in their investment period, so the new fund will take a differentiated strategy. On the other hand, LPs at this stage have very high requirements for liquidity and exits, so we are approaching this from that angle, making our investment strategy more flexible while ensuring returns and improving overall liquidity.

ChainCatcher: You just mentioned that the LPs of this fund have very high requirements for exits. How is this specifically reflected?

Xiao Xiao: On one hand, the investment strategy will have higher liquidity requirements for targets to ensure timely exits at the fund level. On the other hand, the overall structure of the fund will also differ from ordinary funds. Typical funds are completely closed and may only naturally expire after eight years. Our fund will have a window for early redemption in the mid-term; if investors want to take profits, they can choose to redeem early during this window. If investors are more optimistic about the next few years, they can choose to stay in the fund.

ChainCatcher: HashKey Capital's current fund focuses on global infrastructure, scalability, and large-scale application scenarios. What specifically does "large-scale application scenarios" refer to? What is the core criterion for judging whether a project has the potential for "large-scale application"?

Xiao Xiao: We believe that large-scale application is not just about having a large number of users; it requires real usage motivation and a sustainable business model. Additionally, we need to see if the frequency of user usage can create a network effect, meaning users continuously use it over a long period, and whether multiple users can generate a 1+1>2 effect.

ChainCatcher: While many other VCs have significantly reduced their investment frequency, HashKey remains one of the most active Asian crypto VCs. Why do you still have confidence in the market?

Xiao Xiao: We actually understand the behavior of other VCs significantly reducing their investment frequency. Although we are still quite active, the number of recent investments has also decreased compared to previous years. The main reason is that the number of excellent targets in the market is decreasing, and capital is concentrating on top targets, leading many projects to refrain from fundraising.

Why are we still willing to invest? This is actually part of our long-term strategy: during periods when capital enthusiasm wanes and noise disappears, we can find projects that truly have long-term value, so we are willing to invest more effort in finding such projects at this stage.

ChainCatcher: From publicly available information, you rarely invest in prediction market projects. What are the considerations behind this?

Xiao Xiao: Actually, we have projects in our portfolio that are involved in prediction markets, such as Myriad, but they transitioned to prediction markets midway. We were paying attention to Polymarket very early on, but there were some restrictions in the previous fund terms that prevented investment in platforms with gambling characteristics. At that time, they were not compliant platforms and were in a gray area, so our fund did not invest.

Currently, prediction market projects like Polymarket have become compliant, but their valuations have also risen significantly, which no longer aligns with the investment strategy of our earlier funds. However, it may align more with the investment strategy of our new fund, so we do not rule out participating in pre-IPO or IPO rounds.

ChainCatcher: Data shows that nearly 60% of new tokens listed in 2025 will experience a price drop, and given that VC firms have a token unlocking period of at least one year, many believe that VCs are already in a weak position in the industry. How does this situation affect your discussions with project parties regarding valuation and unlocking periods?

Xiao Xiao: We have always been cautious about valuations. If a project has an exceptionally high valuation, we won't participate, regardless of how popular it is. This is one of our risk control measures.

Many projects currently have valuations that are indeed too high; their intrinsic value does not justify such amounts, or they are overextending their market value for the next few years. Why do these tokens drop in price? Because they lack a long-term business model to support them. Stock traders know that many U.S. stocks are actually overextending their narratives for the next two to three years, but after that period, they have new stories or new businesses to continue raising their value. This kind of sustainability is rare in the crypto space; many projects see declining interest after issuing tokens. On the other hand, the teams often lack the perseverance to continue after issuing tokens.

So how do we avoid these issues? It mainly depends on whether the project has its own ability to generate revenue and whether it has a real business model, rather than just using tokens as ecological rewards, which only create selling pressure without practical utility to support them.

Regarding the unlocking period, we believe that token lock-up is reasonable because, for both early investors and teams, if there is a genuine long-term plan, a gradual release of tokens is completely acceptable, but this rhythm must correspond to the pace of product development.

ChainCatcher: During the project due diligence phase, what dimensions of information do you focus on the most?

Xiao Xiao: We place the highest importance on the quality of the team itself, including their entrepreneurial motivation, vision, and execution ability. We have encountered many situations where the project itself and financial data look good, and the project is hitting the right trend, but if the team appears arrogant or not grounded, we will pass on those projects.

For example, in terms of team management, we will pay attention to whether fund management is standardized, such as whether the company wallet and the founder's personal wallet are separate, and whether the employee incentive mechanism is sound. We have encountered situations during financial due diligence where the project party could not clearly provide this information, which usually indicates issues with fund management, and we will directly pass on such projects.

ChainCatcher: The situation of Chinese entrepreneurial projects has become a highly discussed topic in the market. How do you view the changes in the status and role of Chinese entrepreneurs in the industry?

Xiao Xiao: I do not believe that the status of Chinese entrepreneurs is lower than that of their European and American counterparts; rather, their status is reflected in different fields. If it is an application-oriented or execution-oriented project, I am more inclined to trust Chinese teams, as they often excel in internet operations and execution compared to European and American teams.

The advantages of European and American teams may lie more in researching or creating trends. The excellent projects we see now are often mixed teams; even if it is a Chinese entrepreneurial project, if they need to expand into the European and American markets, they also need to hire excellent local talent. Conversely, when expanding into the Asian market, European and American teams also need Chinese talent because they are more adept in the Asian market.

ChainCatcher: The transparency of various information such as project teams, token unlocks, and product progress is generally low, which is considered one of the significant issues affecting industry development. How do you view the role of transparency in the future of the crypto industry?

Xiao Xiao: We actually pay attention to this issue when investing, requiring them to inform us of product progress. At the same time, we also encourage the projects we invest in to improve their transparency to the community, such as publishing project progress reports monthly regarding the token unlock plan. If a project cannot meet these processes, they may be quickly eliminated.

ChainCatcher: Do you think the crypto industry will evolve to have a similar information disclosure mechanism as traditional securities markets in the future?

Xiao Xiao: I believe there will be two extreme situations. One is completely anonymous or decentralized projects, where the mechanisms are very simple, and the community decides on evolution through on-chain voting. This model does not require teams to disclose information because the governance process itself is transparent. However, as soon as a project wishes to trade on centralized exchanges, it must inevitably bear certain information disclosure obligations. From the perspective of protecting users on exchanges and the development of the industry, a set of compliance and disclosure standards is necessary.

ChainCatcher: After multiple market cycles, how do you view the trends and changes in the primary market of the crypto industry going forward?

Xiao Xiao: Over the past few years, I believe a clear trend is that token financing and equity financing are increasingly merging. Previously, many projects either pursued SAFT financing or equity financing, but now more often it is an Equity + Token model, which is flexible enough for exits from both the crypto market and traditional capital markets.

For crypto projects, whether through IPOs or reverse mergers, the listing channels have become smoother. I believe the capacity of the primary market will continue to grow, and many companies with sustainable revenue-generating capabilities will gradually align more closely with traditional primary markets, concentrating a large amount of capital on truly leading entrepreneurs. This is already very evident in the payment industry, where a lot of capital is continuously pouring into leading payment companies, regardless of how high their valuations are.

Moreover, the boundaries between primary and secondary investments in the crypto industry will not be so clear. This has already appeared in the last wave of DAT enthusiasm, where many DAT projects raised funds in the primary market but essentially are secondary targets. This situation will become increasingly common, with many projects listing first and then refinancing after achieving sufficient liquidity in the secondary market.