Andrew Steinwold, a 30-year-old crypto podcaster, has quickly found success in the crypto markets. He shares the 3-part NFT investment strategy that helped him win, and 4 projects to follow. The investment strategies of the famous manager and the projects he recommends are on Kriptokoin.com.
Steinwold’s NFT success story
Andrew Steinwold is one of the biggest names in NFT investing. He shares his story in crypto, which resulted in the founding of an NFT investment firm. He explains his investment strategy, which has helped him gain support from heavyweights like A16z’s Marc Andreessen and the Winklevoss twins. In 2017, Andrew Steinwold and his childhood friend Dan Patterson launched a multi-strategy crypto hedge fund known as Polynexus Capital. “I felt like my skill set was very different and proven from previous times,” Steinwold said. And we’re in the perfect spot to build something really impressive here.”
Steinwold quickly made a name for himself in the crypto industry thanks to a podcast and a news outlet focused on NFTs. In 2019, he co-founded the NFT-focused investment firm Sfermion with Patterson. “Up until January 2021, this was all personal capital,” Steinwold said. This is because I really wanted to build the internal track record and build the back office and have a more stable foundation before diving deeper with outside capital,” he says.
NFT investment strategy
And four short years after the first hedge fund struggles, Steinwold has seen some of the biggest names in the crypto industry come from, from a16z to Marc Andreessen and Chris Dixon to Alan Howard. provided $100 million in support for a second fund focused on investments. The initial fund’s track record has helped attract the attention of these industry heavyweights. Steinwold, 30, shares the unique NFT investment strategy he used in the fund.
describes the approach as much more “low profile” compared to other NFT-based funds. “If there’s talk about any NFT product, that’s not something we’re approaching,” Steinwold says. “We find things unsaid, we take a position on that thing very quietly,” the investor adds. Steinwold said it’s not about being sneaky. NFT markets are so illiquid that if anything comes up ahead of time, it could spoil the entire position, he added. According to NonFungible.com, NFT sales increased by 102% in the one-year period. With the NFT market booming, Steinwold quickly realized he needed to narrow down the funding and focus on four key subgroups: virtual land, collectibles, art, and gaming.
Examine the foundations
Regardless of the subcategory, it is very important to evaluate the foundations of the project. This means looking at the team, product, token economy, community, market data and risks. “And then if it passes the criteria, you say, ‘okay, great.’ This is basically a solid project, we actually want to go deeper, you say.”
Identify value drivers. Each sub-sector has different value factors. For virtual real estate, this includes the location of a plot as well as zoning laws such as the width, height and length at which companies can actually build on the land, Steinwold said. In gaming it’s all about utility and functionality, while in art projects it’s about reputation and branding. The collections are the most difficult to explain, Steinwold said. The story and narrative around the project is what makes it collectible, he said. An example is the CryptoPunks project. Considered one of the first NFT projects in crypto, it has a shortage of 10,000 and was given for free with a Bitcoin launch in 2017. “All these pieces of the story add up to this valuable narrative,” Steinwold said.
Build the investment thesis
The final piece of the puzzle is to create an investment thesis that helps ensure diversity among similar projects. Steinwold said that despite two virtual land projects with similar drivers, they may have completely different investment theses. A virtual world like Somnium Space is geared towards VR users who aim to provide a high-end and high-quality experience, while another virtual world like Cryptovoxels is geared towards much more foot traffic and ad revenue.
A video game like Axie Infinity offers even more challenges because it has the option to invest in tokens, terrain and the characters themselves. Steinwold said, “Okay, so we’re going to give an equal weight to a basket of all these? You have to decide,” he says. The famous investor speaks, “Every investment is made specifically to work on that particular project after passing that basic quality bar.”
NFT follow-up projects
Steinwold’s venture fund approach is slightly different. It’s more about the background of the team and the market they plan to create by focusing on the pre-seed and seed stages. Despite being much more open about venture investments, Steinwold’s portfolio is still incredibly diverse, with names not often found in many traditional venture portfolios. The investor shares four under-the-radar names to watch:
Gallop. Gallop is an NFT infrastructure game that offers software developers and data scientists an API to access NFT data. “Most people just use OpenSea’s API. And that’s fine, but it won’t give you details and give you a lot of great insights,” she says. According to the analyst, “It’s not like a new virtual world or anything. But it’s just something that is desperately needed and they’re just a really good performing team.”
GrowYourBase another project
Steinwold said that GrowYourBase can almost be seen as a metaverse property developer. The firm works with companies, brands and individuals to create virtual experiences. “I don’t know if I can name them, but they work and create with some of the biggest companies in the world. It’s almost like in the early days of the web.”
MetaStreet allows individuals to obtain loans by providing NFTs as collateral. Not many people want to sell their NFTs, but may want some liquidity to capture short-term opportunities in the market. They can now look at platforms like Meta Street. Steinwold said it’s already one of the most active platforms on the market. He is particularly excited about how loans could be packaged into a more investable asset class in the future.
JennyDAO latest project
JennyDAO is an investment that falls into Steinwold’s “power user” category. DAO is an expert user of the NFT fragmentation protocol called Uniqly. Acquires rare and expensive NFT assets at the discretion of the group members. These NFTs are then fractionated, providing liquidity to the protocol. The group also decides when to publish NFTs. “For us, it makes perfect sense to invest in infrastructure and then invest like the number one participant in this space,” the investor concludes.
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