VC 3.0: Venture Capital Reimagined | Brian McNulty | Lingfeng Capital [EP. 311]

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When we were starting these
ventures back, as you mentioned,

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of course this Ledger group, the
FEC, all these ventures, I

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didn't for the second think that
would be one of our funds that

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would be tokenizing.
It was more the training or so

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blue chip fund managers that
we're talking to over that

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Germany that we anticipated
would be watching their fund

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first.
This is Money Never Sleeps.

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Sharp riffs, big ideas and real
insights from smart people.

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I'm Pete Townsend.
Let's go money.

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Never sleeps well.
So my guest this week is someone

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I connected with back in 2015
when he was leading the post

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trade Distributed Ledger working
group.

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And then he and I keep
reconnecting and collaborating

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in different ways through the
years.

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Brian Mcdulty is now a partner
at Link Feng Capital's DVF or

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digital venture fund.
Brian, welcome to the show.

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Thanks, Pete.
Good to see you again.

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Awesome to have you here, Brian.
Listen, if you told either one

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of us back in 2015 that in April
2026 you'd be ringing the bell

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at the London Stock Exchange to
launch a tokenized venture fund,

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what do you think we would have
said?

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Well, I think personally, I
always intended to get back to

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where my career started running
a fund.

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But when we were starting these
ventures back as you mentioned

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posted this Ledger group, the
FEC, all these ventures, I

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didn't for the second thing that
would be one of our funds that

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would be tokenizing.
It was more the training or so

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blue chip fund managers were
talking to over that Germany

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that we anticipated would be
once in their fund first.

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Absolutely.
You and I covered the full FAC

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Story Fund admin chain back on
episode 116 way back in 2020.

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So take me from there to here.
What happens?

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What do you think you learned
and how did that lead to Ling

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Fang?
So FEC just as a recap started

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off as a consortium really we
brought together not just all

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the fund managers, I think it
was N plus leading fund

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managers, but we had about six
or seven of the core fund

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service providers, transfer
agents and some of the exchanges

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and the collaborative effect or
approach definitely worked in a

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some learning spot.
I think we were, we were a

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little bit too focused on trying
to look for operational

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efficiency across the the NTN
value generated funds.

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And I think that was a little
bit of a not a mistake, but at

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the time that's where everyone
was focusing on.

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And in hindsight, it's not
really that feasible to be

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honest with you.
I think there's still DLT will

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be outshone by AI in terms of
driving that operational

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efficiency.
What we realized on the journey

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is that the real benefit once we
get there is that we can improve

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distribution inclusivity and
they hopefully a secondary

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trading when the market
eventually has enough momentum

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to provide that sanitating funds
in the suit.

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Yeah, I get that.
And the tokenization is, you

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know, unless you're able to sell
more because of it and that you

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increase that liquidity and
distribution, it's just

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tokenizing for the sake of
tokenization.

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Absolutely.
I think a large number of the

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tokenization projects are with
the intention of either

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marketing raising profile.
I've always said right from the

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very start of doing this and
listen to others that the

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tokenization is of an asset.
So you need to be very keen to

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invest in the underlying asset
in the 1st place.

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Tokenization is a means to do
something else, hopefully in the

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best interest of the investors
and top of the strength of the

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asset.
So the underlying investment

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case should come first.
Distribution in private markets

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has been broken for decades.
Why hasn't anyone fixed it

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before now?
I think so.

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It's definitely been pockets and
improvements over the years.

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Get tokenization for a second is
definitely been a funds chose

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and a platforms are enabling the
opportunity for whether it be

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pension funds or individuals,
obviously appropriately vetted

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individuals to access private
funds.

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That's fantastic.
Far too much capital only been

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available to a small number of
investors that meet the what is

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quite stringent criteria in the
old model.

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And then secondly, that capital
locked up.

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So it's not just about making
sure that more people can access

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it.
It's actually been able to free

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that capital up to be used and
not be locked up in these funds

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for five, 6-7 years or whether
the the life span of the private

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fund is actually offering the
investor.

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I get that it's a structural
problem with the whole market.

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You're very clear that DVF is a
venture fund first and a

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tokenized structure second.
Why does that framing really

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matter?
Anyone who's investing in

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anything will learn the hard
way.

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Even when I was a technical
trader, you don't just become

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good artists that way.
You sort of have to make

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mistakes and and a personal
level, I've invested in quite a

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few private funds, venture funds
and you end up three, 4-5 years

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down the line and you're
thinking, well, hold on a minute

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here.
Was this the best use of my

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capital?
Absolutely.

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And a personal level at Ling
Feng, who as you say that GP,

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they, I know how strong they are
because they invested in some of

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my earlier ventures.
So I know how strongly, I don't

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know how strong the morals are
as well.

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Now they're supporting me
through some of the financial

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crisis as well.
So they've got a strong track

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record.
So that's the first thing you

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should be looking at is the
track record of the, in this

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case VC before you get involved
in their traditional or

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tokenized investments.
What I'm much more interested in

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is, OK, so let's not oversell
this.

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We can because we've got the
valuations of all the underlying

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we can calculate and we do
calculate in a monthly basis the

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valuation of our fund.
So let's get that calculation

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into a platform, a marketplace,
an exchange, whatever you want

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to call it and to allow those
investors to have the

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opportunity to buy and sell at
the evaluation on.

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We're doing it on a quarterly
basis.

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So, but what we want to do is we
want to be just the first of

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many.
We want others to hopefully

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adopt this model because from an
investor point of view, it's not

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about DBF.
They want to have more

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opportunity than that.
So if you can Fast forward and

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envisage humorous funds, 10s,
thousands of funds doing the

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same model, then the quarterly
basis, you've got that

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opportunity for that secondary
training.

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And in our instance, my partners
with our tracks, they've got the

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that means you don't have that
figmented service.

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They've got the FCA vibes,
they've got the broader services

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so that we go to market with a
end to end solution with the

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appropriate transfer agent that
understands this marketplace.

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And in other instance, we're
launching on the one, the Stock

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Exchange DMI because of in my
view, there's no more better and

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neutral party than when the
Stock Exchange to enable this to

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go out into the marketplace for
other investors to find.

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So it really is exciting that
we're just a start drop in the

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ocean here, but we're leading
the charge.

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We've got a model that wants end
to end, and we're completely

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transparent.
Yeah, that's great.

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And you and I connected for the
second time back in 2018, just

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at the same time that I was
having chats with Graham Rodford

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from Our Tax and tell us a
little bit more about the role

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of Our tax in the overall model.
So I, I think I touched on it

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earlier there, they've got the
FCA regulation that's key.

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But the combined with that, the
broker plus the cost of the

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capabilities, they've got these
institutional credibility that

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comes with that.
But we can go to market with a

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minimum number of players.
That means that we can provide

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what the investors need less of
an investment amount to come in,

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in the 1st place.
Make sure that there's still

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KYCD AM L as required and then
allow them to have more

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transparency in what we're
doing.

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And then give them the
flexibility hopefully to get in

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and out of that trade a much
better than 5 or 6 years.

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It's a practical liquidity and
transfer model together here VC

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3.0.
Yeah, I love that VC 3.0 and

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that's kind of the elephant in
the room is that Venture is not

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suddenly liquid, right.
It's that you know, but it

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sounds like what you're getting
at here is structured

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transferability is the.
Real thing, but it's exciting to

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see that the industry is moving
forward to see how we can ensure

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that we as a fund manager can
have our fund on multiple

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platforms without investors.
They've been locked into a

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particular set of rails.
And again, coming back to this,

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give me I'm in the Arch X teams
some more kid.

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They're thinking about that.
They're making sure that they

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got sale plugged into other
areas where investors want to do

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what they want to do, buy and
sell at the agreed level of

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risk.
And then looking at the investor

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base here, who is this actually
for?

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I think there's four buckets of
potential investor into DVF.

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The first one is anyone who's
long crypto is looking for

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diversification in folio and
this is a sensible way of

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getting diversification into a
very solid PC and Link Feng and

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also the model for the DVF.
We've got access into proven

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companies.
We've already invested in

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Singapore or Hong Kong, America,
Europe and Mainland China and

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we're able to passport these
companies over into the Middle

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East or Europe.
And some of them already got

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contracts.
So we've already got well

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established companies, then
we've already got contracts.

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Once we passport them, all of
us, it's quite a robust

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investment opportunity.
So those are one to diversify

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that crypto long or even crypto
native asset managers, they're

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looking at diversification.
I think we are going to slowly

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see some of the pension funds
coming under a little bit of

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questioning from more and more
customers saying what about the

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digital assets crypto space then
rather than get into something

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that's maybe seen as more risky
then this is more proven

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opportunity.
Another group would be

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foundations.
So we might be wrong, but we

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believe we're a we're changing
the way that VC and you want to

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take a stretch on that.
Other funds can be managed and

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traded.
So any foundations that get

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involved in what we're doing
early, it makes sense that

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others when they start to copy
what link finger doing, they've

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already got the rails locked in.
That's a phenomenal opportunity

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for the foundations to get
involved with ourselves in our

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tracks.
So I said 33 buckets and I would

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say that there's still the
opportunity for traditional

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investors that are savvy in what
we're doing.

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I got a little bit worried when
I've got investors Peter talk at

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length about tokenization and
what we're doing, not that

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inquisitive about the
underlying.

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For me that's a little bit of an
alarm bell with perhaps we're

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doing something wrong or we've
got the wrong type of investor

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there.
We want investors that are fully

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clear on what her underlying
fund is doing before we always

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is a mandate is.
Investment strategy first,

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right?
And you know, that can be a real

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hurdle is when you start talking
to folks that may be more

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interested in learning about
your technology than they may be

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in learning about the the, the
actual strategy of the fund, the

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real hurdles that you have left
to clear here.

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The entire industry, the area
still suffering from credibility

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huddle and say there's just so
many things going on over the

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other are I can't get my head
around why people are doing

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never mind investing in the
tokenization, say coming zooming

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in and what we're doing.
The liquidity expectations are

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still a huddle.
There's still a good investment

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anyway.
But we need to see the proofs

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that Putin whether these
secondary training windows are

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are actually going to be the
scale that we hope ventures

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never going to suddenly be a
liquid asset class just because

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the token exists can improve the
transferability.

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But true liquidity still depends
on the market participation and

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also the price discipline around
it.

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Regulations are something we
need to keep a close eye on.

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We're very happy that we've
thought this through end to end

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and for 10 years.
So like to think that quite a

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few of us gets there.
Some lessons to to throw out in

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there, but you got to be more
careful in this space about how

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they they invested on board and
the custody, the transfer rules

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are important.
Everything hangs together in the

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way that you haven't just sold
now, but it's going to be able

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to scale and you're not going to
find yourself in six months down

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the lane having picked your own
partner.

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I will stress this a lot.
People say it doesn't matter

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which blockchain you use,
etcetera.

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Yes, it does.
Be Uber careful which ones you

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get involved in because some of
them will block your assets,

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your customers into chains that
mean that you can't actually get

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the market efficiency that will
can fall in the mid to long

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term.
Brian, April 21st, you're

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ringing the bell at the London
Stock Exchange.

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Big moment for you.
Yes, it's a big moment for many

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people that have been involved
in this journey.

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It's a big moment for Ling Feng
to to expand what is a strong

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traditional track record into
the digital asset space.

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Now hopefully you can get you
there yourself, Pete.

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Many people that are in that
room have been involved in

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chipping away at this so that we
can have tokenized funds provide

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to liquidity and distribution.
You see, this is hopefully the

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start of many, but there's a big
moment for myself and many

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others in there to just see that
we are coming out the other end

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of our own journey.
It, it has been a long journey

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indeed.
And Brian, it's been a pleasure

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talking through this with you
and we'll hopefully see you on

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April 21st in London.
So thank you.

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Much appreciate that, Pete.
And to all of you, check out the

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00:14:35,400 --> 00:14:38,520
show notes on Monday Universe
leaps that IE or on whatever

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00:14:38,520 --> 00:14:41,600
player you're listening or
watching on for all the links to

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00:14:41,600 --> 00:14:44,720
get in touch with Brian and
learn more about the digital

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venture fund and also VC3 dot O
or you can just reach out to

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00:14:49,280 --> 00:14:52,600
Brian McNulty on LinkedIn as
he's quite active there.

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Till next time, don't forget to
follow or subscribe wherever you

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00:14:57,240 --> 00:14:59,480
get your podcasts.
It helps others to find the show

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00:14:59,480 --> 00:15:01,720
and it means a lot to me.
See you.