The homeless immigrant who ended up a crypto VC: Etiënne vantKruys
Growing up in poverty in Suriname, Etiënne vantKruys was told by his teacher he’d never succeed — but it only made him more determined to not follow in the footsteps of his parents. Thanks, in part, to crypto, he’s now living the dream.
Despite his high-flying crypto VC lifestyle today, vantKruys keeps at least one foot on the ground by remembering his hungry past. He grew up dirt poor in Suriname, where his father was a drug addict who was often in prison.
“I was always hungry — like, dude, always hungry. Always like, ‘Fuck, I need to eat.’ Always, always, always — it sticks with you. I don’t care if I’m in Singapore at a famous crypto conference at a high-flying restaurant, I would still order food from right to left. I would start with the price, like, ‘What can I get?’ You’re aware.”
Back in 2017, anyone could easily get in on highly public ICOs raising $30 million to $50 million with a white paper full of dreams just because it had the word “blockchain” in it. Things are different today, with venture capitalists having to network and clamor to get a small placement of $250,000. Cap tables that track investor allocations fill up fast, and investors are lucky to get a pitch before needing to decide.
“In this cycle, with the speed of things, you don’t have time to consider,” notes vantKruys, who heads New York-based digital asset fund TRGC. Often the only investors who have the privilege of doing full, proper due diligence are the “alpha dogs” like Coinbase Ventures and Binance, for whom he says room will be made even after a round has closed.
The short stick
As vantKruys, 45, stepped out of his Uber upon arriving in San Francisco from Amsterdam for Blockchain Week in 2018, he saw a sight that brought him back to his childhood. The vast homeless population, often suffering from mental health issues, reminded him not only of his father but of the life for which he too was thought to be destined. The reality on the street of the city of technology startups was little different than those of his native Suriname, a former Dutch colony in South America where the average income is under $400 per month.
VantKruys had a difficult childhood and bounced around foster homes before ending up at a residential institution for 80 other disadvantaged children. He was born to teenage parents, and when not in prison, his father could be found “walking around the city in his underwear, dirty and unshaven — lost on heroin.” If his start in life were a poker hand, it looked much like a 2-7 offsuit — the worst possible combination.
On his first day of elementary school, his classroom teacher told him and five other peers from the facility that “People don’t escape their circumstances.”
“You guys have a 99% likelihood of repeating your parents’ lives,” the teacher lectured them in front of the whole class. VantKruys asked if that meant that he still had a 1% chance of making it. Some students began to giggle. “In Suriname culture, that’s a no-no. You never contradict or say anything smart to teachers. I got smacked as hell, like, ‘Know your place,’” he recalls. At eight years old, he knew there was a very hard journey ahead.
But vantKruys had a plan. He believed in that 1% chance, even if no one would allow him to dream of it. “I thought of it like a boxing match in my head. I’ve got to beat 99 Mike Tysons to get where I want to, for that one shot,” he remembers. He worked hard, often getting the best grades.
Homelessness was just one of the “Mike Tysons” he had to defeat. After high school, he managed to get into Utrecht University in the Netherlands to study pharmacy. He wanted to become a doctor, and his uncle covered his airfare. However, without money, he had to make do with sleeping in the central railway station, where he kept his things in a locker, and washing up at a local gym before heading to his morning classes.
“This is just another Mike Tyson fight,” he thought to himself as he lived life in survival mode, convinced that one day there would be a final battle, and that he would make it.
VantKruys’ uncle lived nearby, and in 1998, his uncle introduced him to stock trading. The concept of buying portions of a company was entirely foreign, but he was enthralled. He went to one of his professors for advice, who suggested that “If you’re really interested in the funding of the biotech markets, you should look into the hedge funds on Wall Street.” VantKruys was off to the races.
By using his knowledge of pharmacy to compare clinical trial data with public statements put out by companies, vantKruys managed to find an edge that “made a bit of money.” He dropped out of university so that he could focus full time on trading, developing a strategy around short-selling biotech stocks that seemed to overpromise without hard evidence.
“I treat everything as a short — everything is bullshit until proven otherwise.”
When the financial crisis hit in 2008–2009, vantKruys recalls going down the rabbit hole of endless questions: “What the fuck? What the hell is value? What is money? What is banking? What is finance?” the part-time stock trader remembers thinking as he investigated “all these conspiracy theories surrounding money.”
When vantKruys read about Bitcoin on a forum around 2013, calling “bullshit” was his first instinct. However, many in his circle soon started talking about it, even at his birthday party in November 2013. “One of my colleagues came to the party and had everyone install the Blockchain.info wallet. Bitcoin, at that time, was like $300,” he recalls.
By 2015, he was convinced that cryptocurrency was the future. He even left behind basketball, a passion that he had cultivated as a coach for the better part of a decade. “I have that ‘all in’ mentality,” he says, explaining that he needed laser focus and resilience.
He began moving cryptocurrency around in 2016 while participating in various early ICOs, such as Lisk and Stratis. “They raised so many Bitcoins,” he reminisces. “They weren’t all raising Ethereum yet, so these were mostly Bitcoin raises.”
Crypto-trading transactions saw his bank flag his account as suspicious, and he was grilled on the activity. VantKruys then introduced the banker to crypto: “Hey, listen, there’s something special here. Open up your laptop. That is CoinMarketCap — that’s my new home.”
The banker had some advice: Incorporate, as that’s how he could remove some liability and make things easier for everyone. That’s how TRGC, vantKruys’ investment firm, was born the following year.
Today, the New York-based firm resembles a traditional investment fund with its standard “two-and-twenty” fee structure, implying a 2% annual management fee and a 20% cut of profits. This means that with the $20 million dollars in capital that vantKruys suggests is currently in play, the firm is earning $400,000 per year in management fees to “keep the lights on,” even in a bear market when performance can be negative. In a bull market with a 100% annual gain (yes, this is both too high and too low, don’t @ me), the firm would look to pocket a cool $4 million from presumably happy clients.
“90% were referrals,” vantKruys says regarding the sources of his early investment opportunities, with referrers split between other VCs, developers and a few dedicated scouts. According to vantKruys, networking is the key to success as a crypto VC. He relies on ABN — “always be networking” — traveling to blockchain conferences in about 25 countries, meandering through the crowd while joining conversations.
“The market insights you will get from these conferences is insane.”
Brian Kerr, CEO and co-founder of Kava, says vantKruys is a well known and highly active investor in the space: “At the start of every good crypto deal, you will likely find Etienne. He is one of the most active investors in the space and is solely focused on elevating up and coming projects to the world stage.”
How to pick a token
When it comes to selecting an investment, vantKruys relies on a four-pillar model: founder, product, token economy and the ability to reach users.
The first pillar is the founder with a “maniac drive” who will defeat their own lineup of Mike Tysons and stay with the project “even in the most horrible bear market, find that product-market fit and scale.” “I must say, it’s the hardest part,” he says. “You’re trying to find out if the CEO has that character trait to stick to a trench war and come out on top.”
The product itself is the second pillar, with vantKruys looking for projects with the goal and ambition of getting to the top 100 in market capitalization. That’s not easily done, as “Even cracking the top 200 is like winning an Olympic gold medal right now.” Getting into the top 200 today would require a $250 million market capitalization, whereas the top 100 now calls for more than $1 billion. Each step along the way, even the 1000th spot — which is valued well above $10 million — is just another Mike Tyson the maniac founder needs to defeat.
The third pillar is tokenomics, also called token metrics. VantKruys views tokens as “a representation of everyone’s interest” in the project, from VCs, founders and developers to users and traders. He wants to understand where tokens are going, and who benefits from them. “You’re looking for specific stuff, like ‘Does this make sense?’ ‘Where is the accrual of value? Is it skewed toward the team? Is it skewed toward the community?’” he says.
This issue of tokenomics, he explains, is behind the recent trend of “fair launches,” which do not offer private allocations to investors or developers. VantKruys suggests that Bitcoin is the best example of this, with others like DOGE, SUSHI, YFI and more also fitting the bill. These fair-launch coins have recently outperformed in the market.
Despite the rise in fair-launch projects that effectively cut out VCs like vantKruys, he is confident that the VC industry will survive as long as people want to take risks on projects that are not yet able to get funds elsewhere. “I think the venture capital model is still going to be there, and it’s going to stay as long as people take risks early on,” he concludes.
Fourthly, there is the question of marketing. No matter how good a project is, there will be neither users nor investors if there is no narrative about the use case by which to get heard. For Bitcoin back in the day, immutable peer-to-peer cash was the attention-grabbing headline, whereas Litecoin promised faster transactions, and Monero offered true anonymity. There should be a ripe, ready group of “fanatical early adopters,” he says.
“Can we evangelize the product to the world? Can we get people to join this product, this revolution, this solution? How do we bring this product to people that need it? They might not even know they need it yet!”
At the end of the analysis, there are two final questions that vantKruys asks himself before investing. The first is “Would I hold this token during a bear market?” and the second is a simple “Is this a good investment?”
With the latter, he is referring to the big picture of whether the investment “checks all the boxes” and if there is real substance underneath the “beautiful makeup” that might include an attractive pitch deck and sleek website.
“Even after those standard due diligence questions, you got to ask yourself again: ‘Is it still a good investment?’ Because like I said, I treat everything as short — let it prove itself.”