Yida Gao (Forbes 30 Under 30) is the Managing General Partner of early stage crypto investment firm Shima Capital. Yida formerly co-ran Struck Capital, an early stage industry agnostic venture fund, and also DDC (Divergence Digital Currency), a multi-strategy crypto fund. Prior, Yida served as a technology investor at New Enterprise Associates, a $25Bn+ venture capital fund, and as an M&A investment banker at Morgan Stanley. He graduated from MIT with degrees in mathematics and computer science and dropped out of Stanford’s Graduate School of Business to pursue crypto investing full time in 2017. He teaches the 15.492: Crypto Finance course at MIT.
How did you get started in this business?
After graduating from Massachusetts Institute of Technology, I dropped out of Stanford once I got a taste of the venture capital world. I cut my teeth at New Enterprise Associates and Struck Capital before branching out on my own with Shima Capital.
How do you make money?
I, like all venture capitalists, make money by investing money into promising companies and projects, and then profiting when they profit. This could be after a subsequent fund raise by the company I invested in, going public in an IPO, being acquired by another organization, or simply becoming profitable in terms of revenue. There are clear risks involved with this industry, and so due diligence and a strong understanding of companies and products & services they’re producing is paramount to success.
How long did it take for you to become profitable?
Shima Capital announced our Fund I in August of 2022, so we are still in the early stages of the inaugural fund. Some profits have been realized to date, but true returns won’t be calculated until the fund ends/closes after four years.
When you were starting out, was there ever a time you doubted it would work? If so, how did you handle that?
I think every person, regardless of their track record of success, feels some elements of doubt at some point. That said, I never once thought of a scenario where Shima Capital would not be successful. From day one I’ve aligned myself and Shima Capital with known experts and venture capitalists in their own rights, and with a team more than capable enough to identify solid investment opportunities and nurture them to success.
How did you get your first customer?
In this case, our “customers” would actually be the companies we invest in. These companies and projects are typically introduced by peers and colleagues in the industry, or through personal connections made from over a decade of experience in finding and investing in successful companies.
What is one marketing strategy (other than referrals) that you’re using that works really well to generate new business?
In order to find hidden gems to invest in, we’ve greatly broadened our outlook and outreach to find new companies. We have close relationships with many top colleges and universities, as well as at top tech incubators. If we can find great projects before others, it gives us a leg up in potentially incubating to success ourselves.
What is the toughest decision you’ve had to make in the last few months?
Running a successful venture capital fund like Shima Capital means lots of tough decisions over time. On occasion, we may have to make a difficult decision to pass on investing in what we feel will be a successful project in the long run. The reasons for this may be plenty, but typically falls down to the terms of the investment don’t fit within our mandate and so we must pass on principle. Doesn’t make it any easier, though.
What do you think it is that makes you successful?
I’ve become successful in my endeavors by having strong integrity when it comes to running my fund, by knowing the technologies we invest in inside and out, by building an incredibly strong team around me, and by being persistent and resilient.
What has been your most satisfying moment in business?
There are so many satisfying moments to choose from, but investing in little-known or “underdog” projects that later become well known and very successful in their own right, there’s no better feeling than that.
What does the future hold for your business? What are you most excited about?
For Shima Capital, the future is certainly bright. In under two years we’ve grown our portfolio to more than 185 investments, and I’m excited to watch every one of them blossom while continuing to grow and invest in new companies along the way.
What business books have inspired you?
“The Intelligent Investor” by Benjamin Graham is an obvious classic that’s very relevant to my day to day life.
What advice would you give to your younger self?
Given the industry we invest in, the best money you can spend relative to our industry is on a proper cold storage crypto hardware wallet. I really like Tangem’s offering to keep your hard earned funds safe!