Before heading to the World Economic Forum in Davos earlier this month, I spent a week at CFC St. Moritz representing BCP Ventures.

CFC brings together 250 highly-curated and invitation-only participants from the world of traditional finance and web3 finance for discussions on the future of capital markets, central banks, venture capital funds, asset financing and more. Much of the conversation centered on the opportunity to connect the Web3 and real economy – namely how to apply many of the principles of Web3 to increase capital availability, liquidity and democracy in venture capital and traditional industries like energy, power and infrastructure.

The Crypto Finance Conference began as a startup-like adventure, and has now grown into an established, successful, international conference with the home base St. Moritz as well as events in Europe and the US.

As I wrote about in “Davos Debrief” last week, our global energy transition – and path to net zero by 2050 – requires $100 trillion in investment and complete rethinking of how we generate, consume and trade energy.  At CFC, there was a lot of conversation on the shift to decentralized power generation (decentralization is a big Web3 principal) and the opportunities that this unlocks to generate power at local nodes, trade it between nodes and trade it back to the traditional grid, including between crypto mining sites.

Fred Thiel, CEO and Chairman of Marathon Digital Holdings, discussed co-locating mining operations at sustainable energy sites and trading excess energy capacity between sites and the main grid, discussing a future where decentralized, renewable power can be generated by local communities and then sold in excess to other communities and the main grid to generate revenue for the community – a fascinating vision for energy autonomy and transition. (Incidentally, BCP Ventures portfolio companies Caban Systems and Pratexo play parts in this vision by providing renewable battery power and energy trading (Caban) and software to power a decentralized grid (Pratexo).

In addition to the $100 trillion of investment needed for our global energy transition, we face a $13 trillion dollar infrastructure funding gap.

Both energy and infrastructure projects require large amounts of capital from investors for long term investments, often with limited secondary opportunities. At CFC, we discussed the opportunity to tokenize these projects, raising capital for projects in tokens that can then trade on token exchanges – and therefore become much more liquid investments. Much like a public stock, the value of these tokens is tied to the growth of the underlying asset, and they can be traded real-time based on investor perceptions on exchanges.  This has the potential to turn massive, hard-to-finance illiquid assets into liquid ones – with huge implications for how we can finance reinventing our society (and infrastructure) for sustainability and efficiency.

A similar principle exists for venture capital funds, which can often be perceived as long-term illiquid investments tied to early-stage companies and curtail the number of potentially interested investors.  (Our first fund at BCP Ventures has shorter liquidity horizons because of how we have intentionally thought about and constructed our portfolio).

In the last few months, KKR launched a tokenized private equity fund and Blackrock CEO, Larry Fink, called tokenized funds the “next generation for markets” noting the instantaneous settlements, reduced fees and transparency possible. For me, however, the most exciting part of the opportunity to tokenize funds is to convert a relatively illiquid asset – like a venture capital fund, power plant or high-speed train – to a liquid investment, unlocking new capital and returns for investors worldwide.

Finally, and perhaps most excitingly, tokenizing venture capital funds offers more investors the opportunity to be a part of investing in the innovations for their future and generating high investment returns. In most cases, current regulations constrain the number of investors possible in venture capital funds and the amount of wealth one needs to start with to invest.

In essence, one of the highest return asset classes in the world is limited to some of the richest people in the world. Applying Web3 principles to venture capital funds can democratize access to returns for investors, increase access to capital for managers and portfolio companies and give more people access to both high returns and investing in their future.

All of this requires the Web3 world – the blockchains that create the tokens, the exchanges where they trade and the great minds of the crypto economy to make this happen – merged with the traditional finance world – managers who offer the investment funds, investor relations professionals and bankers who can help grow liquidity across the exchanges, and legal frameworks around the world that make this possible.

The beauty of the CFC Conference was that it provided the forum for collaboration and conversation across these universes – so that, looking ahead, we all may benefit from the democratization of finance, decentralization of energy and improvement of global infrastructure, among many other things.`