Interview with Chen Yuetian of Firebird Capital: Focusing on Crypto Games, Not GameFi
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Interview with Chen Yuetian of Firebird Capital: Focusing on Crypto Games, Not GameFi
Crypto Game is a structural opportunity.
Navigating Web3 tides with focused insightsAuthor: Carol Wu, Wu Blockchain
Colin Wu: I closely follow the WeChat account of Fire Phoenix Capital, which seems to be the only Chinese-language VC or content platform solely focused on GameFi. That’s why I’m curious and would love to have a chat with you. Could you first share your background and how you got into the crypto space?
VincentChen: Sure. I’m actually a fairly typical investor who transitioned from Web2 to Web3. I started doing equity investments back in 2011, initially working at CyberAgent, Japan’s largest internet advertising company. Coincidentally, 2011 was just before the mobile internet boom, during which I analyzed many emerging mobile products and business models—this laid a solid foundation for my later work.
In 2013, I joined Innovation Works, where I mainly handled investments in media, entertainment, and youth culture. At that time, mobile reading and mobile gaming were booming, and I came across many mobile game companies involved in M&A deals in the first half of 2013. By year-end, our team had invested in about 10 mobile game companies. To provide these game studios with more traffic and users, we began engaging with the entire mobile game industry chain—game development, publishing, distribution channels, and app stores. We also explored other traffic acquisition methods, such as anime and manga IPs, especially those high-engagement IPs that already had large user bases or fan communities.
Eventually, in 2014, we chose to invest in Longyuan Network, a game publisher. From day one, Longyuan has remained profitable every year and is considered one of the better-performing publishers in China. Besides that, I also backed several high-engagement comic and animation IPs. On the comics side, we invested in Youyaoqi, and also in a Hangzhou-based company acting as the exclusive agent for Shueisha in China. (Japan’s “Big Three” manga publishers are Shogakukan, Kodansha, and Shueisha, known collectively as the “Three Greats.”) Our investment went into the company holding exclusive rights to Shueisha’s content in China—now called Fanfan Animation based in Hangzhou—and we led their Series A round.
On the animation front, we primarily invested in two studios. At the time, most domestic studios focused on 2D animation. One was Huimeng Culture, the studio behind Season 2 of *The Outcast*, later acquired by Bilibili; the other was the studio run by Lu Hengyu and Li Shujie, creators of *Ten Thousand Cold Jokes*. Our initial strategy revolved around games—using them as a starting point while acquiring user traffic through related IPs. Later, we expanded into idol and talent agencies, such as SNH48, and gradually moved into broader youth culture ventures like the ancient-style music group Momingshimo and video-sharing platform Renren Video.
From 2013 to mid-2016, I spent three and a half years at Innovation Works. Then in mid-2016, I moved to CDH Investments, where they were launching a growth fund focused on cultural industries, and I became a partner there. However, CDH’s investment style differed significantly from early-stage investing, so I eventually left and co-founded the second fund of Chenhai Capital with a friend. Chenhai Miao Fund, supported by Maoyan, focuses on early investments in cultural industries. We’ve backed Zhang Jiajia’s film company, Han Han’s production company, Li Ziqi’s agency, and even Weilink Era, the company behind the cloud gaming version of *Genshin Impact*.
Since leaving Innovation Works in mid-2016, I’ve been a fund partner. By then, I’d accumulated some personal capital. As a partner, as long as it doesn’t conflict with the fund’s core direction, I’m allowed to make personal seed and angel investments.
In 2017, the previous crypto bull market began, and numerous projects emerged. I became deeply fascinated by the crypto market. By the end of that year, I even considered buying mining rigs, but friends advised against it. Instead, I started investing in projects alongside them. In early 2018, I co-invested with ZhenFund in my first project, IOST. Honestly, I was shocked by IOST’s outcome. Having done equity investments for many years, I knew typical returns in private markets took a long time—often years—with uncertain multiples. But IOST listed on Huobi just two months after our investment, and on its opening day, returns peaked at 20x. Even though it settled around 10x by day’s end, the return speed and magnitude were astonishing.
Later, in Shanghai, I collaborated with another angel investor named Wang Lijie, participating in some of his deals. Projects were often shared within the IOST community too. During the first half of 2018, although individual returns varied, the overall market was strong, and nearly every project I joined turned a profit.
However, by mid-2018, the entire market turned bearish. Fortunately, I was relatively lucky—I received all my tokens and had sold off most positions. At the time, my main job at Chenhai kept me extremely busy with equity investments, so I didn’t pay much attention to market movements afterward.
In 2019, a friend introduced me to Suji, who made a deep impression on me. He explained concepts like Web3 and how blockchain technology could redefine production relationships, touching on various sociological and economic topics. I found him incredibly knowledgeable and decided to maintain a long-term connection.
From 2019 to 2020, we met frequently. When he eventually pitched his own project, I wasn’t immediately convinced. It wasn’t until mid-2020, when the market had warmed up again, that I decided to invest. Around October 2019, I used some spare funds to accumulate BTC and ETH at an average cost of around $7,000–$8,000 per BTC. By June–July 2020, prices had risen significantly. I learned about staking protocols like MakerDAO, from which I could draw stablecoins. So I withdrew some DAI and used it to participate in Suji’s funding round.
Honestly, I found the market quite strange back then. Some projects seeking investment, especially toward equity-focused investors like myself, would emphasize they wouldn’t issue tokens. But Suji’s team clearly presented their application, and I personally believed both the software and concept were feasible, with reasonable valuations, so I committed. The project gained significant traction and brand visibility by early 2021. After building liquidity pools, exchanges like OKX and Binance proactively listed their token. I was genuinely surprised when it launched—I expected maybe a 10x return over a year, but calculated against our initial investment, we achieved nearly 100x on day one. I couldn’t understand it at first. Only later did I study the mechanics and begin to grasp how the market truly worked.
Afterward, I used those gains to launch my new firm, Fire Phoenix Capital (Initiate Capital). Initially, we weren’t sure whether to go fully into crypto or pursue other directions.
As everyone knows, since 2021, China’s equity market has suffered heavily due to policy impacts—not just economic policies, but also industrial and regulatory changes. Since then, the entire Chinese equity market has essentially collapsed. Around September–October 2021, we decided to shift greater focus toward Web3 and crypto. Fully committed since then, we’ve invested in over twenty projects—though not many in number, two stand out, one being Jay Bear.
Jay Bear was originally a film company under Jay Chou’s team in mainland China, which I invested in back in 2018. At the time, I saw it purely as a film venture worth backing. However, due to challenges in China’s film market, traditional film operations became unviable. They consulted me on alternatives, and I mentioned my involvement in blockchain, noting the strong market momentum. They added that Jay’s artist friends in Taiwan were actively exploring NFTs, and Jay himself showed interest. We thought about potential NFT collaborations—there were precedents of famous artists selling digital works at high prices—and we had full confidence in Jay’s IP and influence. We planned to auction a song and MV of Jay driving across a desert, but since all music copyrights and derivative rights belong to JVR Music, despite prolonged efforts by Jay’s manager, the deal fell through. Still, we felt we couldn’t miss this opportunity. Jay then suggested using PHANTACi, his owned fashion brand, for collaboration instead. We pivoted, spent about three months developing the idea, and Jay Bear was born. It officially launched online on December 18, released on January 1, with a total supply of 10,000 NFTs. Honestly, we weren’t sure they’d all sell, but they did—within about an hour. Priced at 0.26 ETH each, that wasn’t cheap. Prices surged the next day, reaching thousands of dollars apiece. Within an hour, we generated $10 million in revenue—an incredible result.
The other notable investment was StepN, which we joined in February this year. Honestly, we didn’t anticipate its level of success. We didn’t expect huge multiples, but given its strong product execution and subsequent marketing, returns were substantial. Of course, now in a bear market, it’s far below April–May peaks, but still roughly 20–30x. Valuation remains high—we entered at $90 million, with unlocks scheduled for March 2023.
Currently, our crypto investment strategy has evolved. In 2021, we broadly explored various sectors—for example, we looked into stablecoin protocols early in the year. But afterward, we realized we lacked a real edge in DeFi, understanding it only superficially. Out of over twenty projects, none were in DeFi. We’re most confident in application-layer areas aligned with our Web2 experience. Thus, we now prioritize NFTs, GameFi, Web3, and DAOs. We’ve examined several GameFi projects, but personally, I think last year’s GameFi market had issues—too many low-quality products. What we now focus on, Crypto Games, feels fundamentally different.
At its core, a Crypto Game is still a *game*. We evaluate teams primarily through the lens of game quality—assessing whether excellent game studios can effectively integrate NFTs and cryptocurrencies into their systems. We’ve also invested in NFT and Metaverse projects, including Theirverse, which features Yin Nengjing—we were first-round investors. While DeFi remains crucial to the crypto ecosystem, it doesn’t align well with our strengths, and we don’t feel we can deeply understand it. Without a competitive advantage, we’ve chosen to set it aside for now.
Colin Wu: Yes, every individual and firm has unique strengths. DeFi leans more toward technical or financial expertise, and operates within a relatively specialized subcommunity that holds strong influence internally. Outsiders inevitably face barriers to entry.
VincentChen: Exactly. We continue monitoring diversified sectors, including public blockchains and Layer 2 solutions. As you said, many DeFi investors are deeply crypto-native. Starting small around 2017–2018, these crypto funds focused early on DeFi. After DeFi Summer and the 2021 bull run, their fund sizes exploded—from millions to tens of millions, even hundreds of millions of dollars. Jumping in now, we’d have no advantage. I’ve been reflecting on what role we can play. We should focus on what we do best—which is why we’re concentrating on Crypto Games.
Colin Wu: Got it. Now, are many people from China’s domestic game industry starting to enter the Crypto Game space?
VincentChen: I’d say Crypto Games represent a structural opportunity. The domestic game industry is currently in dire straits, partly due to the suspension of game license approvals, which has lasted far too long. From last October to this June, even with the so-called resumption of licensing, the number approved remains minimal.
Now it’s December. If licenses continue to be issued at the scale of September–October—around 60–70 monthly—I estimate fewer than 400 total for the year. This will be the lowest number of game licenses in China’s market over the past seven years. In 2021, roughly 800 were issued; at its peak in 2017, over 9,000 were granted in a single year. The reduction is drastic, leaving countless small and medium-sized game developers unable to sustain themselves without licenses.
Under China’s game publishing system, lacking a license means two critical activities are blocked: First, you cannot run ads to promote your game, meaning you can’t acquire users or drive external traffic to test software and servers. Second, you cannot monetize—the absence of a license prohibits commercial operation. This directly kills many small and mid-sized studios.
Previously, I mostly talked to two types of founders, both seasoned veterans with over five years of game industry experience:
The first type used to earn tens of millions in net profit annually, living comfortably. As many know, the game industry typically doesn’t rely on external funding—cash flow is strong. A company earning RMB 50 million in annual net profit usually pays dividends to its core team, which tends to be tightly knit. This year, however, such companies instantly flipped from profitable to losing money. Just recently, I visited a company in Suzhou: last year it made RMB 30 million in profit; this year it’s projected to lose RMB 20 million. They can cover losses temporarily from past reserves, but it’s unsustainable long-term. License approval timelines have stretched from the previous three-month wait to six months or even a year. Currently, the average timeline from submission to approval is about 18 months—meaning zero income or cash flow during that entire period.
The second type includes founders who started companies in 2019–2020. Why then? Although *Genshin Impact* only exploded in popularity in October 2020, Shanghai’s competitive landscape had already taken shape by 2019. Talent pipelines were expanding rapidly, and many game producers, having earned significant wealth, wanted to realize their own creative visions—so they left big companies to start their own studios. The capital environment was favorable too: in 2020, ByteDance, Tencent, and NetEase were fiercely competing, boasting strong game production capacity. ByteDance, already dominant in traffic, sought to challenge Tencent’s cash cow—games. So beyond building internal R&D teams and signing external titles, ByteDance made numerous investments. From 2020 onward, game-related investment news became frequent, peaking in 2021. Investment in China’s game market was extremely hot—but then abruptly halted. Multiple factors contributed: first, China’s anti-monopoly crackdown meant every major investment or large-scale acquisition by Tencent, ByteDance, or NetEase required lengthy regulatory reviews. Then, in October 2021, game license issuance stopped entirely, cutting off funding for these startups—no external capital has flowed in since.
Due to low productivity during remote work and persistently high costs, companies laid off staff once Shanghai’s pandemic restrictions ended. Now, a second wave of layoffs is underway—targeting young employees at major game studios, mostly around age 30. Recently, Shanghai’s game industry feels devastated. First, earlier indie founders shifted from profit to loss; second, companies funded in 2019–2021 have been starved of capital since late 2021, with no light at the end of the tunnel—no licenses, no further investments from giants like ByteDance or Tencent. With Lunar New Year approaching in a month, recent layoffs have become especially brutal.
Colin Wu: Let me ask—one thing I wonder is why these game companies don’t just go overseas? Is it lack of capability or insufficient funding?
VincentChen: Initially, there’s a common assumption in the industry: game companies typically establish a solid domestic market presence first, then expand overseas—it’s sequential. Rarely does a game studio jump straight into international markets. Expanding overseas involves many concerns: unfamiliar territory, needing to learn local traffic patterns, user preferences, gameplay tastes, and aesthetic sensibilities. Domestically, they’re more familiar with the landscape, so most believe they should master the home market first.
Moreover, game development cycles are long—minimum 18 months. Typically, projects are greenlit 18 months in advance, so developers couldn’t foresee today’s market conditions. Now, many games are half-finished or 70–80% complete, but can’t be launched overseas due to extensive localization needs—entire processes get stuck here.
I frequently engage with the game industry, so I know China is one of the world’s largest gaming markets—even larger than the U.S. In 2019, the Chinese and American markets were comparable in size, but now China is clearly bigger, as people here love gaming more. If a game fails domestically, launching elsewhere first carries risk. On the other hand, the world’s largest game company is China’s Tencent—much larger than Nintendo or Sony—indicating immense production capacity and abundant top-tier talent capable of creating world-class games. Seeing these talents leave the industry is truly a shame.
Colin Wu: Following your logic, given these real hardships, are more people now exploring Web3? How many are actually getting involved?
VincentChen: I think yes, the number is increasing. People are forced into it—if they could just make games normally in China, they’d do so. These teams have long experience; if given the right environment, they could build Crypto Games directly. But now, wanting to make games but lacking the environment, they’re left with no choice but to take a gamble. Crypto Games seem viable, so they’re giving it a try.
Colin Wu: Would you invest in teams transitioning from Web2 games? If so, what criteria do you use?
VincentChen: We’re open to investing in such teams. The key difference between our focus on Crypto Games and last year’s GameFi trend is that we emphasize *Game* first. We assess products and teams primarily based on gameplay, quality, and other core game elements. Only after evaluating the game do we engage, offer feedback, discuss integration strategies, and sometimes even guide them on effectively incorporating crypto and NFTs. Last year’s GameFi products overemphasized finance, making the games themselves unenjoyable. Poor gameplay fails to attract new users—especially mainstream ones—leaving only existing users chasing yield farming and arbitrage. Given short game lifecycles, once the farming ends, so does engagement. I believe Web3’s biggest need is penetration—bringing in more new users.
Colin Wu: You're right, but this raises two issues. First, if you focus on GameFi, competition is weak. But if you aim for fun, playable games, you’re competing with the entire broader gaming industry—making success harder and less likely. For example, creating a highly playable *Honor of Kings*-like game means competing directly with *Honor of Kings*, facing immense pressure. Second, in both GameFi and Crypto Games, we haven’t seen any proven success story—a Crypto Game gaining public or market recognition purely through gameplay. Whether Axie Infinity or StepN, they were somewhat bubble-like, with economic models dominated by GameFi and P2E mechanics—we must acknowledge that. Under these conditions, do you think relying solely on fun, high-playability Crypto Games faces challenges? And how much real value do NFTs, tokens, and DAOs actually add to the game experience?
VincentChen: Professor Wu, you raise excellent points—yes, the competitive landscape shifts. Here’s my view: the gaming market is enormous. Why do so many different products and company sizes coexist? Because user segments are highly fragmented. You can segment users geographically—Latin America, Vietnam, Europe, the U.S., Japan. Or by gameplay preference: casual players enjoy match-3 games, social gamers prefer farm sims, hardcore SLG players go for strategy or magic-based war games, battle royales, etc. Aesthetic tastes vary widely too—Western, medieval, sci-fi, or anime styles. Gaming is inherently a segmented market. For niche markets, the key is knowing exactly which audience your game targets from day one. If you map out the board carefully, you can always find a corner with demand. While that user base may not dominate the overall market, there are still enough players seeking that specific experience.
By comparison, East Asian players are hard to please—global top-tier game production is concentrated in East Asia, especially in online games. Thus, competition in East Asia is fierce, demanding ultra-high quality. But the same game might thrive in Southeast Asia, where average quality is lower, so expectations are lower. For migrating teams, we advise against over-investing in production costs or art assets. Gameplay polish doesn’t need to hit 90% or 100%—70–80% may suffice. Crucially, you must know which market that 70–80% product serves. As long as it isn’t outclassed locally, and targets a market with massive user volume despite lower quality demands, design the game to be less grindy and less pay-to-win, making it accessible and enjoyable.
Colin Wu: I’ve personally looked into some true Crypto Games, and the one closest to your vision might be *MIR4*. Have you followed it?
VincentChen: Yes, I’m familiar with it.
Colin Wu: One striking thing I noticed is that *MIR4* actually attracted many non-crypto users—even reaching lower-tier cities in China. Of course, it has flaws, but in terms of visuals and gameplay, it achieves a relatively high standard. Yet, unavoidably, it still faces the guildification problem—or anti-Sybil attack issue. Few have solved this well. Once rewards grow large, regular players get priced out, replaced by professional gold farmers or guilds. This happened with *MIR4* and later-stage StepN.
VincentChen: It’s like a social structure—you can’t let corporations and capitalists capture too much value, or the proletariat gets nothing. Some ordinary players genuinely enjoy spending time and experiencing fun. But efficient capital organizations will inevitably emerge, leveraging every method to grab resources. Such groups aren’t inherently bad, but they shouldn’t dominate—if they do, others lose relevance and enjoyment.
Colin Wu: So the challenge lies in balancing this—it’s quite tricky.
VincentChen: When screening teams, we first evaluate them purely as game developers. We set clear conditions: if they partner with us, they can’t use our funds to build a traditional game. If they’re unwilling to integrate crypto and NFT elements, we won’t invest. Second, the team must have demonstrated strong game quality and a certain level of product completion. We avoid abstract, theoretical pitches. There are plenty of teams today with solid, near-complete products—just needing additional funding and minor adjustments to launch. We know these teams have already proven their capabilities in the hyper-competitive Web2 environment. The biggest challenge for me now is helping teams effectively integrate crypto and NFTs into their game design—it takes considerable time and effort.
Colin Wu: I think a core issue is that Web3 isn’t just different from Web2—it’s often contradictory. If you can’t shift your mindset, it’s difficult. Web2 thrives on channel dominance, user acquisition via paid ads, designing addictive mechanics, and top-down models that hook players. But Web3 feels more about community culture and IP strength. Broadening the view, the real successes in Crypto Games or NFTs aren’t StepN or Axie—they’re Bored Ape Yacht Club (BAYC). BAYC represents genuine success in this space, establishing a powerful model. Many similar blue-chip NFTs—around dozens—share this trait: they’re native-born, not celebrity-driven like Jay Chou or Yin Nengjing. Personally, I’m skeptical of celebrity-led NFTs. I favor community-native NFTs—those with strong IP identities and intense community momentum, almost religious in nature. That’s more authentic to Web3. Maybe you don’t need to build a game first—maybe the priority is creating a compelling IP or a truly Web3-native community.
VincentChen: I completely agree with your insights. That’s why, when engaging with game teams, I emphasize that prior artistic output, social media presence, or a built-in following on platforms like Weibo counts as a major plus. For such projects, we can work harder to migrate their domestic Weibo audience to Discord or Twitter, accelerating community growth.
Colin Wu: What are the typical valuations and investment amounts for the companies you back now?
VincentChen: Valuations have shifted. Mid-year, I invested in some projects—not purely Web3—that closed at relatively high valuations, around $50–70 million, because the market hadn’t yet crashed. But recently, valuations have dropped—now typically $10–15 million, sometimes even lower.
Colin Wu: Actually, that’s a good thing—bear markets allow lower entry valuations. The big winners of 2021 were mostly projects funded in 2017–2019, like Solana, delivering thousands or even tens of thousands of times returns. But GameFi still faces widespread concerns—low success rates, and no proven sustainable business model yet.
VincentChen: Yes, I’m hesitant about teams starting from scratch, given how long game development takes. If someone starts building just to raise funds now, I’m skeptical. I prefer teams with 50–70% product completion, needing only additional capital to finish—launchable within a year. Tokens could follow within 1.5–2 years. That’s a healthier pace.
Colin Wu: Because this industry is still highly experimental, nobody really knows what the final successful business model will look like. Unlike Web2, where models are mature—it’s just that licenses aren’t being issued anymore, haha.
VincentChen: Haha, yes, the whole industry is pretty bleak.
Colin Wu: Well, let’s wrap up for today. We can catch up again anytime if anything comes up. Thanks for your time.
VincentChen: My pleasure. Hope we get to talk again soon.
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