Meta Connection | Wang Yuehua of Draper Dragon: The metaverse will reach a turning point in development within three years
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Meta Connection | Wang Yuehua of Draper Dragon: The metaverse will reach a turning point in development within three years
Wang Yuehua, Partner at Draper Dragon Innovation Fund, has 18 years of experience in the semiconductor industry and has founded three startups. After joining Draper Dragon Fund, he transitioned from an engineer to an investor.
Navigating Web3 tides with focused insightsInterview｜Fang Qinyu
Draper Dragon Innovation Fund (originally from DFJ Dragon Fund) is a global venture capital fund that has been investing in the metaverse sector since last year.
Wang Yuehua, partner at Draper Dragon Innovation Fund, brings 18 years of experience in the semiconductor industry and three entrepreneurial ventures under his belt. After joining DFJ Dragon Fund, he transitioned from engineer to investor. His portfolio includes YeePay, ShenDi Technology, Kronos Research, and more recently, metaverse projects such as Ink Financial, Metaverse.AI, and Dmail.
In an exclusive interview with "Meta Connection," part of the metaverse-focused media platform MetaHub, Wang predicted the metaverse will reach a turning point within three years—transitioning from early development to maturity. Key indicators for this shift include lightweight hardware, low cost, low power consumption, and mobility.
“For early-stage investors, the hardest part about investing in the future is daring to imagine the unimaginable and accepting what seems unacceptable,” said Wang. “The first level is when a new thing resembles something familiar—we can still envision its potential. The second level involves entirely novel concepts with no reference points, which requires breaking mental boundaries. The metaverse strategies of major U.S. tech companies like Meta, Twitter, and Google are forward-looking plans over the next three years—clear targets that others can use as benchmarks.”
This year, Draper Dragon plans to invest another $50 million into metaverse ventures.
The metaverse will reach a development turning point within three years
Meta Connection: When do you think the metaverse will mature? What are the signs of maturity?
Wang Yuehua: There are two aspects. On the hardware side, devices need to be lightweight, low-cost, energy-efficient, and mobile. On the software side—whether virtual e-commerce, gaming, or socializing—there must be sufficient user adoption. If we want quantifiable metrics, we can look at internet standards like daily active users, monthly active users, and registered accounts. Judging from Meta’s strategy, I estimate that within three years, Meta’s metaverse hardware will reach consumer-grade levels, marking a pivotal turning point for the entire sector.
Meta Connection: What are your investment plans for the metaverse this year? What are your targets, and how do they differ from previous years?
Wang Yuehua: This year, our focus is more on Web3.0—it’s foundational. This includes edge computing, artificial intelligence, and distributed data networks.
We have a budget of $50 million to deploy this year, aiming to invest in around 20 additional projects.
Meta Connection: You mentioned that early-stage investors need to take unconventional paths when investing in the future. How does this apply specifically to metaverse investments?
Wang Yuehua: As early-stage investors, we must dare to imagine the unimaginable and accept what seems unacceptable. Sounds simple, but it’s hard in practice. We often encounter bizarre, unprecedented projects—things without any precedent or benchmark.
There are two levels. The first is being able to say, “This new thing is as good as X,” allowing us to at least envision its potential.
The second level comes when there’s nothing to compare it to—no frame of reference. That’s when we must break our own mental models to embrace entirely new concepts. This is precisely the hardest part. Think of the first person to go to Mars, or the first person to build an electric car. Being first doesn’t guarantee success, but if you succeed, the rewards are enormous.
Think about what Gen Z thinks today—what do they want? From my perspective, I try to imagine their future lifestyles. These imaginations help expand our tolerance and openness when investing in the future.
A useful reference point is to observe how major U.S. tech firms like Meta, Twitter, and Google are positioning themselves in the metaverse. They hold strategic meetings and workshops outlining their long-term visions—plans typically spanning three to five years—which are relatively easier for people to understand and accept.
Meta Connection: Since the metaverse hasn't matured yet, and you emphasize value investing, how do you practice value investing in this space?
Wang Yuehua: In mature markets, financial investing works because you can see financial data. But why is early-stage investing also value investing? Because we’re investing in a sector, a direction—not necessarily based on current revenue or even a finalized product. Many startups are still refining their MVPs. We position ourselves as early adopters.
When something new emerges but few people are using it, I try using it myself and ask: will many people use this in the future? If I wouldn’t use it, chances are others won’t either.
Once we back a project, we stay involved long-term. Since these ventures are so early-stage, longevity is key. We aim to be stakeholders, not just shareholders. We want everyone to benefit.
Focusing on hardware and distributed storage sectors
Meta Connection: You’ve summarized four directions for metaverse investment. Could you elaborate on your current priorities and the rationale behind them?
Wang Yuehua: We’re active across all four areas: technological infrastructure, content & applications, operational services & protocol tools, and new business models. Our main focus is on infrastructure, particularly hardware—including human-computer interaction built upon hardware—and distributed storage. Although there are already various distributed storage solutions like IPFS, I believe they’re still far from perfect. I expect new solutions to emerge both domestically and globally—not just regarding how data is stored, but also how it’s retrieved and where it’s placed afterward. Computing power is another key area—we emphasize edge computing, as decentralization increases demand at the edge. Digital identity is also a top priority, since assets must always be tied to digital identities.
Meta Connection: You just mentioned investments in storage-related projects. Where exactly do existing projects fall short of expectations?
Wang Yuehua: IPFS is widely regarded as the leader in distributed storage today, but in reality, it only offers a very basic, superficial solution. Many supporting components remain underdeveloped. For example, questions like where to store data, what to store, and how to retrieve it aren’t adequately addressed by IPFS.
More broadly, the infrastructure needed for the metaverse should resemble a full operating system. Every piece of hardware or wearable interactive device has an OS—like iOS or Android. To enter the metaverse, you’ll inevitably rely on hardware, and at the core of that hardware is an operating system defined by three pillars: human-computer interaction (Input/Output), storage (file system), and computing (processing power). Any viable metaverse must be built on such a foundation.
Meta Connection: Can you share some specific projects you've invested in, based on your current strategy?
Wang Yuehua: In content and applications, we’ve backed Highstreet. Virtual e-commerce isn’t just online shopping—it includes NFT minting and digital asset trading. First, you need the concept of virtual land—not real-world real estate, but rather a gateway. With that entry point, you can build department stores, schools, and enable social interactions and gaming.
We’ve also invested in Metaverse.AI, which develops hyper-realistic virtual idol engines. Using motion capture, users can animate avatars represented in anime-style visuals.
Dmail is our investment in decentralized email. Most digital identities today are centralized, creating security risks. Decentralized identity will become fundamental in metaverse applications. Why do we classify this as a cross-platform protocol project? Because it represents digital identity—and decentralized identity may not be singular. Individuals might have multiple private decentralized identities, each carrying associated assets. Through cross-protocol platforms, these identities and assets can interoperate. I believe such cross-platform, cross-protocol projects will play a crucial role.
Virtual land in the metaverse will never be free
Meta Connection: Some argue that while virtual land requires payment now, it could become free in the future. How should we think about monetization?
Wang Yuehua: Virtual land currently requires payment, and many platforms are still centralized—with developers controlling development rights and pricing. I don’t believe it will ever be completely free. Even if not directly charged, users will need to exchange something of equivalent value to obtain usage rights.
There are many virtual land projects out there, and we’ve invested in several. We believe the value of virtual land depends on ecosystem growth—the broader the ecosystem consensus, the higher the value. Growing consensus means more users entering the space.
Meta Connection: Can we interpret the business model of virtual land as simply selling plots for profit?
Wang Yuehua: For project creators, monetization isn’t an issue—the revenue model includes construction fees and transaction fees every time land changes hands. The key consideration for founders is ensuring their benefits grow over time with increasing network effects. For users, owning virtual land allows them to lease it out. Why is property in Shanghai more expensive than in Xi’an? Because Shanghai’s businesses support higher land values. It’s the same for users in the metaverse.
Metaverse projects with blockchain have greater commercial potential
Meta Connection: Concepts like cross-platform and cross-protocol are often discussed in blockchain contexts. Are you specifically referring to opportunities in blockchain here?
Wang Yuehua: For example, Disney’s game engine for animated characters can only be used by Disney, not other companies. A universal engine means all data developed on it can seamlessly move to another platform without changing formats.
Meta Connection: What role does blockchain play in your metaverse investment thesis?
Wang Yuehua: The metaverse itself is an application- and scenario-oriented extension of the internet, while blockchain serves as the underlying protocol and technical layer. The integration lies in what applications are built on blockchain within the metaverse context. Clearly, blockchain enables richer business models and new industries. I believe adoption of blockchain technology will become increasingly widespread, and in the metaverse, it’s inevitable. Most startups in this space already incorporate blockchain modules to some extent.
Meta Connection: What pressures and challenges do you face in the metaverse investment market?
Wang Yuehua: As a global firm, we have ample deal flow. Our primary challenge is the sheer volume of projects—we need more efficient ways to screen and select.
Meta Connection: You mentioned companies you’re watching in the metaverse space. Which investment firms are you paying attention to?
Wang Yuehua: Firms like a16z and Paradigm. We track the projects they invest in and sometimes collaborate with them.
Meta Connection: Whether in China’s A-shares or U.S. equities, how do you view the current state of metaverse stocks in public markets?
Wang Yuehua: I’m not very optimistic about the situation in China—most listed companies are still stuck at the conceptual stage. In contrast, U.S. public companies are actually building tangible products.
About "Meta Connection"
"Meta Connection" is a featured interview series by the metaverse vertical media "MetaHub," spotlighting entrepreneurs and investors shaping the metaverse. The column is led by veteran financial journalist Fang Qinyu. For interview inquiries, contact [email protected].
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