Raising an Angel Round for dCap

Starting dCap — Effortless risk management for crypto holders

How It All Started

As a VC turned data scientist, I was always looking for a data driven approach to enhance my crypto portfolio. I am a holder, not a day trader, but this market is highly volatile, in a week I would have great returns, and in another, I would have huge losses!

There are too many trading bots for day traders, but I didn’t want that. I wanted a way to keep holding, but reduce the effect of this volatility. I also didn’t want to hand my savings to a fund manager, who will charge me hefty fees and lock up my money for a while. I wanted more flexibility and control over my own assets.

Problem/Solution

I used to spend hours every week working on a google sheet to update my portfolio. I used to calculate how much I should buy or sell to rebalance allocations, then login to multiple exchanges separately, and manually place buy/sell orders for every coin I needed to update.

I experimented a lot, until I got to a point where my test portfolio’s value is on average 40% higher than what it would’ve been if I just held the assets without any rebalancing or risk management.

I started writing a Python script to automate this process. This helped me in testing new portfolio strategies whenever I needed to add or remove assets. It also helped me in automating updates and risk management, all in one place across multiple exchange accounts.

Next I started experimenting with AI/ML models using alternative data to create more long term portfolio strategies. Alternative data include: Github/Gitlab blockchain activity, nodes activity, active wallet address, whale alert movements, and crypto news and social activity sentiment analysis, in addition to other asset classes (stock markets, gold). The results were promising, and I kept enhancing the models and adding more data points every week.

The script evolved to an algorithm that helps me do effortless testing and automated risk management. It helped me answer questions like: What portfolio strategy to implement? How much to invest in every selected coin? How to test the strategy performance for selected coins? When and how to update my portfolio? What percentage of stable coins to have in my portfolio for risk management? When and by how much to change this percentage?

The Birth of dCap

I started sharing this with friends and co-workers, and I realized that the majority of them have the same problems. They’re not day traders, and they’re not wealthy enough to invest in crypto funds, but they still need a way to manage risk. When they learned about the software I have, they wanted to use it on their own, and make their own decisions.

But the software was just a script on Jupyter Notebook! I needed help to turn this into a product, a startup.

I partnered with two of Silicon Valley’s top talents: Lui, the best UX expert and product manager I know, and Khaled, the best backend engineer I know. Together we’re starting dCap, Inc. We also hired three contractors to help us move faster: a designer and two senior mobile developers.

For a few weeks, Lui and I met with many potential customers to learn more about their pains and their needs. As a result we’ve made a few changes to the concept and got more confidence to move forward.

The Product

dCap empowers people to manage their own crypto assets across exchanges and wallets. We bring professional portfolio and risk management software to the masses in a mobile application with a freemium subscription.

On dCap, you can explore multiple pre-set portfolios, customize them to include the assets you want to invest in, select a risk level you’re comfortable with, and a frequency for the updates, and instantly test the portfolio performance on historical market data before you activate your portfolio.

When you like what you’ve built, you connect your existing crypto exchange accounts to allow dCap to construct this portfolio for you, and automate updating it.

dCap also keeps notifying you whenever your consolidated portfolio needs your attention.

Available strategies now include simple indexes such as: Market Cap and Equal Weights. We’re also working on: dynamic indexes (that change risk levels dynamically based on market changes and alternative data), optimized portfolios (that use Modern Portfolio Theory and AI models) to provide users with richer data for them to make more informed decisions. In addition we will be adding a new module to optimize for tax impact.

Unlike trading bots, dCap is designed for the medium term holders, not day traders. dCap doesn’t depend on short term technical analysis trading signals. Also unlike robo advisors such as WealthFront for example, dCap does not ask you to trust a robo fund manager who fully controls your portfolio. With dCap, users are in full control of their portfolios.

Legal Notes

dCap is not a fund, an asset manager, or a financial advisor, it provides all the information for users to make their own investment decisions. It’s also not a wallet or a custodian for crypto assets, all assets stay on users’ wallets or exchange accounts, dCap gets access only to automate users’ select strategies.

dCap doesn’t facilitate money movement, in our connection to wallets and exchanges, we only ask for trading permissions, not transfer permissions.

We’re not promising better returns like money managers, we’re offering a software tool for users to select their own assets, strategies, risk levels, and rebalancing frequencies, then we automate it for them.