Paul Codjoe: Analyst of the Month

Welcome to the 18th edition of the Analyst of the Month.

This month we highlight Paul Codjoe, Research Analyst at Franklin Templeton where he is responsible for conducting fundamental research and analysis on liquid and venture investments in digital assets.

We're excited to share Paul's story as we are fans of his insightful points of view and his digital asset research strategy.

Tap in to learn more about how a biomedical engineering education led to Paul’s unforeseen journey into venture capital at Citi and then liquid investing with Franklin Templeton!

What is your origin story, Paul? What is the road that led you to Franklin Templeton?

Interestingly enough I actually graduated from college with a degree in biomedical engineering and absolutely no intention of moving into finance at all (or crypto for that matter). Senior year, a few of my college friends were going through the Investment Banking interview circuit and purely out of curiosity I threw in my resume for fun. Ended up landing a spot at Citi where I would eventually rotate & stay on a VC investing role. I had always planned to pivot back  to medicine after a year or two, but I found that I really enjoyed my time working with and investing in early stage companies/frontier tech, which is how I ultimately made the leap from fintech VC at Citi to Crypto VC and eventually liquid investing at Franklin!

What initially attracted you to crypto? Is that all of your work at FT and did you do crypto investing while at Citi?

I worked on a crypto deal at Citi that first exposed me to the industry but really bought in when I saw the capacity for innovation via stablecoins/ payment solutions. Having family in Ghana, the value proposition of cross-border remittances immediately resonated with me. From there, I continued to dive in and loved the ethos of building and backing products that could tangibly improve global financial inclusion so I took the plunge and joined full time!

You do both VC and liquid investing at Franklin Templeton. Which are you most attracted to and why? 

Both roles have very overlapping skillsets as they are fundamentally centered around early stage investing. Between the two, I have a preference for liquid markets as I find the real-time thesis validation to be more engaging. Moreover, with BTC and crypto broadly becoming more and more of a macro asset class, there is an added dimension of understanding the broader macroeconomic engine and its concurrent overlay to portfolio management that adds an additional layer of complexity that I find exciting.

What are the biggest differences in your approach to investing in VC and your approach to liquid investments?

The biggest distinction between liquid and private markets investing in crypto In my experience is generally product focused. That is to say that private markets investing more frequently relies on building conviction before a product is live. By contrast, by the time a protocol launches a token there is generally some level of a product live and early signs of core KPIs, cohort data etc. As such, although critically relevant in both types of investing, building strong conviction around the founders/people building a product is the core of my approach for VC investing as there generally Is less supplementary data when compared to building conviction in liquid markets  By contrast, although data can still be sparse in liquid markets, the capacity to see early sings of cohort retention, customer attribution, revenue generation etc. often allows more of the conviction to be built around realized traction of the product at least on a relative basis.

From your own perspective, how do you compare the importance of fundamental data analysis with the importance narrative data analysis when valuing tokens?

All of crypto is still very decidedly frontier technology. As a result, investors who only look at fundamental valuation metrics in a vacuum and compare multiples or pricing strictly to Tradfi will miss the bulk of the growth story for many of these protocols. As such, understanding the broader narrative and growth story is critical to efficient and informed capital allocation. However, underwriting purely to narratives also misses the fact that these protocols eventually need to be able to cross the chasm and generate high quality, sticky revenue & cash flow to be profitable platforms. Generally, I think fundamental analysis is helpful especially as a relative metric between comparable protocols, but all investments in this space need to take into account the broader growth story to fill in the gaps where pricing and valuation metrics on an absolute basis may be a bit rich in a vacuum.

Taking a step back, how do you think the general market values crypto networks on the bases of economic value, utility value and speculative value?

Generally I think speculative value was certainly the main driver for many protocols and networks in the past.  However, if 2024 has taught us anything, we’re seeing that change start to emerge. The market is increasingly placing more and more importance on fundamental value capture and fee generation potential as is the case with Tradfi. Ultimately I think this dynamic is healthy for the industry, as the dispersion of returns in alts we are starting to see will hopefully concentrate  value in the highest quality protocols and builders.

What are other investors getting wrong when considering liquid crypto investments?

I think in previous cycles investors were rewarded for investing further on the risk curve of alts and riding BTC until we hit the “banana zone” where capital rotated into alts. Now with the ETF introducing capital in the system that never actually transacts directly on chain and with BTC outperforming most other coins this time around, I think many liquid investors are missing that 1) timing in active management is more important than ever and 2) liquid investors won't be rewarded for just buying alts once BTC tops because there's so much dispersion in returns and so many more tokens in the system.

What theses are you most excited about in crypto?

The tokenized equities narrative is still the most exciting to me because it quite literally unlocks trillions of transacted volume at the end state, which will eventually flow through all layers of the stack (L1 fees, MEV, DEX volume, collateral management etc.) That has always been the North Star and now with the capacity to keep up from a tech perspective with next generation L1s we are only getting closer!

How have you been able to use Artemis to help with your fundamentals research?

Artemis is quite literally my knight in shining armor. Being able to pull all relevant protocol metrics across a variety of ecosystems allows us to better discern comparable performance between products, patterns across sectors or ecosystems, and hidden insights often obscured by the challenge of extracting high quality data from block explorers. Bonus points for directly plugging into Excel!! 

How does one get in contact with Paul?

You can reach out to Paul on Twitter @CodjoeP