Six Years Hartmann Capital, AI-Agents, DeSci, and Movement in VR
Hartmann Capital Bi-Weekly, Friday February 5th, 2024
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In this issue
Note From Management: 6 Years Hartmann Capital - Announcing Metaverse Ventures II & Frontier Opportunities I.
AI: Agents taking over: The next wave of AI by Daniel Derzic
CRYPTO: The Evolution of Research Funding in the USA and the Emergence of Decentralized Science by Jonas Luckhardt
METAVERSE: Movement in VR by JP Minetos
Note from Management
Dear Limited Partners, colleagues and friends,
Six years ago I first signed the papers to incorporate Hartmann Digital Assets Fund, bringing Hartmann Capital to life in an era when digital assets were still stuck in the fringes, virtual reality was a hobbyists dream, and AI was predominately an esoteric late night conversation topic for tech bros, with limited legitimate real world adoption. The world has shifted quite dramatically in those six years, with digital assets hitting the mainstream through ETF approvals, virtual reality experiencing its breakout moment with Apple releasing its much anticipated Vision Pro, and AI permeating the entire tech industry. Maybe 2023 was the year to be bullish after all, despite everyone predicting the end of tech.
On this sixth anniversary, we continue to build. We continue to bet on a future that will make the world more connected, more free, and raise the standard of living across the board. To celebrate this anniversary I am excited to officially roll out two new funds:
Hartmann Metaverse Ventures II: After successfully deploying ~$15m through fund I, and establishing ourselves as a category leader in the realm of spatial computing, gaming and mixed reality, we are excited to return to the market. Over the coming six months we aim to complete our initial close on a $50m Fund II, focused on two core theses:
Spatial Computing is the first major platform since the Smart Phone
Gaming is the new Social Media
Hartmann Frontier Opportunities I: With an offering of three distinct funds and ever rising minimums, Hartmann Frontier provides diversified access to all our funds at a reduced minimum to accredited investors. This new vehicle akin to a vintage fund and fund of funds will provide you exposure to everything we do at Hartmann Capital. We are accepting subscriptions starting today.
We are excited to be on this voyage into the future with you, and are honored to be able to guide you along the way. If you would like to learn more about our offering, please schedule a call or reply to this email.
Now back to the team, which has prepared some new insights for you on the latest cutting edge trends in spatial computing, AI, and crypto.
The future belongs to those who invest in it,
Felix Hartmann, Managing Partner
The Next Wave Of AI
Written by AI & Metaverse Associate Daniel Derzic; Edited by Felix Hartmann
Imagine beginning your day with an AI chatbot rather than a usual human coworker, ready to schedule your appointments, conduct formal email exchanges, and organize your work in ways that no other human interaction can. This is not a utopian fantasy for the future. It is already becoming a reality.
"I believe by early 2025 we will have more AI agents running than the number of humans on Earth." - Div Garg, Co-founder and CEO of MultiOn, 2024
Let's look at autonomous agents, their various applications, and how they can enhance intelligence and flexibility in today's operations.
What is an AI Agent?
Unlike current large language model (LLM) based applications and typical software, autonomous agents can plan and execute tasks end to end, adapt to changes, and sense and act on their environment.
Nvidia has used this approach by developing an artificial intelligence agent that plays Minecraft. The agent sees its surroundings using the game's data, determines the best course of action based on its programming and goals (such as mining amethyst or building a shelter), and then performs the actions within the game.
This can extend beyond gaming and demonstrates how autonomous agents might one day perform complicated jobs in real-world circumstances, improving productivity and decision-making across various sectors.
How Agents can be used today
Modern AI bots can handle complicated tasks by breaking them into different actionable things, unlike older chatbots with only a few pre-programmed responses. Rabbit R1, introduced by Rabbit CEO Jesse Lyu at CES 2024, is designed to take the user back to when there weren't many services on a single device. The sale of more than 50,000 units in 10 days proves the device's attraction to users. It will be able to answer questions, launch a Spotify playlist, or call a taxi with the push of a button.
Another example is Deepgram, which released Aura, a text-to-speech model that enhances AI-generated communication. Aura provides a more natural and human-like conversational experience, surpassing earlier models in speed and efficiency.
But AI agents are not just tools for the end user. AI agents will also be a game changer for startups and product launches. They can help reduce costs and speed up product development by handling everything from market research to development and marketing. The following video presents a compelling example, showcasing how AI agents have built a startup from the ground up. The system creates business plans, manages resources, and makes strategic decisions. Such systems might operate with incredible efficiency and agility, possibly delivering products and services that meet customer needs.
If you want to go further, Microsoft just launched the second version of its automated AI agent creation and workflow framework. AutoGen is a tool for developing LLM applications that employ several agents to interact and do tasks. These agents can operate in various modalities, including LLMs, human inputs, and tools.
For example, the user could start with an initial concept for an application, progressively improve it, and add or alter features as they begin programming code with the assistance of agents.
It is not just a trend
According to the IMF, AI will affect around 40% of the world's jobs, particularly in developed nations where job displacement is more likely, and almost 60% of jobs could be at risk. This transition might result in lower labor demand and earnings or possibly the elimination of some careers. However, there is a positive side: AI Agents will improve productivity in nearly half of these at-risk positions. As we've seen, tasks range from automating processes and improving customer service to helping with coding and creative projects. AI agents are more than tools; they become crucial partners in our mission for a more intelligent, efficient environment.
The Evolution of Research Funding in the USA and the Emergence of Decentralized Science (DeSci)
Written by Crypto & Macro Analyst Jonas Luckhardt; Edited by Felix Hartmann
In this article, we examine the changing landscape of research funding in the USA, where a notable trend is observed: the shift of research funding from the public sector to private business sources.
In 1964, funding from the federal government accounted for over 60% of the total R&D funding, while the business sector contributed around 20%. By 2020, this dynamic had shifted significantly, with the federal government's share dropping to only about 20% and the business sector stepping up to provide approximately 75% of research funding.
https://ncses.nsf.gov/pubs/nsf23339Decentralized Science (DeSci) based on blockchain technology could further amplify this shift. DeSci offers new, innovative ways to finance research projects and could thus play a key role in shaping the future of scientific research funding.
DeSci as a Catalyst for Research Funding
DeSci leverages the capabilities of blockchain technology to open new avenues for research funding, including:
Crowdfunding via Token Sales: DeSci enables researchers to raise capital directly through the sale of tokens, often representing a stake in the outcomes or revenues of the research project. This approach allows researchers to acquire funds independently of traditional funding sources.
5 DeSci DAOs that recently raised funds via bio.xyzAccess to International Investors: The global nature of blockchain technology allows research projects to reach a worldwide audience of investors, significantly expanding the pool of potential funders and enabling researchers to receive support from diverse stakeholders.
DAO Infrastructure: DeSci utilizes Decentralized Autonomous Organizations (DAOs) to enable a more democratic and transparent form of research funding and management. In DAOs, members can vote on allocating resources and directing research projects, leading to greater involvement and accountability.
Six research Topics recently funded by DeSci DAOs on MoleculeDAOIPT and IP NFTs as Financing Instruments
Intellectual Property Tokens (IPTs) and Intellectual Property Non-Fungible Tokens (IP NFTs) are innovative instruments in the world of DeSci, offering new possibilities for financing and managing research outcomes:
IPTs: These tokens represent rights to intellectual property and enable researchers to generate financial resources by selling these rights. IPTs can provide a continuous source of income for research projects while promoting the dissemination and utilization of research findings.
IP NFTs: As a particular form of IPTs, IP NFTs offer a unique way to manage and commercialize ownership rights to specific research outcomes or data. Their uniqueness and immutability on the blockchain help secure the authenticity and value of research findings.
Deepening the Benefits of DeSci
Beyond mere financing, DeSci offers several other benefits that make it a promising tool in the modern research landscape:
Smart Contracts: One of the main advantages of DeSci is the use of smart contracts. These automated contracts enable the management of research funding and outcomes efficiently and transparently. Smart contracts can be programmed to automatically release funds once predefined conditions are met, reducing administrative efforts and increasing the efficiency of research management.
Transparency: The blockchain technology underlying DeSci provides a high level of transparency. Every transaction and progress within a research project can be tracked on the blockchain. This transparency strengthens trust among stakeholders and promotes an open research culture where data and results are easily accessible and verifiable.
Research Platform and Incentive Structures via Token Distribution: DeSci creates a platform where researchers can present their projects and receive support from a global network of investors and stakeholders. The distribution of tokens as incentives for contributions or investments in research projects fosters a network effect, bringing together many scientists and investors. This structure supports various research activities and promotes collaboration and exchange within the scientific community.
Critical Examination of DeSci: Potential Risks and Challenges
While DeSci offers many innovative opportunities for research funding and management, it is essential also to consider the potential risks and challenges of these new approaches:
Technological Barriers: The complexity of blockchain technology could pose a challenge for some researchers and stakeholders. Not everyone in the scientific community is familiar with these technologies, which could hinder the acceptance and implementation of DeSci.
Regulatory Uncertainties: The legal frameworks for blockchain applications, DAOs, and digital tokens are not yet fully clarified. These uncertainties could lead to legal challenges, especially regarding intellectual property, data protection, and liability issues.
Risks of Decentralization: While DeSci promises greater democratization of research funding, decentralization also carries risks. There is a danger that projects with the solid public appeal but the lesser scientific value might be preferentially funded. Additionally, large funders or groups with specific interests could disproportionately influence the research agenda.
Preference for 'Hyped' Topics: There is a risk that topics currently "hyped" in the public or among investors might attract funding more efficiently. In contrast, necessary fundamental research that may attract less attention continues to struggle to find investors. This could lead to a bias in research funding, where trendy but potentially less scientifically significant projects are favored.
Sustainability and Longevity: The sustainability of projects funded through DeSci remains open. It is unclear whether the funds generated through crowdfunding and token sales will be sufficient to support long-term research projects and contribute to continuous scientific development.
These potential risks and challenges require careful consideration and possibly regulatory adjustments to ensure that DeSci is effectively and ethically integrated into scientific research and positively contributes to the future of science.
Conclusion: DeSci at the Threshold of a New Era in Research Funding
DeSci marks a significant advancement in how research is funded, managed, and conducted. By integrating blockchain technology, smart contracts, and innovative incentive structures, DeSci has the potential to transform the research landscape fundamentally. It promotes transparency, efficiency, and collaboration, making it a crucial tool for the future of scientific research. In a world where private funding sources are becoming increasingly important, DeSci could play a central role in shaping a more inclusive and democratic research environment.
This emerging segment is still in its early stages of development. This year, observing which DAOs manage to mobilize extensive funding resources and attract scientists to their platforms will be interesting. Growth and a higher valuation of the governance token can give a DAO an early competitive advantage by enabling it to distribute a larger volume of incentives, further accelerating growth.
In the long term, it will become clear how research successes are monetized and how this impacts scientific work. Each DAO must find a balance between profit maximization and the pursuit of scientific progress. This development will influence how research is funded and how scientific results are evaluated and utilized.
Movement in VR (And Why Disney Probably Won’t Solve It)
Written by XR & Gaming Analyst JP Minetos; Edited by Felix Hartmann
Virtual Reality is on a multi-decade quest to live up to the promise of true immersion - the moment you forget you even put a headset on. At each step of the path new technical problems ask for new solutions, some of which create a new set of potential challenges and trade-offs.
The last decade has witnessed novel approaches trying to solve the unique movement problem in VR - being able to explore vast worlds from within your confined living room, without breaking immersion. For intuitive movement design in VR, it can be categorized into 4 primary modals.
Natural Movement in VR
Controller-based Teleportation Movement
Controller-based free Movement
Stationary Locomotion
Natural Movement in VR
Embracing natural movements in VR creates an immersive experience that mirrors real-world actions. Users find it intuitive, requiring minimal adaptation. Additionally, it offers the potential for physical exercise, adding a dynamic element to the virtual experience.
However, the requirement for ample physical space can be a limitation, making it less accessible for at-home VR users with confined surroundings. As a result, many commercial enterprises with warehouse sized play areas stand out for giving customers the immersive feeling of natural movement.
Some titles, such as Beat Saber, are able to embrace natural movement since most of the game is played stationary.
Natural movement has the lowest deviation between virtual and physical movement, thereby preventing users from feeling motion sickness. This is why titles like Superhot and Beat Saber work so well for new VR users, because there is no comfort curve.
Controller-based Teleportation Movement
Teleportation movement offers comfortable navigation through large virtual spaces without physical exertion. It helps mitigate the risk of motion sickness and is versatile for various VR experiences with expansive environments, and was a common design choice in the late ‘10s for design.
However, frequent teleportation disrupts the flow of certain experiences; breaking the sense of realism, as teleportation is not a natural movement. Teleportation reduces the experience of being in an environment, but works well for games that don’t require extensive and precise movement - such as Walkabout Mini Golf.
Controller-based Free Movement
This modality allows users to navigate the virtual environment by walking, facilitated by a control stick. The use of natural walking movements enhances the sense of immersion and realism. It offers a more fluid and continuous experience compared to teleportation. The engaging gameplay possibilities make it a popular choice for users seeking a more realistic and precise walking experience in VR. This has become the most common choice of design for newer VR native games, especially shooters.
Despite its advantages, new users are prone to feel motion-sickness as their brain experiences motion while the body stands still. Many games offer ‘comfort’ settings to counter this, from vignettes while running, snapping rather than smooth head turns, and other alterations. Anecdotally, the motion-sickness issue is generally overcome after 5-10 hours spent in VR.
Most titles combine local natural movement with controller free movement, and while it isn’t intuitive to start, the form factor becomes natural. This method is much more accessible than other immersive movement options since it doesn’t require 3rd party devices nor a massive play space.
Stationary Locomotion
Stationary locomotion accommodates users in confined physical spaces by incorporating treadmills or tracking devices. It introduces physical exercise into the VR experience, providing a dynamic feel. Users can walk or run in the virtual world, adding a realistic touch.
A number of companies have worked on this for years, including Virtuix and KatVR, to little relative market penetration. The conversation has reignited this week with Disney’s announcement of the HoloTile, drawing excitement to the possibility of real movement in a set space. See their announcement video below:
VR treadmills and tracking devices enhance movement realism but have downsides like high cost, complex setup, and a learning curve. They also differ from natural movement in terms of momentum and friction. For a commercial breakthrough, we would need to see a further reduction in size and cost.
Exploring the evolution of Virtual Reality movement modalities reveals a spectrum of options, each with pros and cons. From the intuitive yet space-demanding Natural Movement to the versatility of Controller-based Free Movement and the immersive potential of Stationary Locomotion, VR design continues to adapt. Disney's HoloTile hints at a future of affordable and accessible realism, but for now, Controller-based movement will have to remain the status quo.
Disclaimers:
This is not an offering. This is not financial advice. Always do your own research.
Our discussion may include predictions, estimates or other information that might be considered forward-looking. While these forward-looking statements represent our current judgment on what the future holds, they are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place undue reliance on these forward-looking statements, which reflect our opinions only as of the date of this presentation. Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of new information or future events.