Discover more from Theia Blockchain — The Monthly Spectacle

fundamental blockchain investment research

2022 Annual Letter

Excerpt from our 2022 Annual Letter to Investors

Mar 24, 2023

2022 was a year of severe economic headwinds paired with encouraging technological progress — we saw the collapse of an entire generation of centralized blockchain financial institutions alongside the maturation of Ethereum and its financial applications. We believe that asset prices have responded to the economic headwinds of the past year, but do not reflect the significant progress that has occurred over the same timeframe. We have spent the past twelve months hard at work responding to the changing market and positioning ourselves for what we believe will be a promising period for blockchain investing.

We also believe that we have built a leading investment strategy. It has been a busy year for our team, and we are confident that we have gained a significant edge investing in our market. We are excited about the prospects for our investors, our team, and the broader blockchain industry. We hope you will share some of our optimism after reading this letter.

This is a long letter, so we have organized it into four sections:

The Theia Underwriting Engine describes the core of our investment strategy and our main source of edge
Measuring Fundamentals provides an example of how we use the underwriting engine in practice
The Market in 2023 shares our thoughts on the current environment and what we expect going forward
Theia in 2023 provides an update on our investment strategy and focus areas

1) The Theia Underwriting Engine

When we founded Theia, one of our core beliefs was that we had an opportunity to build a new kind of investment manager, enabled by blockchain. As a result, we took a risk and strained our capacity to build our entire investment operation in Python and Solidity. Python is the coding language native to data science and Solidity the coding language native to the Ethereum Virtual Machine (‘EVM’). We do not build models or analyses in excel, and we do not rely on company management teams for data. We retrieve data, build models, make decisions, and execute financial transactions from a code terminal. Theia lives in a codebase built by our team that we affectionately call the Theia Underwriting Engine. Any fund that does not have these capabilities simply cannot interact natively with the financial system built on blockchains.

We have described the Theia Underwriting Engine to many of you over the course of the year, but believe it is critical to understand when you think about our strategy. It is our attempt to combine the best of real-time data science with fundamental investment analysis. While there are many facets to the Theia Underwriting Engine, to help explain it we can contrast our approach in Python with an Excel-based approach.

Python

Can interact directly with blockchains, receiving fundamental data on demand from any corner of our investable universe
Allows us to apply cutting-edge data analytics and machine-learning techniques
Can handle hundreds of millions of rows of data
Can build models that automatically adjust and update with new data
Diligence protocols at the most granular level of code and operations
Models interact and build on each other seamlessly

Excel

Data availability depends on data providers that process data and provide plug-ins many months after new protocols launch
Significantly lags behind in machine learning and data science capabilities
Breaks with 100,000 rows of data
Analyst needs to spend hours updating the model every few weeks
Depend on data providers to aggregate and explain data buckets
Models struggle to interact and build on each other

Our underwriting engine is much more comprehensive than simply using Python for analysis. There are five core components to the Theia Underwriting Engine, as defined in our internal documents.

Data: Seamlessly integrate multiple data sources, creating quick and easy access to a wide array of fundamental blockchain data. We collect blockchain-native data, structured data through providers like Token Terminal, as well as traditional 'Bloomberg' data. We can produce a full dataset of all fundamental data related to any protocol within a few hours of work.

Analysis: Libraries and precedent materials for quick analysis of protocols and common blockchain situations. We are continuously standardizing our analyses into python objects and functions with the intent of significantly reducing 'time to output' with every subsequent analysis. As a result, our team can build a comprehensive view of a protocol by running a series of custom scripts.

Execution: The ability to create arbitrary investment products. This means we can quickly and securely interact with the different smart contracts to design and execute investment strategies. Funds without coding capabilities simply cannot interact with smart contracts in the efficient, automated way that we do.

Monitoring: Custom monitoring to track any asset in the entire universe of decentralized finance. Unlike most funds, we do not need to wait for assets to be covered by data providers to own and monitor them. We constantly monitor our investment assets and have developed a library of risk management techniques.

Alerts: A large and constantly pruned library of alerts that track important fundamental indicators across the Ethereum ecosystem and the broader market environment. Like monitoring, these alerts are fully customized based on our fund values and are able to track any asset we are interested in.

Our underwriting engine makes us better investors. We have accurate information at our fingertips - we don't need to wait for quarterly reporting or earnings to keep up with the fundamentals of our investments. Our models update in real-time, so the work that we did on a potential investment six months ago is updated automatically by new data and can help us make an investment decision today. Our custom monitoring system alerts us to changes in the market and protocol fundamentals. We are able to quickly understand why fundamentals improve or deteriorate for our existing and potential investments, and how it impacts our thesis.

Importantly, we use the underwriting engine to find investments in our sweet spot - attractively priced, profitable, and growing protocols that solve a core customer need in the Ethereum ecosystem. These typically look like standard "long" investments in the token (think: equity investment with cash flows) or in the form of "vaults", a concept that we will explain later in this letter. When we encounter one of these opportunities, we do not need to wait for data providers to share diligence information or hope the information we are looking for is online. Through the underwriting engine, we can perform the appropriate analysis and answer our diligence questions as fast as we can code.

Our investment in developing technical expertise has allowed us to understand blockchain structures and smart contract code at the fundamental level. We can break down businesses built on blockchains into first principles, and form opinions on the quality of the code underpinning a protocol. This has saved our funds on numerous occasions, as we have learned to spot mistakes in code or protocol design.

We believe an underwriting engine is necessary to invest in blockchain protocols - data is real-time, businesses and legal documents are built in code, and financial transactions can be structured and executed from our desktops. However, building the underwriting engine was a long and arduous task, and we were not certain it would work. The results have exceeded our expectations. The Theia Underwriting Engine is a core competitive moat for Theia, and it has become integral to our overall strategy. We could never have executed such a long-term strategy without your support, especially in such a turbulent year.

2) Measuring Fundamentals

Now that we have described how the Underwriting Engine works in theory, we wanted to provide an example from our portfolio: GMX.

What is it? GMX is a decentralized futures exchange. Consumers can use GMX to initiate a long or short position on the Ethereum token (“ETH”), for example. GMX uses a dual-token model but for the purpose of this letter, think of the GMX token as stock in the business. GMX owners vote on governance items and receive cash flow from fees that the business generates. GMX is also one of the core long positions in our fund and we believe it has significant upside from here.

How does it work? GMX has created a pool of assets that traders can trade against — if someone wants to go long 5x ETH with 1 ETH of collateral, then the pool will set aside 5 ETH (the most the trader could win), and if someone wants to go short 5x ETH with 1 ETH of collateral, then the pool would set aside the US dollar equivalent of 5 ETH (the most the trader could win). GMX has taken market share from centralized exchanges like Binance and FTX, which provide similar leveraged trading products.

This seems like a thoughtful risk model. What is the downside? The protocol cannot support net open interest beyond the assets available in the liquidity pool. Therefore, size and scale are limited by the size of the liquidity pool. GMX must continue to attract liquidity to grow, which it has successfully been able to achieve by passing 70% of fee revenue and the P&L from trader losses directly to the liquidity providers. With a large and growing liquidity pool, GMX has an advantage over new entrants.

What is the revenue model? The liquidity pool synthetically takes the opposite position of the trader, such that any loss for the trader is a gain for the liquidity pool and vice versa. To date, traders have lost money every rolling three months since inception, resulting in additional returns for the liquidity pool. Traders pay 0.1% fees on their notional size when opening or closing a position. Additionally, they pay a borrow fee every hour they have open interest.

Who gets the revenue? Liquidity providers receive 70% of revenue and token owners (like our fund) receive 30%. The fees get paid out in ETH. Currently, liquidity providers earn a ~25% APR and token owners earn a ~15% APR. The liquidity providers exclusively bear the risk that traders could earn profits against the house, while the GMX token owners only benefit from fee-based cash flows regardless of trader performance.

Is this a durable business model? Decentralized derivatives exchanges are likely to be winner-take-all or winner-take-most, similar to decentralized spot exchanges, as more trader activity attracts higher liquidity, and more liquidity leads to better price efficiency. Decentralized derivatives exchanges are less than 5% of the overall crypto derivatives market, and they are set to benefit from poor risk management at centralized exchanges.

How did the underwriting engine help? GMX is right in our sweet spot. It meets a significant need in the Ethereum ecosystem by allowing traders around the world to take levered, directional positions without trusting unregulated intermediaries like FTX and Binance. GMX smart contract code is open-source, audited, and time-tested. The protocol also does not take custody of trader assets. The business model exhibits strong returns to scale, and we expect GMX to be a winner in a large, winner-take-most market. When we invested, the business was profitable, growing, and priced at under 15x earnings.

The challenge was finding GMX before the rest of the market realized this was a good opportunity. We were only able to because we go through dozens of investment opportunities each month, many of which are small tokens that are not top of mind. Once we did the work on GMX, our underwriting engine kept updating our model in the background, and in this case, alerted us to GMX’s consistent volume, revenue, and dividend growth throughout the turbulent summer months. Our underwriting engine allows us to do real, fundamental diligence and keep up with a large universe of opportunities.

(Advanced) Vault Example: how we built a vault to take advantage of the GMX protocol design. Providing Ethereum to the GMX liquidity pool provides an attractive yield opportunity, as you earn substantial trading fees from the platform and act as the house against the GMX traders, who have historically lost money in the aggregate. However, there is real risk from taking the other side of the Trader P&L, as traders are typically levered long and a prolonged market rally could leave you exposed to losses. We used our underwriting engine to code an automated strategy that would deposit ETH into the GMX liquidity pool but constantly hedge out the Trader Positions. This is not something you can do manually, as the positions are constantly changing, nor is it a product offered by any exchange. Our underwriting engine allowed us to create a ~25% APR product with limited downside from one that typically has a ~30% return with black swan risk.

3) The Market in 2023

It might be helpful for us to briefly revisit our thesis on the overall industry. We believe that blockchains are another useful database technique in a long line of innovations that have changed the structure of the Internet, a list that includes inventions like packet switching, client-server architecture, and HTML. Blockchains are neither magical nor necessary for every business, but they are quite useful for financial and legal applications because blockchains allow you to send assets and create binding contracts with code. This has opened the possibility of an Internet Financial System (IFS) using blockchains, and tens of thousands of entrepreneurs from across the world are lining up to build it.

The Internet Financial System is a shared vision among the many intelligent and hard-working people endeavoring to build an efficient, sound, and mostly automated global financial system on the cloud. On the IFS, you can send money or assets across the world with low fees and instant settlement. You can originate a collateral-backed loan in 12 seconds without intermediaries and their accompanying fees. The IFS becomes increasingly sound over time because all code and asset balances are open source — well-built IFS protocols withstood the calamitous events of 2022 with diminutive losses of collateral. The IFS is mostly automated because code can do the work that requires the labor of hundreds of thousands of industrious college graduates in our analog financial system; Uniswap’s code executed nearly $1 trillion of volume before the company hired its tenth engineer. Importantly, the Internet Financial System is global because a person in Nigeria or Argentina has the same access as a person in New York or London. The reality is that the analog financial system can be expensive in terms of costs and resources, but it works well for most people in the United States. The situation is quite different in the emerging world, where most people do not have the option to save hard-earned money in Apple’s stock or US dollars. We believe the IFS is both a worthy goal and exceedingly achievable. It might be ten years away, but we expect the best investment opportunities will come to those that invest during the transition.

That is our long-term thesis. In the near term, we expect the market to be defined by a continual build-out of Ethereum as the center for financial applications, regulatory pressure on blockchain, and financial sector turmoil highlighting the value of financial innovation. Let’s start with Ethereum.

Two critical developments have catalyzed Ethereum’s growing dominance. First, is Ethereum’s transition from proof-of-work to proof-of-stake, or the “Merge”. This was an enormous technical achievement: a decentralized group of developers wrote code that was successfully implemented across hundreds of thousands of independent network participants around the world. The code changed the fundamental structure of the Ethereum blockchain without disrupting the thousands of unique applications built on top of Ethereum. This oversimplified explanation is significantly under-selling the achievement, but most importantly for investors, the Merge enables Ethereum’s roadmap to proceed. Now, improvements focused on scalability, speed, and decentralization will be quickly implemented in the coming years.

The second development drawing activity to Ethereum has been the successful launch of Ethereum scaling solutions (often referred to as Layer-2 blockchains, or L2’s). As you may recall, Ethereum initially built the blockchain to maximize security and decentralization (i.e. whether people could verify every transaction on their local laptop), while sacrificing transaction speed. Entrepreneurs who believed in the architecture of Ethereum chose to launch blockchains that essentially serve to scale Ethereum, instead of launching separate, much more centralized blockchains like Solana or Binance. These Layer-2 blockchains give users the security of Ethereum while transacting at a fraction of the cost and with faster settlement. During the entire bull market in 2020 and 2021, Ethereum transactions consistently cost between $20 and $100. In 2023, Ethereum networks are processing a greater number of transactions per day that routinely cost less than $0.20.

Ethereum has also regained significant market share, becoming the dominant blockchain for transactions of value. In April 2022, Ethereum constituted 64% of all value stored on blockchains. Less than a year later, Ethereum commands ~85% market share, the centralized Binance blockchain has ~10% market share, and the dozens of other competing blockchains make up the remaining ~5%. We expect this dominance to continue even as most activity migrates from Ethereum mainnet, the original home of Ethereum transactions, to Ethereum Layer 2 blockchains, the scaling solutions described above.

In our opinion, ETH (Ethereum’s native asset) is beginning to seriously compete with BTC (Bitcoin’s native asset) as a compelling reserve asset for the Internet Financial System. While BTC is continuing its set monetary policy curve down from 1.8% annual money supply growth to 0.4% annual money supply growth later this decade (versus 12% for the average fiat currency from 1970 - 2019), ETH has actually managed negative money supply growth. ETH is able to do this because transaction fees go back to the currency holders — the analog would be a large portion of financial sector fees going back to USD holders. ETH has also become credibly decentralized, with over 5,000 different validators across over 100 countries running the Ethereum software in coordination (and we expect this number of validators to quickly increase). ETH has some long-term technological solutions to potential problems like quantum computing since quantum computers will likely be able to break most of the world’s encryption algorithms. Most importantly, ETH has secured reserve asset status within the Ethereum ecosystem — goods and assets are priced in ETH, market makers need to lock up ETH to provide liquidity, stakers need to lock up ETH to receive transaction fees, synthetic pools need to lock up ETH to mint new assets, and users need to lock up ETH to earn fees from applications. The point is that more and more ETH is locked up in the Ethereum ecosystem as it grows, and therefore, ETH price and Ethereum fundamentals should structurally grow together over the medium term. Most Ethereum holders today are not individuals speculating on price, but Ethereum protocols that require the asset for core operations.

For the Internet Financial System to reach its full potential, we need substantive legislation determining digital asset issuance, market structure, and stablecoins. Over the past few years, bipartisan support was forming in the United States, resulting in numerous joint bills put forward in 2021 and 2022. Unfortunately, following the revelations about Sam Bankman-Fried and FTX, the Biden administration has moved to push “crypto” away from the financial system. While not going so far as to explicitly state policy, the word in Washington is that Biden has empowered the SEC to take aggressive action against crypto companies. We saw this in February, with the SEC bringing enforcement actions against major players such as Kraken and Paxos, both of which are state-regulated, compliant entities that have long sought federal registration. The trend continued as the government led the shutdown of the two largest crypto-friendly banks, Signature and Silvergate. And just this week, the SEC served Coinbase with a Wells Notice for their exchange and staking practices. We are monitoring these developments very closely and take this risk seriously; we are speaking with congressional staff, regulators, and industry to help illuminate the risks of the current approach and highlight the benefits of American leadership in this industry.

However, blockchain is a global industry — we are often surprised by how truly global the industry is as we speak to entrepreneurs outside the US — and global regulations matter as much as US regulations. The tone throughout the rest of the developed world is generally supportive. The European Union is pushing ahead with legislation regulating blockchain and digital asset issuance in the form of MiCA. The French government announced a partnership with stablecoin issuer Circle to regulate the Euro stablecoin until MiCA is passed. Great Britain is also quickly shaping legislation with the aim to attract blockchain businesses. Hong Kong has recently re-opened for blockchain companies and Japan has been refining market structure regulations for blockchain since 2018. Many countries liken this moment to the early days of the internet; they seek to emulate the US approach back in the late 90s to promote innovation, attracting the capital and talent that come with it. Good legal frameworks are developing in the UK, Europe, and advanced Asian economies. If the US does not catch up quickly, we believe America will cede financial leadership and be forced to adapt foreign regulations to prevent regulatory arbitrage.

The final theme we would highlight is the possibility that turmoil in the financial sector will have significant consequences for blockchain. To be immediately clear, we do not hope for failures in the banking sector or further economic turmoil, and we are not trying to forecast bank failures in the US or abroad. We simply believe that what has already happened is significant and the consequences could have meaningful effects on blockchain.

In stark contrast to fractional reserve banking, self-custody underlies the entire concept of the Internet Financial System. After all, Bitcoin was built in response to frustration from the Global Financial Crisis. When banks fail, depositors seek alternatives, and we believe blockchains offer a compelling alternative. The Internet Financial System being built on Ethereum is a superior option for most people in most of the world. Building an efficient, sound, and mostly automated global financial system on the cloud won’t be easy or straightforward. However, events like this remind us that it is necessary.

4) Theia in 2023

Founders typically learn important lessons during the first years of a new venture, and investors typically learn important lessons during periods of high volatility. We have developed core principles at Theia focused on learning from experience and market feedback as a primary value. The events of 2022 gave us an opportunity to better understand our markets and improve our strategy.

We believe that owning ETH, the native asset in the Ethereum network, is the single best way to invest passively in the growth of the Internet Financial System. If we had no edge, we would invest our entire portfolio into ETH. We believe we do have a significant edge in the market, and therefore aim to outperform ETH by 20% per year, every year. If we are right about the Internet Financial System, this strategy should lead to good results over the medium-term and better results over the long-term.

Denominating our own thinking in Ethereum is important for our underwriting. When the USD price of ETH is going up, most strategies appear to be working and when the USD price of ETH is going down, almost no strategy seems to be working. Separating market feedback from results can have significant consequences, and we have found the ETH benchmark framework illuminates the risk-return tradeoffs we make more clearly. With this framing, we can maximize the value of the Theia Underwriting Engine and deliver superior returns to investors. However, our fund terms are not going to change — incentive fees are only earned over an 8% hurdle calculation in USD above the high watermark. We simply believe that this framework will allow us to deliver even better returns in USD.

We aim to deliver ETH outperformance through three strategies: longs, vaults, and special situations. The vaults will typically be a majority of our portfolio at any given time. Vaults require deep underwriting and technical expertise, but if successful, we can systematically outperform ETH by a given range. We mentioned the GLP vault above. We believe this vault is likely to earn between 15% and 25% ETH outperformance depending on volumes on GMX. We expect a positive return for our vault even in cases where the business and its equity token experience a decline in fundamentals and/or token price. We consider this a terrific risk-adjusted return and the best way to outperform ETH. However, the GLP vault is one of our higher-yielding vault investments, and many vaults can only earn 12% or 15% above ETH, especially due to our conservative risk assumptions.

We augment our vault portfolio with liquid token long positions, where we believe the Theia Underwriting Engine gives us an important advantage. Our purchase of GMX is a good example of a Theia liquid token long — GMX is a profitable, growing, and reasonably priced protocol with a good customer value proposition and good economics. We typically expect to keep our long portfolio smaller than our vault portfolio because performance on liquid token longs is more volatile than the vaults. This is only a guideline, however, and we are willing to increase our exposure in liquid token longs if the right conditions present themselves.

We are always looking for liquid token longs related to financial applications and core infrastructure as we believe these are valuable parts of the Ethereum ecosystem. Our criteria is relatively simple, and you may eventually grow tired of hearing it — profitable, growing, reasonably priced protocols with a good value proportion and durable moat. We like tokens that are difficult for $100M+ funds to purchase, which allows us to search for opportunities in incredibly inefficient markets. While most of our work is bottom-up, we are constantly refining our view of the industry and the particular themes we like. GMX, for example, played on two themes we had at the time: the growth of the Arbitrum ecosystem (an Ethereum layer 2 ecosystem) and decentralized perpetual swap exchanges.

Finally, we have our opportunistic and special situations bucket. We live in these markets, and we occasionally see opportunities that are attractive and have near-term catalysts. Our Terra stablecoin short last year was an example of a special situations trade — we identified that Terra depended completely on a VC-backed treasury that was going to be depleted within 30 days. We put a short position on UST with downside capped at the cost of structuring the trade (because stablecoins can’t trade much above $1) and were able to earn an attractive return on our invested capital in less than one month. We are always looking for new special situation trades and believe we will be able to find a few amidst the financial distress and regulatory volatility that seem set to define this year.

As mentioned earlier, we believe that US blockchain regulations will be a major theme this year and expect to see some special situation trades come from regulatory catalysts. We have formalized a partnership with PolicyPartner as part of our regulatory strategy. PolicyPartner is a DC-based consultant that specializes in blockchain-related issues. We believe that PolicyPartner is the best at what they do, and we have aligned ourselves with them to grow our connectivity in DC and our real-time knowledge of regulatory affairs. Through our partnership, we provide digital asset insights on relevant topics, and, in exchange, work closely with the team at PolicyPartner to gain exclusive access to congress, lawyers, lobbyists, and other industry professionals. We have already benefitted immensely from working with PolicyPartner but believe we are in the early stages of blockchain regulation in the US and abroad. PolicyPartner is working with Theia specifically because of our underwriting engine.

Even though substantive regulation has yet to pass in the US or abroad, we have already found one trade because of regulatory and legislative knowledge. In February 2023, the SEC levied an enforcement action against Paxos, a large, stablecoin provider regulated by the New York Department of Financial Services. After reading the lawsuit and consulting with PolicyPartner, it appeared clear that for now, the US regulatory environment would be hostile towards stablecoins. While we view that as a major policy mistake (feel free to follow up on that if you are interested), it also presents an opportunity for decentralized, unregulated alternatives to gain share. After spending a few weeks exhaustively researching, coding, and modeling the various decentralized stablecoins, we identified a protocol called Liquity that we expect to benefit from continued regulatory pressure on centralized, American stablecoin issuers like Paxos and Circle.

In closing, we are optimistic about Theia’s prospects for the year. We find many people hoping for a return to the euphoria of the 2020 to 2021 period, but we prefer the market conditions we are seeing in early 2023. There is real, ongoing innovation and adoption of blockchain technology as the Internet Financial System. The best assets have fallen over 70% from all-time high valuations despite meaningful technological progress, and there are only a few investors left looking for opportunities. We are seeing many compelling opportunities in the market and have confidence that prices will eventually follow fundamental progress.

It has become increasingly clear to us that the lion’s share of Internet Financial System activity will occur on Ethereum and the EVM. We consider ourselves lucky to be able to develop a world-class circle of competence in a market that is set to grow from being smaller than the real estate market in North Carolina to one of the largest and most important markets in the world. We are working with every resource at our disposal to ensure that our underwriting and long-term performance are exceptional.

Please reach out to us if you would like to discuss topics from the letter, the market, or blockchain more generally.

Sincerely,

The Theia team

Disclosures:

While the information provided herein is believed to be accurate and reliable, none of Theia, or any of their respective affiliates or representatives or any other person makes any representations or warranties, express or implied, as to the accuracy or completeness of such information. No representation or warranty is made as to the continued accuracy of this information after the date of this Presentation. This Presentation does not purport to contain all of the information that may be required to evaluate a potential investment with Theia described herein and any recipient hereof should conduct its own independent analysis of the data contained or referred to herein. Only those representations and warranties contained in a definitive documentation under which an investor will invest in an investment vehicle, if any, shall have any legal effect. These materials are not intended to be and do not constitute a recommendation to any person or entity as to whether to acquire or dispose of any securities of a fund managed by Theia or any other person. In furnishing this Presentation, Theia does not undertake any obligation to update the Presentation or to provide the recipient access to any additional information.

Prospective investors are reminded that there can be no assurance that a fund managed by Theia will achieve results comparable to those described herein, achieve its stated investment objectives or projections, or that investors will receive any return of their capital. Further information regarding Theia’s investment strategy, valuation methodologies and other terms and conditions will be set forth in a disclosure document or other operative agreements to be prepared by Theia and its legal counsel. Certain information contained in this Presentation constitutes "forward-looking statements", which can be identified by the use of forward-looking terminology such as "may", "will", "should", "expect", "anticipate", "target", "project", "estimate", "intend", "continue" or "believe", or the negatives thereof or other variations thereon or comparable terminology. Any forward-looking statements (including, without limitation, projections of future earnings or value) contained herein are subject to known and unknown risks, uncertainties and other factors which may cause actual results to be materially different from those contemplated in such statements. The information contained herein relates to investments that involve a high degree of risk and potential investors should be aware that they could lose all or a substantial amount of their investments. Potential investors are encouraged to read the risk factors and other information that will be set out in the definitive offering documents.

Investments in a fund managed by Theia will be subject to limited liquidity and significant restrictions on transferability and resale. Investors will be required to bear the financial risks of an investment with Theia for an indefinite period of time.

This Presentation is not an offer to sell or a solicitation of an offer to buy any security of a fund managed by Theia, or any person. An offering of the security described herein, if any, will be made pursuant to a definitive offering documents and the information contained therein together with a subscription agreement and related documentation will supersede the information herein in its entirety.