Venture Capital point of view on the blockchain technology? There you go! I volunteered on the Crypto Summit in Zurich this weekend and picked up few really interesting panels about how VCs go along with crypto. That’s tremendously interesting topic for me and I’m gonna give you few highlights from the speeches given on the conference.
Investing in Blockchain Space: Lessons Learned and the Way Forward
Let me introduce you Jalak Jobanputra. Amazing women that hit the business world and is constantly showing that women can be as successful in VC as men and even, not so rarely, much more 😉 This case is particularly interesting as Jalak’s area of interest is not the easiest the invertor can choose to do business with.
Jalak is a founder & Managing Partner of Future Perfect Ventures -Early stage venture capital fund based in NYC, focused on decentralization, including the convergence of blockchain tech, machine learning, IoT and security. Yes, that’s correct! All these tech stuff is easily embrace and introduced to the market but Jalak and her crew. FPV’s portfolio includes Abra, Blockstream, Blockchain, Bitpesa, Civic, Token, Open Garden, Everledger, Fuse Machines.
Jalak started getting interest in blockchain technology not so long time ago. In 2013 she attended her first bitcoin conference. As she said, it was only the beginning but nobody cared about bitcoin market at that time.
Only last year the interest properly started and already this year crypto market had many ups and downs. However, there are more and more people, institutions coming to the market and stay for longer. Even though the initial doubts and scepticism (Jamie Damon, CEO of JPMorgan said:‘Bitcoin is a fraud’ but shortly after set up proper crypto team in London office) people realized that it’s not gonna go away but stay. It’s already so deeply on the market that it seems to be a real thing.
People and businesses need to be in the space to catch up with the market, they need to adapt, carefully but surely.
Why right now? Why now blockchain is the revolution?
It’s because we are ready to adapt this technology. We are able to process transactions we were not able to some time ago.
Accessibility. Anyone, anywhere can participate. It’s not only Silicon Valley, Zug, Lego, Mumbai. It’s now global and open source. It’s already in Mongolia in a little villages.
Proliferation of data. We produced most of data within last two years. The speed of developing things, creating new value, describing existence, patenting new discoveries is hundred times bigger than years before.
We have speed and security in here and the volume is no longer a problem. Security of data needs to be secured by blockchain. Companies are forced to upgrade systems as they are no longer efficient with the old technology that cannot handle this huge amount of data in a secure way.
Blockchain is adaptable to different sectors. It can be applied almost to each market. Australian stock exchange post settlement system will be replaced by blockchain entirely. It will replace middle/back office solutions.
In Pharma, we can turn our data into assets selecting company that will be allowed to keep our data. We do not need middleman any longer. We can take control back in managing our data assets which have enormous value.
Additionally, Internet of Things (IOT) is already in use here. Cars, traffic lights, refrigerator are fed with this technology.
Machine Learning will develop and work with data more and more globally. Data can be anonymous and then accessible to each company, not only Google and it can be used for good purpose.
All these technologies will work together and overlap creating value for people.
Soon, everybody will have wallet with crypto currencies. Smart contracts will be common allowing transaction in real time. We will tokenize our assets and the public investment will be more accessible. Everything what can be tokenized will be tokenized.
Over 300 Crypto Funds and VCs – The Future of Tech Investment
Another panel treated about investment funds on blockchain and VCs’ state around this topic.
Speakers:
JALAK JOBANPUTRA representing Future Perfect Ventures (introduced above).
ROBERT LEVIN – CEO, Emerging Star Capital LLC. In the past he worked as a trader for family’s firm on Wall Street when it was #56 on the Forbes List of privately held companies. He is now ICO strategist and advisor, investor in cryptocurrencies, investment manager in long-short equities.
RAY HINDI – CEO, L1 Digital. Seasoned investment professional with deep experience in alternative investments. Now CEO of L1 Digital, an active allocator in blockchain and digital assets by selecting and investing in the best crypto managers globally.
Moderator:
Robby Schwertner – CEO & Founder CryptoRobby
What is the future of crypto investment funds?
We are going to tokenised most things. Startups that wanted to get money via ICO and did now come to VCs which is a bit later stage funding opportunity. There is cooperation between VCs and crypto world. They work together because need one another.
What blockchain/crypto startups should do to successfully approach VCs?
They should have already custody who stores the tokens defined. There should be good balance sheet in place. They must know what the plan for tokens is. Utility tokens are still do not known how they are going to be regulated. If they will be allowed to be used in exchange for goods. It’s still TBD but startups can start building up their ideas. The competition is there and it’s not so easy to get money in this developing market. The deal must be good, have sense and clear future vision. There must be scalability potential and the quality must be surprising to stand out from the crowd. The milestones need to be achieved already. However, the truth is that the 95% of the tokens on this first generations will be worthless. There is nothing there in most of the cases and investors need to make wise decisions. There is euphoria without thinking around and pure hype in many cases so it’s a rocket science to pick up really good deal. There must be underlying fundamentals and here most of the cases do not have it yet.
What will be growing the most?
Financial inclusion projects. Movement form physical to digital world in assets. Also, gaming is a big thing today having great potential. It’s said that gaming will be growing rapidly on the public blockchain. Additionally, AI market place is gonna play significant role in the near future. There will be massive aggregation of data and decentralisation. Moreover, sustainable development related projects can also be in the first 5 industries adapting blockchain technology. That’s extremely interesting area! It’s amazing that while creating global businesses the sustainability is coming into the surface and is taken into account. Because yes, we are responsible for the planet and creating new value we cannot destroy another things. It’s no longer about the business, it’s about the business that is doing good but in the way that it does not make any unnecessary burdens, wastes, harms somewhere else. In general, decentralisation will impact almost all markets but slowly, step by step and involving not all areas in the same time.
What about the Mass adoption to this all crypto currencies? How is it paving the way to financial freedom?
- from 100 mln wallets to bn wallets soon to be seen
- early adoption in developing countries
- first companies already adopted cryptocurrencies payments method so it will cover broader piece of the markets
- years ago, there was no online banking as internet seemed to be unsafe, the same is happening with blockchain. Trust requires time
- Asia, Africa need identity and any payment method. They may even be early adopters of crypto. It’s already happening. It’s not about developed market it’s happening in rapidly growing countries like Mongolia
- people will be engaged with this technology but they need to be wisely educated and realize that it will become new normal
End notes which are my conclusions put together after watching and listening all these speeches as well as after talking to many people present on the conference. That’s just list of highlights I completely agree on and believe in. If followed, they will drive healthy ecosystem in a good direction.
*All in all but stable coins are one of the most interesting. The questions that all VC should ask themselves is how to create compliant marketplace? All Limited Partners require that all their investments are is compliant from day one. If this is in place, then founders have enough funds and VC s help them then to develop and execute the strategy.
*ICOs investments are catching up with the value of VC investments. Some companies do not need tokens to raise money but some of them choose this option and this is good.
*It’s all about the founders, all about the TEAMS! It’s repetitive statements of majority of VCs. The technology is just addition. Great team can do amazing stuff from nothing, if they are visionaries they can develop simple idea into unicorn project.
*Thailand and China becoming interesting places to invest.
*There are more than 200 crypto currencies exchanges so there will be many consolidations in near future. The market will clean up naturally and leave few mature and reasonable entities.
*Do not forget about old, good due diligence checklist. It’s extremely valuable and super helpful when it comes to initial decision making process. It helps to verify and recognise if something has potential or is just a scam.
*As soon exchanges get better and faster, the volume will increase and fees will decrease. The market will become more transparent and liquid.
*Tokens should be integral part of the network. If Im a user of this thing, why should I use token instead normal currency? It should make sense. Things do not have to be perfect but make sense.
*Community building is very important background. Honesty is most essential thing for Venture Capital Funds. It can be easily tested. You talk to founders. You can figure it out by talking to people. You can see if somone is making up things and it’s automatic disqualifier. That’s core point! It’s not about lying that you are perfect it’s about telling that you have great idea and need some help to become perfect!
*Whatever you are building you need to understand it very well. If you build something in finance area and you do not have idea how finance works you are not gonna be successful. The same with crypto. The space is new. There are not so many specialist on this market yet. There are clever people with knowledge but specialisation requires years of being in the business, learning by doing so since it’s new thing, nobody has had a chance to experience decades in the business. Think about it and do not jump to the area you do not know well. Focus better on sth you have expertise or learn, test and give yourself some time to succeed in crypto.
*It’s now proper to admit that Hong Kong is very welcoming when it comes to blockchain and crypto talents. There is easy process in place for people who wants to live there and do blockchain related business or help develop existing or just taking off Chinese companies. What about looking at this particular market? I’ll surely do and share with you some thoughts and significant findings.
*’Blockchain reflects humanity perfectly. We are without middle man while communicating so we do not need the middle man either doing transactions between humans’ by Robby Schwertner
Other interesting VC speakers attending the Crypto Summit:
Mauro Casellini – Head of Blockchain and Payment Service Providers, Bank Frick,
Robert Bosch – Partner, Digital & Strategy, Banking & Capital Markets BearingPoint GmbH,
Daniel Gutenberg – Early stage Angel Investor,
David Ellington- Founder & Executive Chairman Silicon Valley Blockchain Society (SVBS),
Jeppe R. Stokholm PHD- General Partner & Venture Capitalist
Black Swan Venture Capital,
Robert Levin- Emerging Star Capital, LLC SFO Executive as Founder,
Joey Krug – Co-Chief Investment Officer Pantera Capital.
The full agenda of the event as well as the speaker list is available here.
