What happens when 11 prominent investors gather together to discuss the impact of blockchain and crypto on the investment space? That's just what we wondered when we invited international investors who ranged from traditional to experimental strategies. From San Francisco, Austin, and Europe, we listened to their insights during Blockchain Week Berlin. Find out below what they had to say.
NBT's Senior Venture Development Manager Yoann Berno opened the discussion
Despite high competition for attention-span during Blockchain Week Berlin, our event entitled “Cryptocurrencies and Blockchain: The end of Venture Capital as we know it?” garnered circa 150 guests. The first panel was led by NBT’s Senior Venture Development Manager, Yoann Berno. As a futurist and tech entrepreneur who believes in the catalytic impact of blockchain and social entrepreneurship, Yoann was the right guy to guide this opening discussion.
Panel 1: Impact of decentralized governance on VC's decision-making power and strategies.
Yoann asked insightful questions from his panel that included: Daniel Hoepfner of b10 Venture Capital, Tim Rehder from Earlybird Capital, Paul Verraditakit of Pantera Capital, Andre Eggert from Neufund, and David Merrin from CoVen (a ConsenSys mesh company.) Seated in a left-to-right arrangement from more traditional VC to most experimental strategy, the group debated different approaches to investing.
Yoann Berno (left) and the speakers of the first panel on decentralized governance and VC strategy.
Daniel from b10 Venture Capital mentioned that a VC has to invest early while weighing various attributes such as team, regulation, and technology. He, and other panelists, indicated that some of the characteristics of blockchain technology itself pose difficulties in influence, compared to how a VC could normally engage with a traditional business. This leads to a form of soft control rather than an explicit control of managerial and strategic oversight.
Paul from Pantera Capital shared how important the relationship of a VC is with a founder: VCs should be flexible enough to be able to handle how a startup team might pivot, and must have a baseline trust in the team to re-steer itself. But a VC also has the obligation to help founders make less mistakes. To that end, and to build community, Pantera Capital does its part to leverage learnings via events and masterclasses. Andre from Neufund says that ICOs demonstrated a huge need for projects to raise funds.
Andre Eggert from Neufund
David from CoVen commented that there seems to be unlimited capital at the seed or pre-IPO stage, citing things like AngelList which have helped democratized early funding. But he acknowledges that at the Series A and B stage, it becomes much more challenging – requiring a higher level of due diligence and a capacity to support. In response to the question: “Can a decentralized VC platform outperform a traditional one?” He says, yes – but it’s still early days. David reminded the audience about the case of AirB&B, where “value was created by putting reputation on the line.”
After a short break, NBT’s Venture Developer in Blockchain, Clément Bihorel, took the stage. Clem drives the development of blockchain-based business models at Next Big Thing AG.
Panel 2: How can funds best leverage DeFi for innovative investment strategies?
Clem's panel included Richard Muirhead, Founding Managing Partner of Fabric Ventures; Philipp Beer, Investment Lead at Cluster Capital; Ryan Gentry from Multicoin Capital, Alex Obadia, Co-Founder of Cambrial Capital, Balász Némethi, Key Opinion Leader at the Aeternity Foundation; and Rafael Schultz, Founder, CEO, BlockchainPunk Labs.
Speakers of the second panel on leveraging DeFi for innovative strategy
The panel kicked off with an overview of “generalized mining”, where Richard from Fabric Ventures explained that there are other things you can supply to the network, to make and keep it active. He says it’s prudent to encourage all the participants in decentralized systems to step up and play their part if they are to succeed. In answering a question about the ‘risk of investing’, he gently warned that “nobody wants to overreach and do something that hurts their business model.” Richard says that you can back a project in different ways, from capital, to patience, to network.
Philip from Cluster Capital spoke about Bitwala, which bridges the gap between traditional finance and decentralized finance (or DeFi). Bitwala is a regulated 'German bank account meets crypto wallet', that, incidentally reached 13 million Euros in funding this July. He recommends leveraging the network across the entire investment cycle, adding that the “decentralized future starts centralized.”
Ryan from Multicoin Capital illustrated Peter Thiel’s concept of "solving the cold start problem," in terms of bootstrapping a network to give it the push it needs to move from zero to one. He offered a striking story of how VC's can bootstrap their investments via active network participation. Ryan’s anecdote described their investment in a business in which he literally went door-to-door marketing a physical hotspot to be deployed on a friend, family, or investor's house to assist in bootstrapping a concept. While this was a great example of a VC taking an active part in a company's success, it also raises the question, which he noted: there’s a fine line you need to walk of going too far where you and the investors are artificially creating a market for the idea.
Also touching on the importance of compliance, Ryan suggests that there’s a need to “educate regulators to get them where they’re not immediately hostile.” He was both shocked and encouraged that during the recent US hearings, people seemed to understand the difference between Bitcoin and Libra. Regarding the notion of mass adoption, there’s a risk that if you exist outside of regulation, there is a distinct chance that you might get shut down. Some panelists expressed that compliance is really going to be the driver that brings the next herd into the ecosystem, and that privacy is already a big concern for mass adoption.
Clement Bihorel, NBT's Venture Developer in Blockchain, addressing panelists during second half of the event.
Clem wrapped by asking the panel what excites them most about the future, to which answers included: Projects that are thinking about a DAO-model can save 3% and put that into tokens, which is apparently easy to set up; understanding the possibility that insurance contracts can benefit from DeFi; collateralized loans; decentralized insurance can bet on protocol failure; smart wallet insurance and solving identity problems; and mutli-asset backed coins.
Stay tuned for upcoming posts on our Medium publication with first-hand perspectives from moderators, Yoann and Clem.
Thanks to everyone for attending, and we hope you all made excellent connections to further your projects and ideas!
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