Blockchain Expo Day 1: Blockchain from the investor’s perspective: A VC view of the marketplace

By Alara Basul | 24 January 2017

'Blockchain from the investor’s perspective: A VC view of the marketplace' was moderated by David Peyronnin, Head of Blockchain Services at Mthree Consulting. The three speakers were Jean-Marc Bonnefous, Managing partner at Tellurian Capital, Eddy Travia, Pioneer Blockchain Investor & CEO, Coincillium and Jamie Burke, CEO of Outlier Capital LLC and Blockchain Angels.

What’s the definition of blockchain to you and why is it a revolutionary technology?

Eddy Travia: Most people know it as a peer to peer distributed ledger. What is really important for blockchain is its key characteristics: The fact that you can’t change blockchain, and that you can share the data and access the data. One reason why financial services are looking at blockchain is they feel it can solve some of the issues they have such as settlements.

What’s interesting is over past few years blockchain was a disruptive technology but now more and more we’re starting to understand that blockchain is becoming a foundational technology. A bit like what the internet was back in 70’s. In the 70’s, the first application of the internet from what we know was e-mail. I think in many ways, Bitcoin can be associated to ‘email’ as the first application of blockchain; it’s easy to use and easy to get.

Jamie Burke: The way I came about investing in the blockchain space, I worked in the consultancy world and came across a lot of business problems, especially with clients in cross-border platforms.

When I came across bitcoin and the technologies such as smart contracts, for me it was very obvious where it was applicable. This was four and a half years ago so it was very theoretical and conceptual. When you think about web 2.0, aside from retail or media it hasn’t really changed the world or the markets that much. They’re still very centralised and still heavily human mediated.

For me, blockchain technology represents web 3.0. It’s a technology stack that enables us to move from a centralised world to a decentralised world, and I don’t mean that in an extreme sense, just a spectrum. And you can start to remove people and alternative functions through smart contracts. What this represents is a shift, from web 2.0 to web 3.0 and I think that will enable more autonomous, certainly more automated, peer to peer markets, and more importantly machine to machine.

We would like to know more about the markets. What are the trends and who are the main investors? Have you seen an evolution in Blockchain, and what’s going on from the financial aspect?

Eddy Travia: The problem with blockchain is that it’s still living more in it’s own community. A lot of early stage Blockchain companies have been funded from the community, and we see a lot of money coming from the community. Last year in 2016 we also saw a lot of institutional funding. The fact that it’s in it’s own bubble is a problem for blockchain to be adopted at a very worldwide level of different industries.

What I see is the convergence of other trends. Everyone knows about the mobile trend, where millennial’s are living financial services differently, and there is a convergence of disruptive in fintech which happen in parallel with Blockchain. Today when we look at blockchain platforms we try to see how they can cope with these various trends to get to a winning strategy in the future. This is a kind of technology that will take some time to get the results.

Jean-Marc Bonnefous: Bitcoin was the first successful draft of Blockchain. Now what’s fascinating to see is it’s reaching these institutional heights. It’s happening in a world of financial institutions and payments. The layers required for investment is the ability to get banks as a form of disrupted ledgers of the digital currency. And more so the central banks. It is happening, but it takes time and there’s quite a few issues to overcome.

What’s going to be the next killer app in this industry?

Jamie Burke: There might not be one for a long time. And if it is going to happen it wont be in the developed world. What this technology is doing at the moment is it’s laying the foundations for a number of industries, to improve the efficiency for greater collaborations. Health and insurance will be the bigger ones this year. Capital markets will also be a big one. But there’s no killer app there. If it comes it’s going to happen in Africa, South East Asia or India. Richard Branson referred to blockchain as the internet of ownership. 

Is it difficult to sell blockchain to investors?

Jamie Burke: Yes and no. The honest answer is we don’t sell blockchain. There is a learning curve, and actually more often than not it’s learning what don’t they need to know. You need to understand broadly a distrupted ledger and smart contracts. I think the biggest challenge is that it’s a fast moving environment. If you’re not a specialist in this area its going to be very hard to keep up with all the innovations, learnings and what’s going on in in this industry.

Jean-Marc Bonnefous: There are two types of investors: First are the strategic investors, such as banks, who need to know what’s going on and have the answer to the innovative technology. The second type of investors are the VC’s: They’re the financial-driven investors. Blockchain almost has passed the test for the big investors. For aspiring blockchain companies, I think you need to get the message right in what problems that you solve. If you don’t solve problems it’s going to be difficult going forward. The second thing you need to ensure is that you know whether you’re a technology platform or if you’re a business case. 

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