Aly Madhavji on blockchain investments in 2019

0:22Founders fund if you could kick it off by giving us an overview of the company and what your guys's portfolio looks like that'd be great to hear sure we're a token and Equity based investment fund we're we're funded by private capital and we have three parts of our business we've got the investment fund and then we've got an accelerator

0:42where we help companies not only on their blockchain specific components but actually helping them across things like go to market strategy governance actually how to basically scale a company from zero to one and then the final part is our Consulting arm where we're working with certain governments as well and intergovernmental organizations so for

1:03example we're writing one of the flagship reports for the United Nations for this year for 2019 on fintech and blockchain and so that's also pretty exciting initiative that we're working on that sounds great Ally awesome so could you break down a little bit further u in the rationale behind your guys's choice of the portfolio you know there's Equity there's security

1:24tokens there's icos from last year what are the reasons that and that you made the portfolio the way it is yeah I mean that's a good question you know of course this industry is changing very quickly and so you know we were we were lucky that we had started doing Equity probably earlier in this industry than than many people and we had that kind of hybrid structure

1:46Now for a while with equity and utility tokens we've done a lot of utility token Investments you know in 2017 as well and 2018 it has slowed down considerably you know given given the state of most utility tokens we're we're not actually focused on those anymore but more so into Equity based Investments and then stos if they

2:11make sense generally we do like Equity linked stos you know could consider things like if there's additional properties related to dividends or other things but very skeptical still on things like Revenue shared security tokens especially if it's not a very large you know cash generating mature business mhm yeah that the security token offerings are really

2:40premature you know from what I've seen it's we really have to see some successful deals and how that works out it's almost like when icos first started people don't really know you know what even the platform to issue security tokens you know there's not really something that's mainstream yet so I'm sure that will be flushed out in 2019 especially 2020 as more in institutional

3:01Investors come into the field as well exactly I mean the approach that we have on that I mean so I am an adviser on polymath which is one of the more well-known companies in the stto space we are we are interested to kind of see how this transitions we're very bullish on stos as a whole but we also do see the downsides of it and some

3:24similarities at times to utility tokens I mean for example we had a we had a company pitch us recently that when we actually crunched the numbers on the math on what you were actually receiving you know we basically came to the conclusion that it was a startup with a couple hundred K of Revenue looking for a 14 billion do valuation there so you do get you

3:46know some weird things having said that it was a very accomplished team you know that might fit the bill on some of those things so you do still have you know kind of exorbitant valuations even even with stos definitely and that's a big mistake you know even for those people that are going into Shark Tank looking for you

4:08know investment they always seem like the valuation is ridiculous and you know you really have to R have the rationale behind that so in terms of the investment opportunities that you guys are currently looking at you know what spectrum of Industries are you currently invested into or are you looking for more investments in yeah so our fund is industry

4:29agnos IC and geography agnostic and so we do have you know Investments all around the world we are very interested in highly scalable companies and so if we're talking about things related that are that are digital that you know you can actually as you scale it your costs aren't increasing at the at the same Pace as you know your Revenue growth that to us is really

4:50interesting we do have you know Investments as well personally outside of blockchain that are You Know cover you know things related to cannabis or things related to you know AI machine learning Etc but even within the blockchain sphere you know it still touches every industry I would say I mean some some of the more interesting things that we're looking at right now

5:13would be things Rel to Enterprise we think that is a very high growth sector I mean we're seeing more and more businesses interested in directly you know using blockchain you know pretty much most major board Boards of companies have you know had these disc discussions now on you know what we can do with blockchain and so that's one

5:34area I mean we are also interested in certain other ones I mean like gambling tends to be a really good use case still for blockchain I mean supply chain is very very very strong use case and we're we're seeing and have invested in half a dozen companies on that on that front so I mean those are those are a few but we're always interested

5:54also in new new things that you know can revolutionize or change their Industries that's great that you guys are so agnostic CU you never know you know the location or the industry where something the next unicorn like might be right exactly yeah so you guys have an accelerator and Consulting Services as well as your your fund so with many of the companies that you invest in

6:20are are most of them being accelerated as well and you know how much Capital are you guys pushing to help them grow yeah so not not all of the companies that we invest in go into our accelerator I mean there are plenty of Investments that we make that you know the company is not say extremely early stage if they're not you know seed level and they're kind of a little bit

6:41past that then they're probably not something that we would necessarily put into our accelerator having said that I mean our ticket sizes are generally in the six figure range so kind of anywhere through that range and we are also open to following on investments you know and you know if we do for example the seed round we're interested

7:02to look at it for series a so there's that aspect as well definitely that's great good to know and you know throughout 2018 we both did a lot of public speaking I spoke alongside you in Vietnam as well as Manila and we also spoke in our hometown of Vancouver and I know that you're continuing the events and the networking throughout Asia in 2019 could

7:29you give a little scope to people that are in North America on you know what is the status of blockchain startups and Investments in Asia right now because I know North American people have sort of been in a little lull yeah I mean in Asia and so I mean I have been doing quite a bit of speaking and it was also great to see you in you know three different

7:51cities over the course of a few months all around the world and I mean the scope of investment in Asia it I mean it has slowed down of course I mean a lot of it is also correlated to cryptocurrency prices given that a lot of funds in Asia were actually token funds and only invest in utility tokens and so they've they've been burned pretty hard of course I mean

8:15when you've got a lot of these utility tokens have gone down you know 90 95 99% that is tough so it is slow I would say but having said that there's also a number of funds that were doing equity and that were you know also traditional funds that have moved into the space and things like that and so the stronger funds are still deploying capital and

8:40we're still seeing it with certain stos we're still seeing you know Equity deals being done as as they're always being done and so there's there's still definitely the ability to fund raise in Asia there's of course if it's if the business has applicability to Asia you will find investors that you know have an affinity to it and so

9:02things are things are still going I mean as an example yesterday I was at I was speaking at the wbf so the world blockchain Forum conference in Shenzhen in China and you know there was a massive group at least 500 plus people you know many investors there many interesting projects as well that we came across and so very Lively atmosphere as well that's

9:28awesome that's great to hear and you know I hope that the crypto markets you know go sideways and then up and that will only increase the mainstream adoption as we did near the end of 2017 we really kicked it in a lot more people started getting into the industry a lot more startups you know some bad ideas but at the same time some really good

9:46ideas as well right and those have grown in the last two years despite the bare markets those companies are actually doing really well absolutely I mean we see it as well we think there has been you know some really good companies I mean there's also plenty of really good blockchain companies that we've seen that don't necessarily have a

10:05token and that's also okay right I mean that's part of still growing the industry and growing the use cases and real applicability we're also actually seeing you know for example in China some really big things happening from major companies so for example there's a there's a really large partnership between IBM chingua University in Walmart on food

10:31safety related to blockchain and this is a pretty big deal and so you're starting to get a lot more visibility as well in the public and so we do we do anticipate that with the right things happening which we think they are like real blockchain adoption real major companies adopting and pushing the benefits of blockchain that will also have an effect

10:54You know on cryptocurrency markets as well at some point yeah wow yeah and that's actually really great insight from China there so I'm expecting big things out of Asia this year as well so speaking of this year you know what do you think would be one of the biggest challenges for blockchain Founders fund U growing and achieving your goals by the end of

11:142019 yeah absolutely that's a that's a good question I mean so our focus is still looking for you know great deals great companies we do like early stage companies and so I mean if there are viewers or people that know of great companies I mean please feel free to reach out to us as well we're looking to continue to build out

11:37And shape what we find as as game-changing things in this space so I mean if there are things that we can get involved with and help them grow that you know potentially can help change the world we're interested in that and our philosophy as well I mean because this industry has done a lot of good for us and so part of this as well is you know how can we continue to give

11:58back and so one of the things that we're doing is the report with the United Nations you know which we see just a lot of value for the world I mean if we can if we talk about and it's a very complex report but if we talk about underbanked and unbanked populations we talk about migrant populations and refugees we're talking about you know

12:17small and medium Enterprise and how we can help each of these groups become much more effective with financial inclusion or remittances and other other factors I mean we're talking about the ability to help millions of people people with you know the power of both blockchain and cryptocurrency and so there's some very interesting aspects here that we're hoping to help drive

12:38more government adoption that can really have an impact and change you know these regions and change the lives of many many people that's awesome Ally I'm glad that you guys are in line with those you know initiatives and I found that a lot of the blockchain you know people that have been around in the industry for a few years they're all

12:58about giving back to the community and things like the pineapple fund which give millions and millions in cryptocurrency from the gains that they happen to make to actually make the society a better place so I'm glad that you guys are you know in line with that philosophy so you mentioned you guys are looking for more projects you may be looking for other people to get in

13:17contact with you what is the best way to get in contact with you and the blockchain founders fund yeah absolutely that's a good question and so we actually have a couple of interesting things that we do in here so one I mean if it is a if it is an interesting project you can tweet at us you can reach out to us by email if you have our email if you don't you have to find

13:38a way to get to us and so you can check us out at events you can talk to people that know us I mean we have a very strong reputation across North America and Asia as well as in the Middle East and growing in Europe and so I mean that is also one of the filters is you know find a way to get to us and find a way to get to our attention because we do also use this a

13:59way to filter out a lot of scam projects which are are very apparent in this industry and just lowquality projects that you know if they can't Network into into US I mean it'll be very difficult I'm sure to network in their industry and build build what they need to do to make their business successful that's awesome I like that ideology well thank you for

14:17your time today it's all the time we have this time but I'm looking forward to seeing you again and hopefully speaking on stage and watching blockchain Founders fund throughout 2019 let's follow up in the months to see what's happening with the fund and if you guys have grown and I'm looking forward to then absolutely can't wait and chat soon thanks so much again

14:39for having us thank you