An Israeli bitcoin startup focused on enabling bitcoin purchases with credit cards has closed a $7m Series A funding round.
Backing Simplex are bitcoin mining firms Bitmain[1] and Cumberland Mining[2], and FundersClub[3], a crowdfunding platform that previously invested in Coinbase. A group of angel investors, which Simplex declined to name, also contributed to the funding.
The amount adds to a previously raised $1.4m, bringing the firm’s total fundraising to $8.4m.
Simplex CEO Nimrod Lehavi said that the company is seeking to enable faster purchases of bitcoin via credit card, while at the same time reducing the consequences of fraud for businesses, such as exchanges or brokerages, that offer the service.
Lehavi told CoinDesk:
“We launched the beta product about a year ago. We kept it kind of low key up until we were able to offer the service better. We came to the world to solve a very big and annoying problem: It’s such a drag to buy bitcoin.”
In interview, Lehavi repeatedly invoked the firm’s commitment to fraud mitigation, pointing to the experience of CTO Erez Shapira and CRO Netanel Kabala, both of whom previously worked for PayPal in similar capacities.
Lehavi said that Simplex’s customers benefit from offering a way to sell bitcoin more quickly than with wire transfer, and in the event of fraud or a chargeback, Simplex absorbs the cost.
“Even if there’s a chargeback, we’re still paying them the money,” he said.
According to Lehavi, the firm began beta testing its service about a year ago, and its website cites customers including cloud mining provider Genesis Mining and bitcoin exchanges Spectrocoin and Bits of Gold.
Lehavi says that since then, the service has processed more than $3m in bitcoin purchases via credit card, concluding:
“We went live about a year ago with a few selected design partners, and we’ve managed to process, so far, about $4m in purchases and [be] able to fight fraud and fight it pretty well.”
New York-based blockchain startup Digital Asset Holdings announced today that Goldman Sachs and IBM have joined its recent funding round, pushing the total amount raised above $60m.
The firm, which as reported earlier this week, is conducting a distributed ledger trial[1] with JPMorgan Chase, has now garnered support from a total of fourteen financial institutions.
Other parties in the round[2] include ABN AMRO; Accenture; ASX Limited; BNP Paribas; Broadridge Financial Solutions; Citi; CME Ventures; Deutsche Börse Group; ICAP; Santander InnoVentures; The Depository Trust & Clearing Corporation (DTCC); and The PNC Financial Services Group, Inc.
The round marks the second publicly disclosed investment in the bitcoin and blockchain space for Goldman Sachs, which last year took part in bitcoin services provider Circle’s $50m funding round[3].
Paul Walker, global co-head of technology for Goldman Sachs, said in a statement:
“We believe that distributed ledger technology will play a transformative role in the way financial institutions transact globally and we look forward to working with Digital Asset and the broader financial and technical community to engage this emerging technology.”
IBM is making its first publicly disclosed investment a company focused on technology, a move that follows months of internal testing and development of proofs-of-concepts. The firm is now playing a leading role in the Open Ledger Project[4], an open-source initiative that also involves Digital Asset.
“We are excited to jointly develop distributed ledger technologies that will allow our clients to transform their business, and further strengthen our partnership with Digital Asset,” said Jerry Cuomo, the IBM Fellow leading the firm’s blockchain efforts, adding:
“Blockchain holds real potential to transform a wide range of industries and IBM is committed to making it ready for business.”
UPDATE (8th September 18:55 BST): This piece has been updated with comment from ShapeShift CEO Erik Voorhees.
Digital currency exchange ShapeShift.io has raised $1.6m in new funding.
As reported by TechCrunch[1], the round drew support from Digital Currency Group, bitcoin entrepreneur Roger Ver and Bitfinex, the Hong Kong-based bitcoin exchange
Bitcoin Foundation executive director Bruce Fenton, Transform PR founder and CEO Michael Terpin and Trevor Koverko, founder of education-oriented e-commerce platform eProf, also took part in the round as angel investors.
The announcement comes nearly six months after ShapeShift announced $525k in seed funding[2], an amount invested by both Ver and Digital Currency Group founder and CEO Barry Silbert.
ShapeShift later made headlines after it become one of the first of a growing number of digital currency businesses to stop serving New York customers[3] following the development and launch of the BitLicense licensure framework in the state.
When reached for comment, ShapeShift CEO Erik Voorhees would be used to support ongoing development, provide liquidity to the exchange and enable further scalability.
He told CoinDesk:
“It took a little coaxing as many Bitcoiner-investors aren’t sold on the concept of other cryptocurrencies. Key to our raise, however, was the ability to demonstrate that tomorrow will be full of digital assets, of all different kinds, and such a future demands a frictionless exchange engine.”
“Investors are starting to realize the enormity of the potential,” he added.
Filament has raised $5m in Series A funding led by Bullpen Capital and including contributions from Verizon Ventures and Samsung Ventures.
The decision by Samsung Ventures[1], the capital arm of consumer electronics giant Samsung, marks its first public investment in a blockchain industry firm and notably follows its participation in IBM’s blockchain proof of concept ADEPT.
Announced in January[2], ADEPT used the bitcoin and Ethereum[3] networks to enable devices to communicate as part of a wider transition toward connected consumer devices known as the Internet of Things (IoT).
Co-founder and CEO Eric Jennings framed Filament[4] as a decentralized IoT software stack that uses the bitcoin blockchain to enable devices to hold unique identities on a public ledger. By creating a smart device directory, he said, Filament’s IoT devices will be able to securely communicate, execute smart contracts and send microtransactions.
Given this vision, Jennings sees his project as similar in ethos to ADEPT, even though it will target the industrial market, enabling large firms in industries such as oil, gas, manufacturing and agriculture to unlock new efficiencies.
Jennings told CoinDesk:
“Almost all these companies have the same concern – ‘What is my IoT strategy?’ Many of these companies are good at what they build but they don’t have a lot of expertise in mesh networking or blockchains, but they know they need to connect these networks to gain efficiencies or risk going out of business.”
Filament will seek to market two hardware units: the Filament Tap, a sensor device that allows devices to communicate with phones, tablets and computers at distances of 10 miles, and the Filament Patch which extends the capabilities of the technology to custom hardware projects.
By leveraging its blockchain-based technology stack, Filament said enterprise companies can better manage physical mining operations or water flows over agricultural fields without relying on centralized cloud alternatives or pen-and-paper methods that result in human inefficiencies.
Founded in 2012, Filament was originally conceived as Scout, a wireless home security system built on mesh networking, before rebranding as Pinocc.io[5]. After being accepted into the Techstars incubator last October, the company reemerged as Filament with a new focus on industrial use cases for connected devices.
Behind this technology, Filament boasts the inventor of the communications protocol Jabber/XMPP[11] Jeremie Miller as its CTO. Launched in 1999, Jabber was an open standard alternative to chat applications such as AOL Instant Messenger.
Support for the protocol was eventually adopted to varying degrees by Facebook, Google and Microsoft, a success Filament aims to replicate with its platform.
“The lesson is that decentralized systems are more valuable to the company and the people that use them,” Jennings explained. “That’s the ethos we’ve learned, that decentralized systems with more equal footing between the users tend to be more valuable.”
Filament’s thesis is based on seeking to unlock how a similar platform can be used to enable decentralized communications between connected devices, a vision Jennings argues is based in business logic rather than any ideological support.
“Decentralized isn’t a tinfoil hat position,” Jennings argued. “Decentralized systems are more valuable to people that interact with them… It’s a good reminder. ‘Why it does it matter using the blockchain?’ because it can make systems more powerful and more valuable.”
Filament’s technology stack will use five layers – blockname, telehash, smart contracts, pennybank and BitTorrent. Filament’s sensors rely on the first three in order to operate, while the final two protocols are optional for clients.
Hardware and technology stack
The Filament Tap is the smallest unit offered by the company, which it aims to sell in units of 10 to those interested in testing the product’s capabilities.
Among the products benefits, according to Jennings is ease of use. “Taps have sensors so they can be attached to devices in an office space and be up and running in 20 minutes. They can start monitoring infrastructure immediately,” he said.
Each device will be equipped with the ability to handle communications on all five of the company’s protocols. Using blockname[12], devices are able to create a unique identifiers which are stored in a part of the device’s embedded chip and recorded on the blockchain. Telehash[13], in turn, provides end-to-end encrypted communications and BitTorrent[14] enables file sharing.
“In the blockchain, when the devices are manufactured, we store the unique hash of a network address. When we manufacture our devices, we create a unique global IP address and in blockname, we store where those hashes can be resolved,” Jennings said. “If device A wants to talk to device B, blockname will tell them how.”
Payment for the devices’ use is handled by smart contracts, which allows the terms of payment and access to the device to be controlled programmatically.
Jennings sought to stress that Filament’s products and technology are blockchain agnostic, but they currently use the bitcoin blockchain. Jennings said data for contracts is stored using the 40 bytes of extra data added to bitcoin transactions.
Jennings described Filament’s PATCH product as the “brain of the Tap”, which would be integrated into other hardware devices and stacks but use the company’s technology.
Supporting microtransactions
Of the five planned parts of the company’s stack, Jennings acknowledges that IoT micropayments, or the ability of devices to transact, remains in the earliest stages.
Filament will use a bitcoin-based protocol that is has developed called Pennybank[15] for microtransactions on its platform, in part because of its unique needs. “Our devices are not high power and they aren’t always online, so in order to allow these devices to transact, they can’t be a lightweight wallet,” Jennings said.
Effectively, Jennings said Pennybank creates an escrow service between two devices, allowing them to settle transactions when they are connected online.
Jennings suggested early talks with clients lead him to believe enterprise firms want to pay on an ongoing, real-time basis. Here again, he suggested the only way to satisfy this market demand was by using blockchain technology.
The ability for Filament devices to transact, he said, is also crucial to ensuring the network remains viable even if the company closes. Further, he suggested it would open up new opportunities for clients, who could sell their device data to others in a similar way.
“That’s the beauty of bitcoin and the blockchain in a lot of ways, you can’t go and change things, it’s established and locked in. If clients ask ‘Are you going to be around in a year or two?’, having the ability to answer that is a big sales benefit,” he said.
Still, Jennings sees Filament’s role in the IoT ecosystem as connecting devices and parties but owning the smart contracts by which they interact.
He concluded:
“Our value is not the software stack. It would be like saying the value of the bitcoin codebase, the value is having the private keys to your coin, that’s what you want to keep secret. We get the code out there, we leverage it and add value to the contracts.”
The biggest opportunities for bitcoin and the blockchain lie in their ability to disrupt emerging economies, according to FuturePerfect Ventures founding partner Jalak Jobanputra.
The New York-based firm has emerged as an active investor in companies in the sector, so far participating in funding rounds for Abra[1], BitPesa[2], Blockchain[3], Blockstream[4] and Case[5], two of which are among the largest so far in the industry’s history.
Going forward, Jobanputra[6] says FuturePerfect[7] is actively looking to invest in post-seed companies raising rounds of $1m–$5m in a bid to scale their efforts. However, it’s a global focus that is compelling the $50m fund, launched in 2014 by Jobanputra following stints at RTP Ventures[8] and the Omidyar Network[9], that shapes the firm’s thesis on bitcoin and the blockchain.
Her interest in the technology, she explained, came early in 2013 following time spent in Africa analyzing the growth of mobile money services platform M-Pesa[10].
“That was the perspective I was bringing to learning more about the space,” she told CoinDesk. “Large data, decentralization and analytics, [bitcoin and the blockchain] fit in nicely with where technology in general is headed. It’s not only in the FinTech space, we’re witnessing more decentralization as more machines and devices come online around the world.”
Jobanputra said:
“If you look at the efficiencies, a digital ledger just starts to look like a global opportunity. It’s just such a huge technology with huge potential that I wouldn’t want to even categorize it.”
Of course, while those opportunities may exist, the teams that can turn these big ideas into products that thrive in the marketplace are more scarce.
“Venture is not really about funding science projects,” she continued. “It’s looking at applications that can serve a purpose and address pain points in the current market in the near term.”
Immediate opportunities
In particular, Jobanputra cited FuturePerfect portfolio company Abra as a “great example” of a company that has provided a convincing case it can create a more efficient cross-border payments system today.
“There is a huge opportunity to do something in the sector and do well, but it’s important to know who else is working on what.”
Helmed by entrepreneur Bill Barhydt, Abra offers a mobile app that facilitates remittances via the blockchain, effectively outsourcing money transmission requirements to end users. Heralded as an “Uber for remittances”, Jobanputra suggests that rising smartphone penetration provides a compelling case that the as-yet-unlaunched service can take off.
“The tellers are mobile and they’re not fixed kiosks. That’s an immediate pain point, wrapping in other elements of technology and mobile is one of them,” she explained. “Smartphones are much more prevalent than they were five or six years ago.”
Because of the broad applications for technology, Jobanputra says it’s too early to tell if it will take off as a consumer or business-focused solution even given the increasing interest from major mainstream banks in the technology.
“We’re just in the very early stages and even thinking about the use cases,” Jobanputra said.
Her advice to those who want to get involved in the ecosystem? Observe the competition. “We’re seeing a lot of new companies startup because there is a huge opportunity to do something in the sector and do well, but it’s important to know who else is working on what.”
Keeping score
Jobanputra also spoke out about the tendencies of the tech press to view startup funding as a measure of success, noting that some companies are simply able to operate leaner and more efficiently.
“We’re in a very nascent market and we’re accustomed to seeing high fundraise amounts just because the money is out there,” Jobanputra said. “The smartest companies are figuring out their business model and not raising just because they can.”
She further rebutted attempts to compare current investment levels in the bitcoin and blockchain ecosystem with funding from the 1990s, calling this analogy potentially “dangerous”.
“There are lots of things that have changed in tech and capital,” she continued. “Capital has become a lot more global and consumer and enterprise focused.”
Still, Jobanputra indicated that were some trends in the sector that she currently supports, including the tendencies for VCs to focus on strong technology teams as a hedge against uncertainty regarding how the industry may evolve.
As for her prediction for the technology’s killer app, she asserted her belief that the developing world will perhaps provide the answer.
However, she hinted at the many components are needed to realize it, concluding:
“This whole idea in the longer term of having an identity that you have different assets associated with and can transact with, that is very attractive as we get to a more global and cross-border world. There’s so much more movement of people and assets across borders and I think this is where the blockchain can excel.”
Jalak Jobanputrais speaking at Consensus 2015[11] in New York. Join her at the Times Center on 10th September. The full speaker list can be found here[12].
Bitcoin is the fastest growing area of startup investment since mid-2012, a venture capitalist at Redpoint has claimed.
In his recent analysis[1] of Mattermark data, Tomasz Tunguz noted that investment in bitcoin companies – closely followed by photo sharing and physical storage startups – has grown by 151% in the last three years.
Image via Tomas Tunguz
However, Tunguz pointed out that bitcoin startups represent a “minuscule fraction” of the total invested funds – receiving just 0.18% of the total funding in the last year.
VC investment in the banking industry has only grown by 65% since mid-2012, but the sector received a 1.85% share of the total number of dollars invested in the last twelve months.
Redpoint[2], which has funded 434 companies to date, offers seed, early and growth stage investment to startups.
Tunguz’s assertions follow the publication of CoinDesk’s State of Bitcoin Report (SOB) Q2 2015, which found[3] that total VC investment in the digital currency space was on the rise, noting an increase of 21% to $832m.
With more than $800m so far invested in bitcoin and blockchain technology startups since 2012, it’s safe to say that venture capitalists are certain captivated.
Investments in the industry have already exceeded the cumulative total for 2014, with more than $380m pledged to startups in publicly announced funding rounds this year.
While an impressive figure on its own, what that number doesn’t successfully convey is how many seed to late-stage firms are making bets on the new wave of innovators aiming to take bitcoin and blockchain technology forward.
CoinDesk’s Bitcoin Venture Capital[1] data indicates nearly 200 VC firms have invested in bitcoin companies, a total that excludes the many individual and angel investors that have participated in public funding rounds as well as the various private deals kept out of the public eye for as-yet-unannounced stealth projects.
Out of these many investment firms, however, clear leaders have emerged whose investment deals and ideals have influenced the wider ecosystem.
With this in mind, we’ve compiled a list of 10 of the most influential and visible investment firms in the industry.
The only non-US entity on the list, China’s IDG Capital has emerged as an early, yet conservative investor with a stronger emphasis on applications of the blockchain as a distributed ledger.
IDG’s first investment came during its May 2013 funding of Ripple Labs[3], a distributed payments protocol provider that has raised $37m in total and recently closed a $28m Series A[4].
Later, it took part in Koinify’s $1m fundraising[5]. Originally conceived as a decentralized Kickstarter, Koinify has since announced it plans to pivot as a result of unsustainable revenues[6].
Though the firm seems to prefer investments in distributed ledger tech, IDG has nonetheless backed one of the largest bitcoin services providers, Boston-based Circle Internet Financial, having participated in Circle’s $50m Series C[7] in April.
A representative from IDG Ventures USA indicated that the firm is currently looking for early stage opportunities, while its China-based counterpart is focused on late-stage deals.
Described by TechCrunch as a “mega VC firm”, Menlo Park-based Khosla Ventures recently raised $400m[9] to fund its next batch of seed investments, some of which could end up being devoted to bitcoin or blockchain firms.
Khosla has been relatively quiet in the public regarding its stance on bitcoin, the blockchain and if its investment thesis favors one or the other. Still, that hasn’t stopped it from participating in some of the most talked about funding rounds in the space.
Khosla’s bitcoin portfolio includes industry fundraising leader 21 Inc[10], which has amassed more than $120m in startup capital to date, as well as the sector’s largest pure technology play Blockstream[11].
Elsewhere, Khosla has backed smaller funding rounds by blockchain technology specialist Chain[12] and financial services provider BlockScore[13].
San Mateo’s Boost VC may be moving away from a specific focus on bitcoin (recently announcing its newest class would be equally dedicated to virtual reality[15]), but since its inception in 2013, it’s been one of the most prolific investors in the space.
The early-stage startup fund founded by Yahoo founder Jerry Yang, AME Cloud Ventures has emerged as another cautious and infrequent investor in the bitcoin industry.
The Palo Alto-based company boasts three of the best-funded startups in its portfolio to date – BitPay, Blockstream, Ripple Labs, as well as Blockcypher and blockchain identity solution ShoCard[24].
Despite the public investments, however, both Yang and his firm remain quiet about both their investment strategy and opinions on bitcoin.
Though Lightspeed has arguably slowed the pace of its investments in the technology, the venture capital firm was one of its earliest and most vocal supporters, with partner Jeremy Liew voicing his enthusiasm[26] publicly for the technology as early as 2013[27] and appearing as a witness at the New York BitLicense hearings in 2014[28].
Overall, Lightspeed has made an interesting investment in an array of bitcoin and blockchain companies either directly or through its subsidiaries, backing BlockScore, digital asset exchange Melotic and China-based bitcoin exchange BTC China. Lightspeed also made a key early investment in bitcoin-focused incubator Boost VC[29] in May 2013.
However, Lightspeed moved most decisively in October 2014 backing a $30.5m funding round for bitcoin wallet provider Blockchain. The funding, then the largest in the space, arguably set the stage for even bigger rounds at the top of 2015.
Liew has said of his firm’s strategy:
“We believe that in the next few years the core opportunities in the bitcoin ecosystem will be driven by store-of-value and speculation use cases, and that only after these use cases support a much higher bitcoin market cap will the bitcoin 2.0, distributed ledger opportunities be ready to scale to realize their full opportunity.”
Yet another venture firm that has provided perhaps more thought leadership than investment to the technology’s ecosystem is Ribbit Capital.
Launched in 2013[31], the VC firm was one of the first to take an interest in the space, with founder Micky Malka joining the Bitcoin Foundation[32], then the industry’s leading trade group, as an industry board member.
Though enthusiastic, Ribbit has been equally patient backing some of the ecosystem’s biggest funding rounds, including those from Blockstream, BTCJam, Coinbase, Ripple Labs and Xapo.
Still, according to Malka, there’s value in adopting a long-term investment strategy with regards to the ecosystem. Following Coinbase’s $75m Series C, he told CoinDesk:
“The good news for bitcoin is the long-term belief from established players that it is worth understanding what can happen in this ecosystem instead of simply believing it will never happen. It’s obvious still early but Rome wasn’t built in one year.”
Driven by outspoken partner Fred Wilson, Union Square Ventures (USV) has been among the most actively engaged in the public dialogue on the technology.
While liberal with its praise, however, USV has been conservative with its funds.
To date, USV has made investments in only three bitcoin and blockchain companies – bitcoin services firm Coinbase, decentralized commerce network OpenBazaar and open-source identity protocol OneName.
The investments, while seemingly disparate, however, suggest one of the more well-defined theses among major VC firms. USV believes in exploring whether the explosive growth enabled by the bitcoin protocol could be applied to verticals beyond finance rather than investments in bitcoin’s supporting ecosystem.
”We’re not interested in investing in a company that’s the same as Coinbase. I think Coinbase has a big opportunity in front of itself and so we’re careful not to investment anywhere close to what they’re doing.”
Another firm not as public with its praise for the technology, RRE has more quietly added an impressive list of bitcoin companies to its portfolio.
Starting with bitcoin exchange itBit in 2013, RRE has since invested in bitcoin mining firm 21 Inc; merchant payment processor BitPay; API specialists Gem; hardware wallet provider Case; Mirror and Ripple Labs.
Perhaps its most noteworthy investment, however, is blockchain technology firm Chain, which is led by CEO and RRE partner[36] Adam Ludwin.
RRE’s investments are noteworthy given their variety, though most of these startups are focused on fundamental aspects of the bitcoin ecosystem, whether it be machine-to-machine payments or blockchain-based smart contracts.
However, these investments could come to form only a fraction of what’s next for the firm, as it has raised $1.5bn over seven funds since its founding in 1994.
BitFlyer, BitPay, BitPesa, BitGo, BitNet, BitPremier, BitX – these are just a handful of the bitcoin-focused startups boasting a ‘bit’ prefix and backed by Barry Silbert’s Bitcoin Opportunity Corp.
Recently rebranded as Digital Currency Group (DCG), Silbert’s fund has been one of the most active investors both personally and through DCG, with major names such as Coinbase, Circle and Ripple Labs rounding out its portfolio of 35 companies.
DCG has been bullish on bitcoin on all fronts, backing firms both in the US and internationally in Latin America, Mexico, Japan and South Korea, and supporting innovation in virtually all areas of the digital currency ecosystem.
Perhaps inarguably the most high-profile firm involved in the bitcoin ecosystem has been Andreessen Horowitz, the private equity firm launched by Netscape founder Marc Andreessen and Netscape product manager Ben Horowitz.
Following its participation in Ripple Lab’s April 2013 investment round, Andreessen Horowitz moved aggressively to help develop and cultivate the industry’s two best-funded startups, Coinbase and 21 Inc, which account for $227m in total investment or more than $1 in $4 so far invested in the industry.
Andreessen Horowitz has also seen general partner Balaji Srinivasan take on an active role in the development of 21 when he assumed the company’s CEO position[39] in May.
Andreessen himself has further adopted the role of one of the technology’s most high-profile defenders, routinely tweeting about developments that both directly and indirectly impact the space from his heavily followed @pmarca account[40].
The company has also participated in smaller investment rounds for TradeBlock[41] and OpenBazaar[42], signaling that it remains interested in early bets on potentially disruptive ideas.
ShoCard has raised $1.5m in funding from AME Cloud Ventures, Digital Currency Group, Enspire Capital and Morado Venture Partners.
The startup, which seeks to use the bitcoin blockchain as a way to authenticate identification, debuted in May at TechCrunch Disrupt NY[1]. Its launch came amid a broader shift in focus among investors, who appear increasingly interested in harnessing the power of bitcoin’s underlying distributed ledger for use cases beyond payments.
ShoCard views its solution as one that could disrupt the digital identity business, providing consumers with the means to hold a secure version of their personal information for use in e-commerce purchases, online banking logins and more.
The funding will help the startup advance on what might be its core barrier to mainstream adoption as stated by TechCrunch’s Romain Dillet – attempting to secure mainstream partners.
While a challenge, the company boasts experience at the helm, having been founded by former Yahoo senior vice president Armin Ebrahimi and former Coupons.com president Jeff Weitzman.
ShoCard is one of a small but growing number of startups seeking to use the blockchain as a means of improving identity management that includes online identity protocol OneName, which has raised $1.62m in funding from investors including Union Square Ventures.
Los Angeles-based venture capital firm Block26 has completed its first investment, contributing $450,000 to the ongoing seed round for bitcoin wallet provider Airbitz.
Launched in June[1], Block26[2] has indicated it plans to focus specifically on blockchain and digital currency ventures, contributing to seed to later-stage rounds.
Calling the funding the company’s “first big announcement”, Block26 principal Ni’coel Stark indicated that Airbitz[3] is representative of the kind of companies in which her new venture firm is looking to invest.
Stark told CoinDesk:
“We’re really looking for nuances in the technology. Airbitz is an amazing wallet, it solves problems for consumers, but it’s so much more than that. We see opportunities beyond the wallet, the ability that they have to go into security, their contributions to the Internet of Things, altogether they really make them fascinating.”
She went on to call Airbitz “underrated” compared to its competition due to its team’s ability to contribute to areas of the technology beyond simply creating quality mobile bitcoin wallets.
“Block26 is attracted to what’s under the surface,” she added.
Going forward, Stark indicated that Block26 intends to “innovate along with the space”, and that it plans to focus on a smaller selection of high-quality startups.
Founded in 2014, Airbitz was previously accepted into the Plug and Play Tech Accelerator, based in Sunnyvale, California.
As one of the oldest and most established venture capital firms in the US, Kleiner Perkins Caufield & Byers (KPCB), has had a helping hand in mainstreaming technologies from IT to biotech since its founding in 1972.
While Kleiner Perkins[1] hasn’t yet invested in a bitcoin or blockchain company, it’s likely it will soon do so via its newest fund, KPCB Edge[2]. The seed-stage investment firm, announced 16th June and launched with a $4m budget[3], will have blockchain technology as one of its six core areas of focus.
Leading KPCB’s exploration will be founding partner Anjney Midha[4], the firm’s youngest partner and a former Google policy fellow. In a recent Medium[5] post, Midha explained his interest in the blockchain, bitcoin’s underlying decentralized ledger, heralding the technology’s strong increase in developer adoption, which he contrasted against the decline in the price of bitcoin.
Speaking to CoinDesk, Midha expanded on his investment thesis for the technology, indicating that he believes the bitcoin blockchain and other blockchain protocols will become invisible to end users while enabling faster, cheaper and more secure payments.
He said:
“I see the bitcoin blockchain as an implementation of blockchain technology – so I’m interested in both the generalizable stack, as well as any specific implementations that see developer adoption.”
The firm’s new interest in blockchain technologies is notable given the company’s history of strategic bets in early Internet companies such as Amazon, Google and Netscape, a connection that further highlights the perceived parallels between the technologies.
When asked if he believed startups working on the blockchain would produce similar success stories, Midha answered:
“We wouldn’t be focused on this space if we didn’t believe that.”
Value creation
Midha reiterated the views he expressed in an KPCB Edge blog post, suggesting developer adoption is perhaps the most important metric in evaluating opportunities in the current bitcoin ecosystem.
“Historically, the combination of a new platform’s capabilities and rapid developer adoption has produced significant value for users,” he wrote. “Take the case, for example, of the mobile stack between 2008–2015. Incredible value was created with each new capability developers could access on mobile.”
This increase in developer interest, he argued, was key to the creation of notable startups from Whatsapp to Waze.
Midha drew a parallel between the underlying technologies that propelled these apps to recent tech advances that enable distributed, programmable contracts on top of the bitcoin blockchain.
Going forward, Midha expressed his enthusiasm for further infrastructure development, labelling micropayment channels as another “interesting use case” that has emerged around the technology.
Anjney Midha, founding partner at KPCB Edge.
Multi-tiered approach
Though KPCB Edge will primarily place small strategic investments of $250,000 in select projects, Midha hinted this strategy likely wouldn’t suffice on its own.
When asked if KPCB might consider entering into larger Series B or Series C rounds for veteran industry companies, Midha said a single strategy isn’t “necessarily the best”.
“Seed is one strategy,” he continued. “It’s where I believe the Edge team can have the most impact. For later companies, KPCB has larger funds and separate teams that are focused on those rounds.”
Midha further hinted a hybrid investment strategy could be put in place by the company, noting KPCB works with founders at every stage, regardless of the industry.
Backslash selection
Midha also expanded on his firm’s selection of Backslash founder Roneil Rumburg to the staff of the new venture, noting his experience with bitcoin and the blockchain was a specific factor in his selection.
“Rumberg worked with the bitcoin stack as a founder less than 12 months ago. Few other VCs have this timely and technically rigorous background when it comes to blockchains,” he said, adding:
“This allows him to both empathize with and think critically about founders in this space.”
Rumberg’s background as a developer was also mentioned, with Midha referring to him as a “crack full-stack engineer” with the technology that could play a valuable role in vetting projects.
As such, KPCB Edge is currently accepting applications for new startups in the blockchain industry.
