Jamie Burke, as Europe's leading blockchain investor, discussses the opportunities and risks of building startups today and tomorrow. And explains how startups can navigate them to beat the pack.
3. Paradigm Shift
1. Next phase of The Web
2. Decentralises centralisation of Web 2.0
3. Outdated rentier / platform models
4. Collaborative economies at scale
5. Core function likely not business
6. Not about owning code its about creating
markets
4. What is the value they can bring?
Provenance
P2P
Exchange
Digital Trust
Supply Chains
Task
Automation
Distributed
Database
Auditability
B2B
Marketplaces
Identity Paperless Security Transparency
GovernanceRedundancyReduce Fraud
Sharing
Economy
B2C
Marketplaces
M2M
Liquidity
Asset Integrity Back Office
5. 3 x Opportunities
1.Trying to fix legacy systems
2.Disrupting disruptors
3.Real innovation in emerging
markets
6. Risks & Challenges
1. Timing. Being first not always
best.
2. Tech Infrastructure Building
Blocks
3. Scalability & Costs
4. Barriers to entry lower
5. Race to free (leaves with
regulated services)
7. What I say to investors / startups
1. Even riskier than normal early stage
2. More than ever investing in people / teams
3. No idea is unique.. For long
4. Stealing advance in a general direction
5. Blockchain 10% practice 90% planning
6. Borrow more than you build
19. Fundraising Overview
Coindesk tracking 138
VC-backed total
BCA Tracker has
1,000 VC and non-VC
backed
Biggest deals in Q2
Circle Series D @
$60m
Quione @ $16m
Bit Flyer @ $27m
Elliptic @ $5.0m
Fluent @ 1.65m
Mediachain @ 1.5m
Tierion @ $1m
If you exclude theDAO
20. ICO – Initial Coin Offering
• ICO the new ‘pre seed’
• Unique to blockchain. Self funding mechanism
• Still only 0.05% of global crowdfunding
• Unclear regulatory position (SEC, tokens as securities)
• Positioned as ‘future access to a network’
• Small pool of ‘buyers’ (Razormind: $1.9m from 290 individuals)
We moving from Bitcoin early adopters; libertarian, academic to
Commercial BaaS
And open standards
Needs re different
15.8% of startups are building products categorized as ‘infrastructure’. This is down from 18% from February.
Bridges - interoperability between blockchains and extending the bitcoin blockchain functionality. BTCRelay, Rootstock, Blockstream, and Interledger
On / Off Ramps With 28%, startups with ‘no HQ’ constitute the second largest ‘location’ of blockchain startups and projects after the United States. This could either be explained by the nascency of the industry or the blockchain industry could have the potential to be a stateless market that doesn’t necessarily require on/off ramps.
That said, 1.4% of startups are based in Hong Kong and another 1.9% in Switzerland. This suggests that blockchain startups are very much aware of friendly regulatory environments & tax laws.
ROLES & RESPONSIBILITIES
Identity 3.3% of startups are focusing on ‘identity and reputation’. There is a real need for a standard or clear winner in the space, that can be deployed easily by startups.
It is impossible to pick a winner because success will be more about geopolitics than technical superiority. Identity is a problem that permeates the global economy broadly, but ShoCard, Airbitz, and Blockstack
Reputation: There are 33 companies building identity and reputation services, that is a duplication of effort and not sustainable, we expect to see consolidation in the market very soon.
3.6% of startups engaging in ‘governance and transparency’ activities which covers things like decentralized voting, new company and governance structures, and third-sector structures.
7. USABLE SECURITY - Airbitz
Trent of Big Chain DB
Filament, Slock.it, Chimera and TilePay
VARcrypt / 2% tracker are gaming Pokeman promise
‘Distributed Manufacturing’ CubeSpawn, 3D Plex, Creative Barcode (Manufacturing Design)
Generally Early VCs from US filling gap
specialist act
ing as lead to Silicon although activity in Asia is hotting up
About 50 VC firms & 30 tech angels
Netscape web browser
A number of corporate venturing
Cisco here is this building want 20% of startups target
20% of Barclays last batch were blockchain
Expect to see more thatTaking VERY simple use cases. We had one
Biggest VC deals in Q2 mainly B2B
Eliptic – illict behaviour
Tierion – data files
Circle now $136 mainly China overtaking 21 Inc at $121m
Bitflyer now biggest Asian startup at $33.94m
We know of at least 200 Ethereum based POCs.
We estimate 1/3 of are beyond POC and at MVP (minimum viable product), with varying levels of customer traction with modest professional funding.
software or communications including mining companies, wallet, most infrastructure
finance and insurance is more the payment processors, exchanges and trading
The areas getting the most level of funding and progress, beyond Capital Markets, seem to be around provenance / chain of custody, governance (corporate, public and NGO), Health, Energy, Insurance and IoT.
We know of at least 200 Ethereum based POCs.
We estimate 1/3 of are beyond POC and at MVP
The areas getting the most level of funding and progress, beyond Capital Markets, seem to be around provenance / chain of custody, governance (corporate, public and NGO), Health, Energy, Insurance and IoT.
UK is home for blockchain fintech – Brexit
When asked 28% said without HQ
Statelessness or nascent
But 4.7% Switzerland & Singapore