802: Crypto VC: After $10m Raised in ICO for Fund 3, Now Demand High for $250m Fund 4

Spencer Bogart. He's a managing director and the head of research for Blockchain Capital, the premier venture firm for investing directly in the blockchain companies. Prior to joining Blockchain Capital, Spencer was a VP of Equity Research where he covered traditional software and internet stocks. He had his first industry report on blockchain technology and is the most active analyst covering bitcoin.

Famous Five:

• Favorite Book? – Zero to One
• What CEO do you follow? – Balaji Srinivasan
• Favorite online tool? — Telegram
• How many hours of sleep do you get?— 6
• If you could let your 20-year old self, know one thing, what would it be? – "I just wish I would have spent more time on bitcoin"

Time Stamped Show Notes:

• 01:48 – Nathan introduces Spencer to the show
• 03:10 – Crypto hedge fund has created a "honey pot" for hackers
  • 03:18 – The "honey pot" is actually bigger on the exchanges
• 04:23 – Most companies are now making bitcoins more accessible
  • 04:45 – Spencer shares how to use Coinbase
• 05:00 – Spencer has predicted that there's a sub 25% chance that the US SEC is approving a bitcoin ETF
  • 05:21 – It is difficult for regulators to get comfortable with bitcoin
  • 05:30 – Spencer shares the pros and cons of approving a bitcoin ETF
  • 06:02 – There has been changes in US SEC's administration that could be favorable with the approval
  • 06:39 – There's an ETF that was disapproved, but appealed and it was then granted
  • 07:34 – There are speculators who moved in beforehand
• 08:03 – Blockchain Capital is a VC firm that has focused on blockchain for the last 4-5 years
  • 08:14 – The last fund they did was their own ICO
  • 08:23 – Their cap was a $10M offering
  • 08:33 – Their offering's sold out in just 10 minutes
  • 08:50 – They are currently raising their fourth fund
• 09:10 – The industry has been changing consistently
  • 09:36 – "We're just all hands on deck"
• 10:08 – Blockchain Capital's fund one was $3-5M and fund two was $15M
  • 10:40 – Target fund for the fourth one is $250M
• 11:12 – Spencer shares about their Civic deal
  • 11:50 – Civic allows you to provide your identity to others without them getting your identity
  • 12:28 – Civic's ICO
• 12:50 – Spencer discusses with his team how they handle situations where they had an initial investment of token sales
  • 13:22 – Tokens are not dilutive
  • 13:57 – People who bought into token issuance won't directly benefit from the acquisition of companies
  • 14:08 – There's a lot of demand for under-line technology
• 15:35 – Spencer shares the problems Civic is trying to solve
  • 16:18 – Civic wanted to sell enough tokens to get the attributions abroad to create an initial user base
  • 16:35 – A company won't sell its equity upfront
• 17:45 – Spencer made their acquisition and token issuance in two totally different time frames
  • 18:13 – Token offerings have different models
• 20:19 – Nathan asks Spencer how an entrepreneur can manage his money in order to run the business vs. what to keep
  • 20:31 – Most of the funds that have been raised should be converted to dollars so they can pay the bills
  • 21:05 – Spencer is liquidating usually 80%
  • 21:19 – "Do yourself a favor, convert into a currency that you can actually pay your bills in and pay the developers in"
• 21:57 – Spencer believes that Coinbase is the biggest brand in the space, especially in exchange
• 22:38 – Nathan asks Spencer, "what if any government starts normalizing crypto?"— the demand for the exchange would decrease drastically
  • 22:58 – Coinbase was incentivized to not see widespread government adoption of cryptocurrency because they need people to put money into their system
  • 23:20 – Spencer believes that if this happens, this will be a high class problem for Coinbase
  • 23:25 – There are companies who are using Coinbase, not just for exchange
• 26:24 – The Famous Five

3 Key Points:

1. Bitcoin is becoming more accessible to people because of the demand.
2. The government's regulation on cryptocurrency is still in its beginnings.
3. Liquidation of the funds depends on the company's decisions regarding what they need and their what their goals are.

Resources Mentioned:

• Simplero – The easiest way to launch your own membership course like the big influencers do but at 1/10th the cost.
• The Top Inbox – The site Nathan uses to schedule emails to be sent later, set reminders in inbox, track opens, and follow-up with email sequences
• GetLatka - Database of all B2B SaaS companies who have been on my show including their revenue, CAC, churn, ARPU and more
• Klipfolio – Track your business performance across all departments for FREE
• Hotjar – Nathan uses Hotjar to track what you're doing on this site. He gets a video of each user visit like where they clicked and scrolled to make the site a better experience
• Acuity Scheduling – Nathan uses Acuity to schedule his podcast interviews and appointments
• Host Gator– The site Nathan uses to buy his domain names and hosting for the cheapest price possible
• Audible– Nathan uses Audible when he's driving from Austin to San Antonio (1.5-hour drive) to listen to audio books
• Show Notes provided by Mallard Creatives