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Angel Investing & Blockchain - Angels Nest BIM Yucatan

Boris Mann
November 10, 2017

Angel Investing & Blockchain - Angels Nest BIM Yucatan

A mix of intro to Blockchain & crypto-currencies, plus ICOs, how angels should thinking about investing, and opportunities for Mexico.

Presented at Angels Nest / BIM Yucatan.

Boris Mann

November 10, 2017
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Transcript

  1. Angel Investing &
    Blockchain
    Angels Nest • Merida • Nov 2017

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  2. Boris Mann
    • First Startup Accelerator
    in Canada
    • Seed investing
    • National Angel Capital
    Organization (NACO)
    • Open Angel
    • Frontier Foundry

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  3. What is a blockchain?
    IBM Blockchain 101

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  4. Three Definitions of Blockchain
    • Blockchain as Innovation
    • Blockchain as Public Chain
    • Blockchain as Ethos
    Credit: Lisa Cheng, Co-founder Vanbex / EtherParty

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  5. Audience Interview

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  6. Describing Bitcoin as Money over IP
    “Blockchain is going to disrupt business
    models the same way that VoIP
    disrupted the telephony market. ”
    — Pantera Capital, Blockchain Letter, Nov 2017

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  7. Bitcoin was the first blockchain
    • Created in 2009
    • All other “coins”
    copied the Bitcoin
    code
    • Very complicated: C++
    code & miners

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  8. Top 5 “Coins” by Market Cap
    via http://CoinMarketCap.com

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  9. Ethereum includes smart contracts
    • Crowd sale / coin offering in
    2014
    • Created as a new coin, went
    live in 2015
    • In 2016, forked into ETH and
    ETC
    • Includes smart contracts —
    which are really apps — that
    run on the blockchain

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  10. Ethereum Tokens
    • Ethereum defines ERC20 — a token
    standard
    • An explosion of tokens — no C++, no mining
    • 2017 becomes year of the ICO - $2B+ raised

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  11. Blockchain as access to financial infrastructure
    “Developers and start-ups who wish to build financial
    products do not have open and unfettered access to
    the world’s financial infrastructure. While Ethereum
    doesn’t provide access to that infrastructure, it does
    provide a different infrastructure that can be used to,
    for example, create and execute a financial contract.”

    — Adam Ludwin, Chain, A Letter to Jamie Dimon

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  12. “33/ You could argue that investing in
    Ether is betting on the total economic
    value of all the tokens built on top of
    Ethereum.”

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  13. What is an ICO?

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  14. Initial Coin Offering (ICO)
    • aka Token Generation Event
    • Define a token and an economic model, sell it to
    global participants
    • Pay with crypto online through a website, get
    coins / tokens
    • $2B raised in 2017

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  15. Security vs. Utility
    • Many ICOs attempt to classify as utility
    tokens
    • Increasingly, many are being labeled as
    securities
    • Utility tokens are being traded on exchanges

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  16. ICO Regulations
    • China has cracked down completely
    • SEC has an enforcement group
    • Crypto friendly areas such as “Crypto Valley”
    in Zug, Switzerland
    • Every country playing catch up on regulations

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  17. Blockchain in Mexico

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  18. Mexican Fintech Stats
    • Debit and credit cards are used regularly by only
    18% of the population
    • Large usage of pre-paid credit/debit cards
    • 135K convenience stores (7 Eleven, Oxxo) where
    people deposit money
    • ~54% of the population don’t have a bank account

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  19. 4 Major Exchanges
    • CEX.io - credit card, ACH bank transfer, SEPA
    transfer, or AstroPay
    • Bitex - AstroPay
    • Bitso - SPEI Transfer, Oxxo or 7-Eleven
    • Volabit - 7-Eleven, Farmacias Benavides,
    Farmacias del Ahorro, or Extra

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  20. Total Funding by Country (US excluded)
    Jamie Burke, Outlier Ventures, CoinDesk / Coinbase

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  21. Opportunities for Blockchain in Mexico
    • Remittance
    • Mobile Banking
    • P2P Lending
    • Microfinance
    • Provenance

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  22. Can Mexico use Blockchain to leapfrog?
    • Blank canvas to implement new models
    • Along with adoption of smart phones and
    banking, can leapfrog straight to
    decentralized applications

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  23. How should angels invest in
    blockchain companies?

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  24. Types of Blockchain Investing
    • Hedge Fund: Many people are investing directly in
    Bitcoin, Ethereum, and other coins, in a sort of
    “crypto” hedge fund
    • Pre-Sales: Early access to ICOs through pre-sales,
    often with a SAFT (accredited investor only)
    • Angel: More traditional angel investment in the
    company directly

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  25. Simple Agreement for Future Tokens (SAFT)
    • Modelled after the Y-Combinator Simple Agreement
    for Future Equity (SAFE)
    • Instead of equity, get tokens at a discount when the
    ICO happens
    • Just as risky as any other form of early stage investing
    — opportunity for very early liquidity (~6 - 12 months)

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  26. Assessing a blockchain company
    • White Paper
    • Network Economic Model
    • Is it any different than reviewing any other
    company?
    • Challenge is absence of an informed angel
    investor community

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  27. Blockchain Take Aways
    • Blockchain will interact with many industries — fintech,
    supply chain, law, copyright
    • It is both a technology and a movement
    • Regions outside of the US may benefit more and have an
    opportunity to leapfrog
    • We are very early in the cycle — you need to put the time
    in to understand, research, and participate

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  28. Boris Mann • @bmann
    https://frontierfoundry.co

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  29. Frontier Foundry
    • Building a platform to work
    with Regulated Tokens
    • Initial target market is
    powering Debt Pools on
    the blockchain: Canada,
    Kenya, Korea
    • Close the finance gap for
    SMEs
    http://frontierfoundry.co

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  30. “Do you want to be a crypto cowboy or
    a pig farmer?”

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  31. Vinay Gupta
    • Programmable Blockchains in Context https://medium.com/humanizing-
    the-singularity/by-the-end-of-this-article-youre-going-to-understand-
    blockchains-in-general-and-ethereum-a-next-e11df6a1d7cf
    • What does Ether $100 mean? https://medium.com/humanizing-the-
    singularity/what-does-ether-100-mean-bb58522f781e
    • “A smart contract is a tool for changing the world.”
    • “direct communications between people, which are capable of
    storing and transmitting economic value.”

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  32. References
    • IBM Blockchain 101 https://
    www-01.ibm.com/common/ssi/cgi-
    bin/ssialias?htmlfid=XI912346USEN&
    • Letter to Jamie Dimon, Adam Ludwin,
    https://blog.chain.com/a-letter-to-
    jamie-dimon-de89d417cb80
    • Pantera Capital Nov 2017 https://
    medium.com/@PanteraCapital/vcs-
    missing-97-of-the-trade-blockchain-
    letter-november-2017-e02abd27c47f
    • What is the value of a token?, Sizhao
    Yang @zaoyang https://twitter.com/
    zaoyang/status/
    901099062254030848
    • Jamie Burke, Outlier Ventures, https://
    www.slideshare.net/jamie9010/
    investing-in-blockchain-startups-a-
    guide-for-angels-vcs, Slide 21

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