Angel Investing & Blockchain Angels Nest • Merida • Nov 2017 

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

What is a blockchain? IBM Blockchain 101 

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

Audience Interview 

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 

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

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

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 

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

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 

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

What is an ICO? 

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 

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 

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 

Blockchain in Mexico 

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 

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 

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

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

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 

How should angels invest in blockchain companies? 

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 

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) 

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 

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 

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

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 

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

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.” 

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