The first real revolution in VC Stefano Bernardi Crypto tokens and ICOs

ABOUT VC Startup VC Crypto? ?

What’s a token and what’s an ICO? Crypto token Digital security Digital token ICO Crowdsale Token sale Coin ITO “An ICO is a way to raise money for a new cryptocurrency project by distributing a percentage of the initial coin supply among the early supporters and backers” Smith and Crown “A crypto token can be any kind of digital asset or any digital representation of a physical asset, which is recorded on a cryptographic blockchain” yours truly Crypto asset Token distribution event

Intrinsic tokens Asset-backed tokens Application tokens Types of crypto tokens

Why does it matter? $100B+ TOTAL MARKET CAP

Why does it matter? 0 500 1000 1500 2000 ICOs Blockchain-related early stage VC Early stage VC $2,000M $140M $350M $2,000M $140M ICOs vs VC

Why does it matter? ICOs vs VC

Why does it matter? 0 1,000 2,000 3,000 4,000 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Ethereum-related repos on Github

Why does it matter? Protocols & Infrastructure Middleware & DevTech Capital & Liquidity Applications Distributed computing Distributed Storage External Data Identity & Privacy Cryptocurrencies Crypto Funds Asset MGMT Public Blockchains Private Blockchains Market Cap over time GovTech Legal Tech Analytics & Resources Exchanges & Wallets Scalability & Interoperability By Alexander Ruppert, VC @Earlybird. Supplychain & Logistics Energy DevTech IoT & mesh networks Marketplaces Infrastructure Attention thanks to @alexruppertvc

Why does it matter? CVC + Major VC-backed companies launching tokens and many others coming soon

Why does it matter? $36M raised 24s total time (2 blocks) <150 total investors $8M largest transaction $4000 largest transaction fee 10x price on exchanges

Value shift Fat protocols

Why tokens? A new tool GOVERNANCE ECONOMIC INCENTIVES MONETARY SUPPLY AND FISCAL POLICY INFLUENCE USAGE

Value shift Tokens: The end of monopolies?

What’s the difference? Ownership model VENTURE CAPITAL CRYPTO TOKENS Preferred equity shares Cryptographic protocol / usage tokens Investors Accredited angel investors, institutional ventures funds Retail Capital entry Rolling seed rounds, structured venture rounds ICOs Capital exit Acquisition, IPO, (dividends) Liquid exchanges Structure C-Corp, Ltd Anything, usually LLC + non-profit foundation Lock-up 5-10 years none Investor protections Board seats, covenants, shareholder approvals, etc. none inspired by William Mougayar Information Private: Deck, business plan, KPIs, team, metrics. Public: Whitepaper, product, team, open source code.

Difference #1: LIQUIDITY A new world

LIQUIDITY

Lose control of price At the mercy of the market from day 1, including: - pump and dump schemes - malicious owners - market mood swings LIQUIDITY

Difference #2: PUBLIC and DEMOCRATIZED A new world

PUBLIC and DEMOCRATIZED 100X bigger investment base More distributed ownership Engaged and incentivized user base Substantial upgrade for companies outside of VC-heavy hubs

100X bigger investment base More distributed ownership Engaged and incentivized user base Substantial upgrade for companies outside of VC-heavy hubs People will lose their shirt No idea on owners identity and amounts No “very invested”/aligned owners Value often irrational PUBLIC and DEMOCRATIZED

Difference #3: Basically NO REGULATION A new world

Great experimentation in governance structures Level-playing field all over the world NO REGULATION For now

Great experimentation in governance structures Level-playing field all over the world Lots of scams Very hard to litigate
 
 Companies creating tokens just for fundraising purposes, with no real utility NO REGULATION For now

Difference #4: IT’s NOT EQUITY A new world

PREDICTIONS / TRENDS Normalization: Pre-ICO rounds (and funds) Milestone-based investments Tokenized equity Completely new value-distribution models A new breed of amateur investors Regulation is coming

A final, crazy prediction: In 20-30 years, token exchanges will be bigger than the stock market.

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