Venture Titans: AV’s Top 20 Blockchain & Fintech Investments and What’s Next

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  Speaker 1:

  Hello, I’m Mike Collins. Today we’re going to talk a little bit about decentralization. You hear a lot of buzzwords around crypto and day trading and the role of technology in the modern economy. And as a venture capitalist, one of the things we do is we try to look beyond the horizon and think about technology trends that we can ride. And one of the big trends is around the technology of decentralization, disruption, and blockchain, and we’re going to talk about that a little bit today from our perspective, share some of the specific companies we’ve invested in, and talk a little bit about where we think the future is headed. So thanks for joining.

  Before we get started, our lawyers have us read the disclosure that this is not an offer to buy or sell securities, which are made pursuant to formal legal documents. This is just our view of the world and the investing landscape. So what I’m going to cover today, probably in 20–30 minutes, I’m going to just introduce myself and Alumni Ventures, talk very quickly. For those of you less familiar, about decentralized ledgers and blockchain—what we’re really talking about here beyond the hype—our belief that the big theme of the power of decentralization when it comes to software and technology is what we’re going to be seeing over the next decade or two. We’re going to talk specifically about some sectors and investment pillars that we have and some of the really interesting companies solving real problems that are within our portfolio. And then obviously end up talking about our own book. Alumni Ventures has a series of focus funds, one of which is a blockchain fund. So this is about the future. This is about a long-term commitment to a secular trend. Again, this is not about today’s headlines.

  So just briefly about myself, I grew up in the Midwest. My first job in venture capital was with a venture firm in Boston in 1986. My calling is at the intersection of innovation, entrepreneurship, technology, and venture investing. And I started this business to bring smart, simple venture portfolios and deal access to retail. The thesis behind the company is pretty simple: that we can do better together in this asset class than any of us could do on our own. We’ve been successful. We’re able to offer access to deals led by some of the top venture firms in the world for as little as $10,000. We’ve grown to almost $1.5 billion, 11,000 individual investors. We’re typically ranked among the top handful of most active VCs in the world by PitchBook. And we have employees roughly split between our headquarters and regional U.S. tech hubs like Menlo Park, Boston, New York, and Chicago—again, roughly split between investing professionals and back office.

  Our niche is that we try to be a co-investor of choice to an entrepreneur. So we only co-invest. We don’t lead rounds, we don’t sit on boards, we don’t price rounds of financing. We try to add value to the entrepreneurial team, which I think we have a great reputation for doing. And that network, that community allows us to get into amazing companies, some of which, just for ease-of-use sake, we put together in an Apex 50—companies that you might recognize. So we encourage people to check it out because at the end of the day, venture capital is about the deals you can get into and do.

  I mentioned before, we are a co-investor. These are some of the firms we co-invest with—not all—but you can see we do a lot of deals with names that are very well thought of within the venture space. And it’s even true kind of a layer down—the individuals within these firms that we love to work with. So again, we think and our goal is to be a co-investor of choice that provides amazing deal access to our community. So enough about me, enough about us.

  Blockchain, if you’re not familiar, is software. It is a distributed ledger technology that is recorded on blocks within a chain that are mathematically proven and distributed.

  It allows some really strong benefits.

  So what is the value of this technology, without having to kind of understand the nuts and bolts of it? One, it’s distributed, decentralized, which allows us to not have to trust the other co-party. The technology itself is quite secure. If you look at some of the white papers, even with some of the buzz around quantum computing, Bitcoin’s been around a long, long time. The Bitcoin itself is incredibly secure and tamper-resistant. These things are immutable, hard to forge. There are layers that can rest upon this technology stack. But at the heart, this is a very powerful software framework.

  In the same way I think one can think of some of the things going on with LLMs and some of the work in machine learning as a new technology, this too is a new technology. And in fact, there’s some really interesting synergies between things going on in AI and blockchain technology that I think are compelling and additive. Trust is one reason that with AI and DeepFakes and the ability to do all kinds of really fast, fancy stuff, trust is going to increasingly be something that’s valued, and blockchain can really be a technology that fits within that.

  So think about this as a technology wave, not as a meme coin.

  And by the way, I’ll just say that we’ll send this deck to people. Some of the stuff I’m going to go through pretty quickly. You can read it, read it again. Sometimes there are links in it. Sometimes you’re going to want to take a side journey to check out a company. We think that’s great. I’m just not going to do that within this presentation and this webinar today. So feel free to use this as a resource.

  Again, I want to make this point. If you want to simplify a trend that you want to believe in, in order to invest in blockchain and these kinds of companies, I think you want to believe we’re going to live in a decentralized world where there’s going to be dismantling of centralized power structures, disruption of big institutions, industries, companies, and that you believe in the power of the people and the power of a distributed network. If you do believe in that, I think it can make a lot of sense to allocate a part of your portfolio into these kinds of companies. That is just good diversification. That’s first principles, that’s thinking.

  So again, I mean I think some of this is intuitive to a lot of our viewers who tend to be thoughtful, educated people, but there are some real benefits to disruptive systems, right? Control with the user, the ability to have redundancy, ease of use, efficiency, things being manipulated for purposes you don’t agree with. These things are all where we think the puck is heading in the next generation. So we’re believers in the secular trend, we’re investing in it. It’s one of the pillars of Alumni Ventures and what we believe the future is going to look more like. So we’re big believers in decentralization, and this technology is a way to manifest that.

  Listen, here are some breakdowns of some of our investments into different and somewhat orthogonal takes about investing in this trend. So we clearly have our blockchain protocols, scaling solutions, infrastructure, security, identity networks, asset ecosystems. Again, if you’re in the space at all, some of these names like Kraken, Circle, Qui Network, Misten Labs, companies like BlueSky, Upstart, Carta—these are things that we’ve invested in in the space of what we view as kind of within the remit of the decentralization blockchain investment thesis.

  So take just one of the companies—BlueSky—which we did as kind of a pre-seed round and has gotten a lot of buzz lately as kind of an alternative to X.

  And I think superficially people say, “Oh, X is the wild west and BlueSky is the nice version of social media.” This investment was actually done by our blockchain team because the structure of the tech stack at BlueSky is very different than X. There’s a lot more ability to control your data, create your own version, private. It’s really a centralization versus decentralization view of the world. So one of the reasons we’re bullish on the company is we just like that tech stack for the long term much better. So again, within the thesis of blockchain, you have a company like BlueSky.

  So I’m going to go through these really quick. I’m going to encourage people to kind of scan it, go through it. I think I want to make the point that we’ve been investing in this space. Alumni Ventures was incorporated in 2013. It got kind of started in 2014–2015, and we had our first blockchain investments back in 2018 with our very first blockchain fund. So the ability to get into companies like Circle, Kraken, Algrand—either through investing in the company or investing in companies that were purchased by these companies—dates back quite a time.

  So we have, I think, a really exciting portfolio that is just beginning to reach kind of the maturity phase where they’re starting to do token drops or think about going public. So I think there are obviously continued opportunities not only to invest in some of these amazing portfolio companies again, but there’s always another generation, another wave of technology that’s going to be built on decentralization and disruption.

  And again, I think we’re in maybe the third inning of this trend, and I think it’s going to be turbocharged actually by some of the work over the next five years that’s going to take place in our society regarding AI. So I think they’re very much sister investment areas that one should consider.

  So here’s blockchain protocol scaling solutions next: Misten Labs, Qui Networks. These are companies that are just doing really interesting work. They have just dropped tokens relatively recently. I mean, this is one of the things about investing in the space—a lot of times, not always, we’re going to invest in the kind of lab, the company. But also, because of that, we’re in early. A lot of the time we get a big chunk of tokens. So there are several opportunities to provide exits and liquidity for our investors.

  Babylon, TRM—I’ll just go through these pretty quickly. Again, encourage people to check them out. Some of the interesting work they’re doing—Sahara, Soso Value—relatively new investment we’ve made just last year. Really, really doing interesting work and has had a few huge up rounds. I also want to point out here just the nature of the firms. Some you’ll recognize—Sequoia China. But again, if you’re in the space, these are players that know what they’re doing when it comes to leading rounds of financing and investing in distributed ledger technology.

  Upstart—this is a company that we were invested in early. Really a little more in the financial AI space, which is in the remit of this fund as well. This company did go public. We did really well on it.

  We have now exited Upstart, but it was a really good investment for our investors.

  Next again—Carta. A lot of you are familiar with Method. Really interesting company, really strong investor base. Again, just giving you a teaser on the depth and breadth of our distributed ledger technology.

  So if you look at the top 20 companies within our portfolio, I think we’re seeing a lot of these things as kind of common themes. I think there’s a really—I’ve mentioned before—really strong merging between AI and blockchain. This is a kind of “two plus two equals 20” kind of situation. I think we’re seeing decentralization in a lot of areas. Social media—we talked about BlueSky. We also have investments in research, supply chain management—where this technology really helps keep track of things safely, authentically, really hard to have fraud. I think we are seeing a maturity of the industry and the companies within it really wanting to do things the right way.

  Obviously there’s a phase of any new technology that is kind of the wild west with kind of get-rich-quick schemes. One should not be deterred from technology always winning. So you’re going to go through these phases of wild west, disillusionment, growth, hype—but the endpoints are up and to the right.

  Again, we are just big believers that more and more people are valuing privacy, security, data sovereignty, ownership. They want to control things personally, locally—within their company, within their team, within their family. And so we think this user-centric, disruptive, and distributed trend is here to continue.

  I also think we’re going to continue to see changes in the internet and the web and how one experiences what has been a Web2 to Web3 transition—which I don’t think is going to be an explosion. I think it’s going to be like boiling a frog. And I think it’s like in 2030, we’re going to have a very different operating internet world and web. And I think, for example—I’m looking at my phone on my desk here—I think what our phone is going to do and how it’s going to act is very different today than a centralized app-centric thin AI layer. I think those things are going to change, and we’re investing in that future.

  So again, this is just—I’ll leave it for people to look at—our fund history here. Going back to 2018, various size funds. Again, I think these are all portfolios that are relatively immature yet. The average fund is 10 years, where most of your returns come from kind of the last third. There’s a J-curve in venture capital, where kind of your lemons ripen early. So we’re feeling really strong about our funds, including ones that are starting to enter their sweet spot of value creation.

  I’ve made this point before, but this is just kind of another visualization of—when you’re doing deals with these kinds of players—it is because they have their pick of great opportunities. So if there is a chestnut about venture capital, I would give you three:

  1. One is you want a large portfolio that is diversified.

  2. Two, you don’t want to time markets—you want to invest consistently.

  3. And three, you want to invest alongside really strong lead investors who know the vertical, know the space, and just understand that it’s a long-term illiquid asset class that is power law—where your winners more than pay for your losers.

  But the great companies have a tendency to go to the very best players in their space because they can. And so there’s a strong correlation between names on this list and this list, and who is going to do really well as an investor.

  And one of the things we try to do at AV is give the heart surgeon in Des Moines who’s done very well access to these kinds of deals within their portfolio. And that’s a win for everybody. So selling our book here—again, if you think decentralization is going to be a thing, we’d like to be your venture capital partner.

  That’s our ask. Encourage you to check us out, read the materials, talk to us. We are open to a broad swath of personalities. We have people who are just getting into it for the very first time, and they want to kind of take a baby step and invest in a diversified fund with $10,000 that has 20 or 30 companies in it. They’re curious. There’s a place for them with AV.

  Also, with a chunk of our customers are people who have kind of made their “screw you” money and are thinking about legacy and the next generation and giving back. And we love working with those people through their trusts and their specific areas of interest.

  We have trophy hunters who are all about alpha—trying to build financial security and wealth—and they want to allocate 10% of their portfolio to taking big swings.

  We have people channeling Warren Buffett who think about this kind of very unemotionally, very rationally, and understand that equity is where it’s at, innovation is where it’s at.

  And that it’s very hard to capture that if you just wait for public companies in an era where nobody wants to go public. So there’s a secular trend of staying private longer and creating more and more value. And I think we’re going to see the blurring of public and private companies into semi-public companies. Some of the later-stage technology companies have value in the tens of billions and do secondary. So I think it’s hard to ignore private venture investing if you really want a well-diversified portfolio. And asset allocators get it.

  And then there are people who just are focused on their career, love technology, read science fiction, and they want to know what’s coming. They want—for their own career, their own life, their own families—to understand where humanity is going with technology, which is really upstream to our lives. And they invest to be in the know. And many other personas.

  And we want to understand you, your needs, and help be your venture capital partner.

  So if you want to reach out, obviously you can check out our website. We make it really easy to talk to us. We love talking to people. We have a variety of funds to suit your particular needs. Talked a lot about our blockchain and fintech fund today.

  We also have AI and robotics. For our first-timers, we have an AV Foundation Fund, which is very diversified and a really nice place to start.

  We have alumni funds. The nature of the company is—we started out with communities built around really kind of top academic entrepreneurial institutions: Stanford, Harvard, MIT, etc. So if you’re an alum of one of those schools or want to get into those communities, we obviously have those as well.

  So bottom line is—it’s an interesting time. We’d like to be your venture partner. There’s lots of material and education that we’ve created as a retail-first VC firm, and we’d love to talk to you. And yeah, right on 30 minutes.

  Thanks for your time today.