In a June report by financial market intelligence firm Greenwich Associates, it was estimated that investments in Blockchain Technology will reach $1 billion by the end of 2016. This survey showed that venture capital backed investments in Blockchain and Bitcoin companies grew a multiple of 158 times from 2011 to 2015.
As a blockchain advisor and investor, Steven Nerayoff keeps a close eye on emerging trends in this space. A former securities attorney, Nerayoff cut his entrepreneurial teeth in Silicon Valley, starting six businesses, all of which are still active. He continued running companies until 2007 when he started a venture fund called Maple Ventures assisting blockchain and other tech startups. Nerayoff is a big proponent of the Blockchain 2.0 movement, serving as a senior advisor to Ethereum and Lisk, assisting these two emerging companies with their legal and business strategy.
In an interview with CoinCap News, Nerayoff shares his observations about the blockchain investment landscape and related trends in this space:
What are your thoughts on Blockchain’s emergence?
There is a huge renaissance occurring in FinTech that’s being spurred by the Blockchain. I felt it in my bones back when I got into this space five years ago. The advancements taking place right now are going to be unprecedented.
What factors do you see as critical in evaluating Blockchain investment opportunities?
Building upon my experience, I’ve shifted nearly all of our investments into Blockchain. When sizing up an investment I look at factors like the quality of the development team and who else is behind the project. I also like to know whether their leaders have some prior experience in tech. And longevity is important. If they’ve existed for 2-3 years, that speaks volumes.
Are there factors that in your mind raise the likelihood of success for a blockchain startup?
I look closely at who their CTO is. The blockchain application platform Lisk is a great example. Their CTO Olivier Beddows is at the right age and has really good background and experience.
For me, the operative question is whether that person can truly lead a technology team. I’ve personally had startups with a CTO, a Chief of Engineering and hundreds of programmers underneath me. So I understand how complex these platforms are to build and how difficult it is to stay on target with project timelines. I also look to see whether they are solving a pain point that’s optimal for the blockchain to solve. I assess whether they can solve it in a way that is will eventually catch on with the masses.
How can blockchain startups best navigate today’s competitive environment?
Given the competition, having first mover advantage is helpful. We’re already seeing this with Monera, Dash and eventually Zcash in the private transaction niche.
All of this begs the question “who is going to ultimately make it?” And more importantly, can they extend beyond themselves in order to achieve momentum. Take Zcash for example. I believe they possess the unique ability to extend beyond its own currency. In other words, Zcash could be embedded into other currencies, other systems, other protocols. Another example is Lisk. What I like about them is their ability to easily port over applications like those built for Ethereum onto the Lisk platform. They are making moves that I believe will be very impactful.
What do you see as blockchain’s key value proposition?
A lot of people say that blockchain is a great database. I respectively disagree. I think it’s a horrible database that is inherently inefficient. However, it does offer a huge feature that current database offerings like the Oracles and Mongos are not offering. It’s called immutability. That’s really huge, particularly when you begin looking at blockchain applications such as those being advanced in the public sector. When something gets recorded, it’s important that it become a permanent record. Blockchain does that.
Are there any startups that have really captured your attention?
I am particularly enamored with Zcash because they are very careful about every detail concerning their project. And the lead developer Zooko Wilcox, well, I’ll go on record in telling you that I have rarely seen someone be as properly, appropriately paranoid about getting the product right before it goes to market than he has. He has a really, really strong team and group of advisors. In observing his work from a sort of “outsider-insider” perspective so to speak, I have developed the highest regard for him.
Lisk is another startup that in my view is being very methodical about how they go about things. Like Zcash, they have not been in a rush to get to market, which is refreshing.
Any final thoughts on Blockchain’s future and investment opportunities?
While I don’t believe the blockchain has universal benefit as some would suggest, I do believe it will probably touch every single industry is one way or another for no reason than the fact that industries and nations are so interconnected these days.
This space involves big outside bets. For example, no one in their right mind would have suspected that Ethereum was going to have a billion dollar market cap today. I see that with Lisk, Ethereum, Zcash, absolutely. All three are well positioned to create billions and billions of dollars in value.