Getting exponential under the St. Louis Arch
St. Louis, Missouri — We interviewed Brian Dixon, a speaker on the inclusive finance panel hosted by the St. Louis-based Singularity University (SU). This organization teaches people about exponentially growing technologies that shapes our modern world.
Last summer SU launched its St. Louis chapter by focusing on the theme of digital divide, using advances in digital tech to reach underserved communities.
This time the forum is about inclusive finance. 1.7 billion worldwide are unbanked. There’s a huge gap in financial access and wealth distribution in poor countries, as well as advanced economies. Inclusive finance strives to provide affordable and equitable access to financial products for all households and entrepreneurs, especially the most marginalized.
By empowering people to exploit a wider set of economic opportunities, inclusive finance can be a pivotal tool in driving individuals, organizations and economies towards a sustainable growth path.
Brian is CEO & Managing Partner of the Off the Chain Capital, where he’s managing the firm’s the digital currency and blockchain assets portfolio. He’s also the COO of Capital Innovators, a startup accelerator that’s building out the entrepreneurial ecosystem in STL.
In this episode we speak with business and blockchain expert Brian Dixon, who is CEO of Off the Chain Capital, a…itunes.apple.com
This interview is edited for brevity and clarity.
How did you get involved in exponential technologies and in particular blockchain?
I’m originally from St. Louis. I went to law school at Washington University. It was back in 2012 when I first learned about Bitcoin and blockchain technology. I became completely infatuated with the opportunities that it could be. I started doing all this research during my free time. I had all these google docs and folders across my drive. I needed to aggregate it in a cohesive manner so I can understand it better.
I ended up writing two books. I wrote “Bitcoin Basics 101”, which is about taking Bitcoin and the technology blockchain, breaking it down in layman terms so the average person can understand it. The second is “Block Party on the Blockchain”, which is about startups in the blockchain and crypto space, what their value propositions were, the venture firms investing in these companies, and my predictions where this market is going.
That was the time in my life when I started dedicating my energy towards a path there. After working at a law firm for a few months, I wanted to take a shift. I came across Capital Innovators in St. Louis. At the time there was the CEO and one other individual running the org. I came in and learned about it and decided this would be an entry way into tech. I didn’t have a technical background. I started as an unpaid intern. After a couple months, I was able to take on a full time role.
We grew the organization from there. Over the last five years we’ve grown the portfolio, invested in over 100 startup companies in energy, consumer products, and tech verticals. About 85% of the companies are still operating and growing. We help them raised over $300M and created a little over 1,000 jobs, about 85% of which stay in St. Louis.
But that whole time in the venture space, I kept getting pulled into the blockchain. I’ve been an active investor since 2012. I began diversiying into other cryptoassets and learned how these markets were behaving in ways that were uncorrelated to other asset classes. Then other organizations and startups wanted to take what I had learned and implement blockchain into their existing business structures. Because of that, I cofounded a business that focuses on blockchains strategy.
What kinds of cryptoassets are you interested in at Off the Chain Capital? What is your guiding philosophy?
We’re very long term. We think the market is still very much in its infancy. It’ll continue to propel in the next 10–20 years. You’re always analyzing new protocols, new teams, new technologies, what’s their potential for disruption, how they’ll be using new markets. We consider the protocols we’re looking at just like how I would consider a venture capital investment is into a tech startup.
With my work with corporations and universities around the world, I get some insight into how they’re looking to adopt this tech. It gives me a unique opportunity to identify emerging cryptoassets and protocols that could be valuable for them but also for my investments. We’ve provided allocations to some of the more matured asset classes. Our strategy will also evaluate some of the more experimental, long tail protocols, get exposure to that technology early on as it’s developing and see how it potentially captures market value.
What are some interesting projects are seeing from the recent cohort of startups in the accelerator program?
We’ve invested into a company that tracks data flows into business processes into organizations. If you think about financial institutions, they have data flowing all over the place internally. This startup takes how that data flows and put blockchain next to their tech, not infiltrating their data. It’s another layer on top of that.
As that data flows from one department to another, they’re tracking that transaction and storing it on the blockchain. At month end, when you have an audit firm to ensure you’re doing things as it should be, you can reference their platform and show how the data moved throughout the organization, saving the organization 90% of their time and money, as opposed to how they’re doing it now , manually going through Excel spreadsheets, and seeing how the data moved, how the transactions took place and providing it to the auditors.
Capital Innovators has partnered up a traditional utility company in the Midwest to create an energy tech accelerator to support innovative solutions in smart grid tech., IoT, distributed ledger tech. What have you learned?
We created an opportunity for a utility company, Ameren. We also partnered with statewide university. We created an energy-focused tech accelerator program. We source brand-new energy innovations around the world. After we do due diligence, we’ll bring them [early stage energy startups] in and make investments. We’ll engage them with the utility. They’re getting hands-on mentorship.
In the energy space, it can take up 1–3 years to get a pilot in their company. We’re identifying new energy companies, bringing them to St. Louis into the accelerator program, in conjunction with our partners, and helping them to cultivate the solutions so they can deploy them.
It’s still early. We’ve made several blockchain investments into our energy program. For example, we have a company that’s building smart contracts that allow people using renewable energy to exchange on a peer-to-peer basis. We have another company that’s providing energy demand tokens so that users can actually monetize on their energy efficiency and savings at home by getting money via a utility or another partner to the user that’s saving the energy through a utility token.
The state of Illinois approved a market mechanism called NextGrid. When will that kind of peer to peer energy project be approved in Missouri?
It’s probably going to be approved quicker on the coasts, specifically on the West Coast, where we have larger adoption of renewable platforms like solar. An example of a use case would be: you have solar panels on your home and I do not. My energy bill is rising in that particular month, and instead of me continuing to purchase energy from the energy provider, I come to you and see if you can get me a more competitive rate. I’ll purchase my energy through you since you have been harvesting solar energy and you have access.
We can work out a different rate that could be lower and more competitive. I could purchase that from you. That transaction could be performed with a smart contract on the blockchain that would allow that mechanism to take place. You can build these contracts that’s just not a financial exchange. you can almost create a bartering system. How about I buy your groceries for next week. In exchange, you provide me some of your energy. It creates brand new business models that don’t even exist right now for how you transact on a peer-to-peer basis.
What is inclusive finance and why do you think blockchain is part of that solution?
Financial inclusion means providing financial products and services to underserved populations or populations who’ve never had access to traditional services. There are billions of people around the world who have never had access to a bank account, but they have access to a mobile device. Through this mobile device, these individuals can download cryptocurrency apps which they can use to transact monetary value from one party to another. Before blockchain technology that would not happen. That provides a huge opportunity to provide inclusion on a global scale for individuals who would never meet the conventional standards of lending or services and providing them these products and having them participate in the global financial system.
We invested in RippleNami, a company that’s deploying solutions throughout Africa and other underserved developing regions. They’re providing GPS tracking on the blockchain for different use cases. For example, it allows farmers a key associated with their livestock so they could track them. It’ll be tagged on the blockchain. Before, the cattle could be lost or stolen. This allows them to track their cattle more effectively on the ground. By doing that, they can buy and trade their livestock.
Is there something special about St. Louis or Midwest market that is suitable for tech?
Of the 100+ companies we’ve invested in, about 85% of those companies have stayed in St. Louis. From a pure cost perspective, you’re going to pay one-fifth in cost of living in St. Louis versus what it would be on the coast. It allows you to stretch out your dollars further along the business during growth stages.
The opportunity for connectivity in St. Louis is remarkable. Our program has a great track record of getting our companies with key decision makers and executive staff of major organizations. You can’t do that in Silicon Valley. You can’t just connect with someone at the executive level.
There’s an open embrace in St. Louis, people wanting to learn more about the startup community, see how they contribute, and help develop the ecosystem. We’re seeing engagement among the startups here sometimes better than the coasts. The entrepreneurial ecosystem has skyrocketed in St. Louis over the last 10 years. Multiple times we’ve been ranked as one of the top startup cities in the U.S.
Editor: Dang Du
Guest: Brian Dixon