The Japanese expression of gratitude we heard everywhere, almost always accompanied by a bow, delivered with a lilt, is so different from the distant almost insincere “thank you” we mutter in most parts of the world. And that is Japan for you: a modern, developed society, that is so genuine, still steeped in ancient culture, that it stands apart from every other developed country we have been to.

Before you go

Packing: there was much debate in the family about how to pack for our 8 days in Japan. We did China with backpacks and that worked really well. We wanted to do the same in Japan as we foresaw a lot of train and subway travel. But the kids argued that Japan has excellent infrastructure featuring long walks in train terminals and airports and very crowded subways, where a small rolling pullman would make more sense. As it turns out we found Japan was both — backpacks work best outside the big cities and the rolling bags worked better in the giant train terminals. …

The Trading Show is an esoteric conference that brings together people who work in niche areas of fintech like algorithmic trading and increasingly in digital assets and cryptocurrencies. I was invited to speak at the Chicago event last month on the subject of Fintech and its evolution, which presented a good opportunity to introduce our investment thesis for the next series of funds from Applied Crypto Ventures.

From Blockchain to Fintech 4.0

Back in late 2017, when Applied Crypto Ventures first fund announced our framework for investing in Blockchain, we were very focused on blockchain protocols at two levels:

1. Cryptographic innovation to establish new secure distributed ledgers (also called Layer 1 protocols) like Bitcoin, Ethereum, Hashgraph, Algorand, etc. …

In “Crypto” yes, but blockchain technology is thriving

Welcome to the first of our new periodic updates about our blockchain-tech focused funds, our strategy, our portfolio, and sector news.

Highlights

• Should you read this update? Only if you are curious about how a diversified VC fund focused on blockchain and ‘decentralized finance’ can thrive despite the decimation of cryptocurrency valuations.
• Our maiden fund, ACV Blockchain Fund I is completely invested across a portfolio of 27 holdings across equity, tokens, and cryptocurrency investments (approximately a third in each category). Visit the portfolio here.
• Fund II is now open to qualified accredited investors (see disclaimers below) and several existing investors in Fund I have signed up for Fund II as well. Most have funded their commitments already. However we are not investing from it yet, while we tweak strategy to adapt to the changing blockchain opportunity. Accredited investors who are qualified clients may wish to check out Fund II (sign up to learn more). …

1: The rise and fall of bitcoin

Bitcoin has been spoken about a lot in the 10 years since its birth. Unleashed on the world in 2008, a few weeks after the financial crisis was ushered in as indicated by the fall of Lehman Brothers, it largely stayed in corners of the Internet till a mini bubble grew and popped in 2013–2014. Since then a lot of excitement has built around cryptocurrencies and Bitcoin and other coins flourished, especially in 2017, only to meet their comeuppance in 2018.

2: People looking for information on bitcoin

Anyone who is keenly interested in the blockchain sector, has probably realized that the blockchain technology market has matured and is primed to solve real-world problems, far separated from the hype and hysteria of cryptocurrencies. As thoughtful, thematic, and analytical venture capital investors (rather than crypto speculators), we at Applied Crypto Ventures have been firm believers in the enterprise blockchain opportunity.

Important Note: The class of technologies colloquially called “blockchain” is now more accurately called Distributed Ledger Technology (DLT), with blockchain being one architecture that works pretty well and is most familiar as it underlies popular cryptocurrencies.

From the inception of our first fund over a year ago, we had been looking for a platform that would deliver on the promise of blockchain technology for the enterprise. We knew that the next-generation enterprise software stack was perhaps the largest prize in the near to medium term in the DLT. As experienced enterprise tech investors and operators, we also knew that the platforms already positioned in this market (like HyperLedger, Stellar, and Corda) were imperfect and that their promise was front-running their capabilities. However, we also possess the humility to admit what we didn’t know: the kinds of enterprises that would adopt DLT first, the killer app that would spark adoption, or the features and functions that would work well within enterprise constraints. …

We recently completed our first overseas reconnaissance as we look to give our portfolio greater geographical diversification. Given the summer lull in the Americas and Europe, it seemed an opportune time to connect with a part of the world that does not slow down much in July and August: Asia.

First stop, India!

The choice of Mumbai as a stop on this tour was one of convenience rather than necessity. Having procured an incredible airfare to Mumbai, I set up meetings in an ecosystem where I have deep connections, given my previous investing experience in this part of the world.

Going in, having heard of scams in the market, regulatory restrictions, and limited local tech talent at the protocol level, I was skeptical about blockchain deals here. But I was pleasantly surprised. …

Those of you following AVG Blockchain Fund are probably aware of our laser focus on the foundational layers of the blockchain stack. Our strategy has been largely based on our published thoughts regarding near-term opportunities in the sector in infrastructure and protocols.

We have also developed a view that in this nascent sector, the best deals in line with that strategy (entrepreneurs, technology teams, and investor syndicates) are based in the US — and consequently our early stage investments have been concentrated here.

However, we are now revisiting our geographical concentration strategy based on three observations:

• Listed currencies are sensitive to geography. A sizable part of our portfolio is allocated to listed currencies (also called alt-coins). As we rebalance the currency portfolio away from Bitcoin and Ethereum and towards alt-coins with other properties, geographical exposure has become a prime consideration. …

Enough people asked me to present a primer on how blockchain works (rather to answer the question: is it Bitcoin or is it Blockchain) that I decided to put together a set of slides.

Note that I make some generalizations here in the interest of keeping it simple enough to be a first introduction.

My long form posts on Blockchain investing:

• A Framework for Blockchain Investing
• Guardrails for blockchain investors
• My latest adventure: a Blockchain VC Fund for qualified individual investors

I welcome your thoughts but minimally please clap so I know you find this interesting.

Originally published on Medium; all views are personal.

Other analyses from me on Medium:

• VC/PE Fund Performance Metrics
• Getting real with Deep Learning