Blockchain — VS — The VC

Andrew Prell
Feb 24, 2018 · 7 min read

I have spent a great deal of time lately pondering the blockchain and its uses to benefit the universe. I have been drinking from this firehose of Blockchain information daily since August of 2017; however, my first exposure to it was hanging out with Jered Kenna of TradeHill in 2011/2012. Jered did his best to get me on the bandwagon back then and I could see its merits and uses but was too deep into my own thing — at the time I was preparing (at the time it was called Agora Startup Idol). was like an online Tournament Shark Tank with a NCAA style 64-team bracket where everyone, including the judges, participated via video conferencing from anywhere around the world.

Jered did try and convince me to build a reward system into the online event based upon this new thing called Bitcoin. Bitcoin was around $2 at the time, added a new layer of complexity to an already overly complex production, and besides, we had no budget. As the saying goes — if I had only known then what I know now……


I published a deck on SlideShare, Nov 18, 2011 about the event that had one stated goal I will cover later.

We ran the event out of the original Hacker Dojo in Mountain View, CA before they moved to their 2nd location. That was an awesome ecosystem of people who loved a great challenge, everyone chipped in to help out and we pulled it off. The event had one and only one stated goal — to get one of the startups 100,000 users through the process. We told every startup upfront not to expect to receive any funding from the event, the goal was to gain users or their core following which is more important in the long run for a surviving business. Four participants and 4 judges with a moderator came together in each heat of the tournament over video conferencing, we captured that live interaction and webcast it out with a gamification layer rewarding the viewers with “points” for providing valid feedback and engagement with the startups. How I wish those points were bitcoins. I believe had the worst production quality in the history of broadcast (someone please fact check that for me), It was very cumbersome to produce and almost killed the totally volunteer crew who pulled it off. However, each week it got a little better. We banded together around the one goal of traction and at the end of the day, one of the startups acquired 253,000 verified users through the system, another had gained 550,000 users he blames on us, even though we could not track them (which he did not care, because he on-boarded the users), and 11 of our contestants received funding. Go figure, actually receiving traction can get you funding, who knew….

We listened to a few of the VCs that participated and paused the 2nd event until THEY could write us a business plan and get us a true budget to improve the production quality. Nine months later we had lost our momentum and no one wanted to fund the business plan they wrote — lesson learned..

Fast forward to today and why I have been drinking from the fire hose of Blockchain and ICOs.

There is a contingent of Blockchain enthusiasts who believe the intelligence of the crowd will outperform any other human process, including and especially the Venture Capital industry. On the contrary, speak with many VCs and they believe that their specific process has been finely honed and crafted over the last 50 years and they are constantly getting better at it.

This sounds like someone should put these opposite opinions to the test. (Crowd roars as he drops the gauntlet)

Over the last week, we have brainstormed this Idea with people like David Orban, Keith Teare, Crystal Rose Pierce, Francoise Sinclair of Unicorn.VC (Brock and Crystal Rose Pierce’s private fund), Reese Jones, Oz Sultan, Crypto Consulting Group, and many others.

Blockchain — VS — The VC

Who’s the best?

How do you compare them?

How do you square them off for a true competition that can be tracked, verified, and validated?

Did that one VC just have a bad day with a few bad investments?

Is it a fair fight to pit the crowd against just one VC?

This sounds like a modern-day version of John Henry -vs- the Steam Hammer!
VC -VS-Blockchain
Old School -VS- New
Individual -VS- Hive Mind
People who must sleep -VS- a Blockchain that never does
Proven Analysis -VS- a Popularity Contest

As legend has it — John Henry did win the competition, but then died with his hammer in his hand. The steam hammer technology lived on and was constantly improved as a tool. Could this be a metaphor for the future?

At the End of the Day, it is really about “How best to serve our community.”

To make it a fair comparison, we decided to pit Nine (9) qualified professional investors against the crowd.

Here is a chart that describes the normal fund manager process in the graphics and the benefits of adding the crowd below each graphic:

The NEW “Grand Experiment”:

This is our plan we are currently working to implement: Convergence is setting up 10 funds with 10B of our tokens in each fund. The real improvement to the old Fund Creation process here comes at the start and end of the process. First, with the time savings of an instant fund and second, at the end of the process, with the Ready-Made Exit into the ecosystem. This creates a Virtuous Circle for our Tokens -AND- it onboards thousands of users to the startup while they are building their projects. Thanks knowledge. The token allocations must be to benefit our ecosystem, which encompasses much more than people think. There have been $1B Funds set up in the past just to invest into sub-sections of our total ecosystem, so, needless to say, these funds can be deployed far and wide and put to great use. (NOTE: By the time I was able to get this post edited by my group and submitted, 3 of the 9 slots have been spoken for by very high-profile people in the blockchain community — maybe this is just too good of a deal for the Fund Managers, IDK — Blockchain usually does that– if you are interested in a slot msg me on LinkedIn.)

Rules of the Game:

The Selected Startups/projects will receive 10,000,000 to 500,000,000 tokens each. They can only use or trade on a secondary exchange up to 10% of their holdings or 1,000,000 tokens a month, whichever is more. Each Startup can receive these tokens from more than just one fund i.e. the Crowd Fund can deploy 10M to them and 5 of the others could release 30M to them. In that example, that Startup would have a total of 160M tokens to supplement and help their project.

A Fund Manager must own and hold at least 200M of our tokens as their “Skin in the Game” while they manage the fund. This properly aligns their motives to those of the rest of the ecosystem and shows they believe in the ecosystem’s long-term success.

The Game:

Startups submit a video and a Google Doc application to the Crowd. They engage with the Crowd via our forums, Telegram, Youtube, Twitter and any other social media channel they can think of to sway our Crowd to vote for them. Every week the Crowd votes on how to deploy 2B tokens to their favorite projects. They vote on each project one at a time. Then vote on the amount to deploy to them from 10M to 500M tokens each. Once the 2B is used up, the remaining projects have to wait until the next week while they try to grab the attention of our crowd.

In the meantime, the Fund Managers can participate in this process because they are token holders. However, they can also be approached individually by the projects. The Fund Managers get to set their own personal selection process and have the advantage of reviewing the crowd’s selection process.

Every month the Crowd gets to vote on each of the 9 Fund Managers to award them an extra (2%/12) in management fees for their participation, engagement and effect on the process. At the end of the year the fund that has profited the most from their deployment of their tokens, receives an extra 10% to their carry. (Their carry goes from 20% to 30%)

The Crowd gets to participate in the 2% management fees of its fund based upon their involvement in the selection process, voting and management of their portfolio projects.


Learn, Improve, Reiterate this process — to create a better world for our ecosystem.

YES — this is not a perfect system and it will be ugly with warts from the start. However, if we all work together on it, it can evolve into a wonderful process for the ecosystem that everyone wants to participate in.


Since we believe in the wisdom of the crowd, please discuss the game and its rules and help us make them better. We hope to start some lively discussions on the promise and pitfalls we are opening up here. We want to fix as many issues with this BEFORE we launch it at d10e in May of this year.

Please join us on Telegram to discuss:

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