The Great Magnetic Pull of Crypto
Boston Blockchain Week Company Spotlights highlight the work of one Boston Blockchain and/or crypto company every month.
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“It’s like a vortex that pulls everyone in,” says Dave Balter, Founder and CEO of Flipside Crypto. Many of the blockchain founders and crypto investors we have met throughout the past few months have echoed the same sentiment — it’s hard not get hooked.
For Dave Balter, his entrance into the crypto industry comes as quite a change from his previous endeavors. A serial entrepreneur, having previously founded BzzAgent (acquired by Tesco in 2011) and Smarterer (acquired by Pluralsight in 2014), Balter and his partner, Jim Myers, Head of Engineering at Smarterer, were working on their second company together, Mylestone. The premise of the Company was to make people’s memories easily accessible on virtual assistants.
While things were progressing at Mylestone in early 2017, in the background, both Balter and Myers had developed a keen interest in investing in crypto assets. They called their friend Eric Stone, the best data scientist they knew — the three of them had worked together previously at Smarterer. Prior to their Smarterer days, Stone had built a swing trading algorithm for Hedge Funds who were actively trading equities. Balter and Myers asked if they could utilize his old algorithm with crypto historicals. Stone gave them the go-ahead.
Then came the fun part. After the algo was built, it was time to utilize it for trading. But as for any new crypto investor, learning the nuances of wallets, private keys, and wallet addresses was a nightmare. “Jim was using it to buy and sell crypto assets, and out of jealousy, I tried to do some buying on my own. I’m not that technical, and was pretty soon completely, utterly, confused. I thought I’d completely lost all of the money I was investing,” Dave joked. “I was trying to figure out how to not tell Jim that I was totally baffled about how to trade across the crypto exchanges.” Eventually, Dave asked Jim for help and watched as Jim ran through a series of technical activities in order to find the crypto. It was clear: for most, even with effective data, there was a barrier to smart buying and selling.
From the experience, Flipside Crypto, a Boston-based startup that helps accredited investors invest in cryptocurrencies, was born. The Company offers a variety of Investment Vehicles that help individuals manage the cryptocurrency investment process, from managing private keys to investing with different exchanges. The Company also develops algorithms based on market maturity, developer behavior and nodes tracking utility algorithms, to help identify projects with likely value for their investment vehicles. The idea was met with overwhelming interest, with Flipside raising $1.5M in 15 days for their first Vehicle (Club I), and even more for a follow up vehicle, Club II.
Balter and Myers then left Mylestone to turn Flipside Crypto into their next venture. And while the level of participation was certainly a great motivation, the real driver for Balter to make the leap was the potential for the industry itself. “I always look for spaces with a high polarization of opinions,” says Dave, “when you have one set of super enthusiastic people, and another set of people spending just as much energy, maybe more, to try to deflate the enthusiasm. If something real wasn’t happening, no one would care.” Luckily, the crypto industry was, and still is, no stranger to controversy and differing opinions, from Warren Buffet calling bitcoin “rat poison” to John McAfee, John Altucher, and others predicting Bitcoin to hit $1M by 2020.
Since August of last year, and 6 Investment Vehicles later, the Flipside Crypto team has successfully secured venture funding in March 2018. The Company raised $3.4M led by True Ventures with participation from Boston Seed Capital, The Chernin Group, Converge, Founder Collective, and Resolute Ventures. Even more recently, the Flipside team has launched a new product, Daily Crypto Baskets. The team uses their algorithms to create baskets of crypto assets that follow different themes every day. Buyers can opt in at the $100, $250, or $500 level for themes such as “The Decentralized Exchange Basket” or “Smart Contract Platforms”.
And while things have been running smoothly at Flipside Crypto, Balter is the first to admit that building a blockchain and crypto company is not easy, as volatility, regulatory concerns, and news stories define the space. “The hardest part is lack of clear regulation,” says Balter. “It isn’t about whether you are doing something that is or isn’t wrong, but knowing what lines to paint within.” In an industry that’s regulatory environment is quickly changing, it can be hard to stick to a singular path forward. But Balter remains confident. To the Flipside team, “it becomes clearer and clearer that crypto is not going away. The real question is, how significant of a market revolution will it drive?”
As for his vision for the industry in the next 5 years? Balter is a firm believer that all financial institutions in the world will be required to have a sophisticated crypto offering, alongside traditional assets such as equities, bonds, securities, derivatives, etc.
Company Spotlight:
To learn more about Flipside Crypto and their Investment Clubs, visit their website at: https://flipsidecrypto.com/.
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