The Story of CityBlock Capital: Chapter 1
“Why haven’t you sent me the pitch deck?”
I’m an experienced financier, but when one of my advisers called last year to check my progress on a new fund, I felt like a high schooler caught without his homework.
I’d been staring at the deck for days, perfectly aware of the details it should describe to my future investors: strategies, dealflow, terms. But I’d barely been able to write a word. The same way a high school kid’s mind might drift to the ballfield outside the classroom window, I was distracted by a voice at the back of my head, whispering an intriguing promise:
What that voice was tempting me with was huge — even bigger, in fact, than I could imagine at the time. I was part of a growing community of people in technology, finance, and venture capital obsessively tracking the explosion of cryptocurrency and blockchain. I’d seen what pioneers like Blockchain Capital and Science Blockchain had done: issuing digital tokens that represented shares in a venture capital fund. Tokenizing presented big advantages over the traditional VC structure, including access to a global network of investors, and greater liquidity for those investors.
And I knew this wasn’t just a solution in search of a problem. In early talks to start my new fund, I’d gotten a hard but fair message from one investor in my first fund, who complained about the standard ten-year capital lockup. “Rob,” he said, “10 years. That’s twice as long as the average American marriage. I like you, but I don’t want to marry you twice.”
It was a common pain point, and now there was a solution: because cryptocurrency had built a huge and very liquid global market for digital assets, a VC token could be cashed out much faster and more easily than a conventional paper share. That liquidity, in turn, would make it easier to commit to a fund, with potentially huge implications for investing worldwide.
But I was still staring at that pitch deck, arguing with myself. This was what I’d been working towards since my days in banking. But I couldn’t shake the contradiction: Every day, as venture capitalists, we ask entrepreneurs to be innovative, but the VC model itself hasn’t innovated since the 1980s. How could I get entrepreneurs to trust me if there was a chance for me to step into the future, and I didn’t take it?
So I settled the argument with myself once and for all — I deleted my deck. Then I went downstairs and issued an ultimatum.
“Jon. We’re gonna do it.”
Jon Avidor had already told me ‘no’ plenty of times. We first met because we’d invested in some of the same companies, and I’d been talking up the idea of a tokenized venture fund to him for months. But he was a busy guy, between running his own fund and a law practice. Still, I knew I couldn’t do this thing without a partner who knew securities law, knew tech investing, and knew New York. So I committed to wearing Jon down, like it or not.
In the months since then, I’ve had to batter down a lot of doors that looked like they were closed. I realized pretty quickly why more people weren’t launching tokenized funds: the technical and legal complexities are huge. And I quickly found there was only one company that could help me hit the ground running. Securitize had spun off from the team that launched SpiceVC, another early tokenized VC fund, so they actually knew what they were doing — for instance, focusing on compliance first. That has put them hugely in-demand.
That’s probably also why, at first, they weren’t answering my emails. I realized I had to make myself just as much of a nuisance to Securitize as I had been to Jon. After an exhaustive search using the dark arts of Google, I dug up a private phone number for Securitize cofounder Tim Reynders. About the fiftieth time I dialed it, he actually answered, and I was able to convince him that I was serious. I was on a plane to San Francisco the next day, and I managed to drag Jon along with me. The meeting with Tim and Securitize made it clear we shared a vision. Not only did we sign a deal for Securitize to help issue our token, but that’s when Jon finally decided he was all-in.
But there was still one ingredient missing. In March, I went to Blockchain Unbound, also known as the Puerto Crypto conference. I reconnected with an old friend and fellow investor named Anthony Pompliano (If you’re active in the crypto-sphere, you might know him simply as Pomp), who introduced me to Max Goldstein, a former marketer at Google. I told Max about our idea — a tokenized venture fund, focused on New York, which we would call NYCQ. As we got deeper, I told him that perhaps somewhere down the road, we’d roll the model out to other cities. “Maybe we could call it ‘CityBlock’ or something,” I concluded.
Max’s eyes lit up — not because I was brilliant, but because he saw I was leading with the wrong foot. Max launched into a story about his days at Google, when part of his work was sending actual human beings into communities to verify information about local businesses. It had always seemed remarkable, he said, that one of the world’s biggest tech companies still relied on old-fashioned shoe leather to get the details right.
It was the same kind of hands-on work, Max reminded me, that good venture capitalists do. To identify good projects and get the best deals, you have to know a city’s startup ecosystem backwards and forwards — you have to completely own the last mile. That applies even to giants — Sequoia might not advertise themselves as a Silicon Valley fund, but that’s mainly what they are. Cryptocurrency created huge new pools of borderless global capital. But (as the fragility of the ICO wave has shown so clearly) that doesn’t matter without the expertise required to connect that capital to good projects.
“What you’re building isn’t a tokenized fund for New York City,” Max concluded, “You’re paving the last mile for global capital.”
And that’s how NYCQ became CityBlock Capital — and how Max became a co-founder. Securitize has helped us build something that isn’t just a single fund that uses technology to offer investors more access and flexibility: CityBlock is launching a scalable model for efficiently allocating capital into the best early-stage startups and deals, wherever they might be.
Jon and I know New York, so we’re starting here. And we’re partnering with four of the most impressive blockchain industry leaders we’ve met along the way — Nikhil Kalghatgi and Ateet Ahluwalia from CoVenture Crypto, and Rob Paone and Don Mosites from AirSwap. They’ll actively source deals and deploy the NYCQ fund, with an initial focus on security token infrastructure startups, to help build the ecosystem that we are a part of. (Read about the NYCQ Fund)
Then, after New York, we’ll be partnering with young but proven local VCs in a series of cities, starting with San Francisco and Los Angeles, then globally — not just in existing innovation hubs, but also smaller markets where there can sometimes be more talent than capital. And each of those tokenized venture funds will be open to investors worldwide, in a way that was unimaginable just three years ago. We already see the demand — when we launched our private presale for NYCQ, we received over 100 allocation requests from around the world, many of them from accredited crypto investors looking for exposure to security tokens.
I’m already sure deleting that pitch deck is the best move I’ve ever made — even though there are still big challenges ahead of us. Jon, Max and I could have taken what looked like a safer route, but instead we’ve decided to create the future we see coming. Now we’re ready to get down to the hard work of forging the right relationships, making the right investments, and helping build the technical and legal infrastructure for scaling tokenized investing.
But just as I couldn’t start this fund alone, making that broader vision a reality will take sustained effort from an entire community. If you share our conviction that tokenization is the future of global investing, and you’re looking for a way to get involved, join us — either as an investor in NYCQ, or as a member of our community on Twitter, Telegram, or Medium.
Special thank you to our advisors: Carlos Domingo, Anthony Pompliano, Kwame Anku, Orlando Jones and Arlan Hamilton.
To request an allocation in the NYCQ fund, visit www.cityblockcapital.com
Click here to learn more about the NYCQ fund
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