Eden Block: A Genesis Story
A story led by powerful Values and remarkable Individuals
Dear Friends, Partners, and Followers:
Since 2018, Eden Block’s mission has been to align with and work with the world’s most talented entrepreneurs, technologists, and researchers. We’re incredibly humbled by the connections forged with our portfolio companies, our co-investors, and the broader communities that we’ve been in touch with.
The past two years have been pivotal for the Blockchain industry, as they have been pivotal for Eden Block and its activities. We have witnessed an ongoing (and far from complete) maturation of an incredibly exciting industry and have had the chance to back the formidable entrepreneurs and scientists leading the charge. In this post, I will try to give some background about Eden Block, our vision for the future, as well as provide additional information about Eden Block’s identity and focus.
A brief History & Mission Statement
With blockchain rapidly making its way into the mainstream, and its associated industry getting bombarded with incredulous amounts of investment capital, some truths became more apparent than others: with Blockchain’s purported ability to enhance and/or disrupt every single industry in the world, we quickly understood that the DLT industry would grow massively, and potentially fix a pathway towards unbounded economical, social, and even political reform. However, we also observed that this fundamental truth of opportunity would have to be matched with an equally compelling case for execution — a sorely overlooked medium beneath the billions of FOMO-inspired capital.
Business theorists at heart, our foremost goal was to meticulously map the industry as we saw it — by combining deep industry expertise with a broader understanding of how businesses and industries rise and fall. We’ve developed cutting-edge research into consensus models, cryptography, and other central architectural components. As Researchers, we executed profound analysis of the industries that we believe will be most impacted by emerging technologies, including blockchain. As demonstrated Operators, we designed frameworks — we crafted and mapped out methodologies that were specific to building, proving, and scaling value propositions enabled by blockchain and other emerging technologies. With our Founders, we developed and executed on strategies that touched every single aspect of a venture’s journey. As Investors, our mission was to develop an investment engine possessing capacities for tremendous specialization while retaining incredible breadth and perspective.
Today, Eden Block brings the most multidisciplinary, specialized, and demonstrated investment team into the uncharted world of blockchain ventures. Our mission is to bridge the colossal gap between opportunity and execution within this nascent industry. Through our investments and our work with the industry’s most brilliant teams, Eden Block and its partners strive towards refining, standardizing, and growing this infant industry to the heights that it deserves. Until now, industries such as Artificial Intelligence & Fintech have created 47 and 56 unicorns, respectively. The emerging blockchain industry has created 11 unicorns to date, and our mission is to enable the others forthcoming.
Leadership
Lior Messika: Lior’s breadth of experience in the investment world is particularly unique. As Chief Executive Officer of the Messika Holdings Group, a leading single-family office, Lior’s investment lens has been profoundly multidisciplinary and highly integrative. As part of his multi-asset management strategies, Lior has built innovative frameworks and execution models specific to a number of industries. Throughout his career, Lior has specialized in capital markets, impact investing, late-stage private equity, real estate, and early-stage ventures. In 2018, Lior founded Eden Block with a vision to accelerate the application and adoption of blockchain technologies. A business theorist and technical researcher, he has executed profound research into the application of blockchain and has designed unique frameworks for business model innovation leveraging blockchain. At Eden Block, Lior works tirelessly with portfolio founders to ensure success, while constantly refining Eden Block’s vision for the implementation of blockchain in the real world.
Yoann Douieb: Yoann is a finance professional with almost 20 years of experience in investments. With education from Tulane University and the MBA Institute (INSEEC Group), where he earned a B.A in Business and Finance, Yoann went on to occupy positions related to investments, trading, sales and risk management at Legg Mason Group’s EnTrustPermal (a fund of hedge fund with $30 billion in AUM), BPCE Group’s Natixis, or First International Bank of Israel. Yoann also advised the UN on international trade and tariffs, as well as founded and managed Temple Stone, an innovative investment management company, investing across multiple asset classes with 100 million US dollars in AUM. At Eden Block, Yoann is a Partner and CFO, where he oversees cross-functional aspects of the company’s operations. That includes all financial, legal and regulatory functions, as well as risk management and investors on-boarding.
Rami Beracha: Rami has been a Managing General Partner at Pitango for 18 years until 2018. His investment focus is primarily in Disruptive technologies and building teams of serial entrepreneurs. Rami has led investments into Israel’s highest profile companies, and boasts one of the most accomplished portfolios in the global venture landscape. Rami is a Co-Founder and Chairman of the Board of SOSA, a unique hub connecting global innovators with leading Fortune 5000 players seeking for innovation, with presence in Tel Aviv and NYC. He also initiated a unique investment company, i3 Equity partners, dedicated to IoT whose investors include Microsoft, Qualcomm, GE, Tata, Tamasek and the Tel Aviv University. Rami joined Eden Block as Chief of Strategy and General Partner in 2018. At Eden Block, Rami is constantly fine-tuning areas such as vision, portfolio construction, due diligence processes, and portfolio success.
Ben Livshits: Ben is Chief Scientist for Brave Software, the company behind the Brave browser, a fast, open source, privacy-focused browser that blocks intrusive ads and trackers. He is also an Associate Professor at Imperial College London and an affiliate professor at the University of Washington. Previously, he was a research scientist at Microsoft Research. He received his Ph.D. in Computer Science from Stanford University in 2006. Ben’s research interests include application of sophisticated static and dynamic analysis techniques to finding errors in programs. Ben has published papers at PLDI, POPL, Oakland Security, Usenix Security, CCS, SOSP, ICSE, FSE, and many other venues. He is the author of over 100 academic papers, dozens of patents, and multiple tech transfer awards for bringing research into practice. Dr. Ben Livshits is the Chair of the advisory board for Eden Block. He joined the fund in the capacity of a scientific advisor in 2019, focusing on providing due diligence and follow-up technical advising to companies in the Eden block portfolio to provide them with the advantage of cutting-edge research and technological expertise.
Dermot O’riordan: Dermot has a broad experience of the investment and the startup world. On the investment side, he has advised on PE and M&A transactions from the hundreds of millions to the high billions and spent his last few years as a lawyer advising some of Europe’s most exciting technology teams in their investment rounds — from the very early stages to the late. He also co-led the European blockchain practice for US law firm, Orrick, in London. On the startup side, he is a board member of the ICE List, one of Europe’s leading entrepreneur communities, and previously ran a venture builder focusing on taking technical teams in the blockchain space from zero to one. Dermot is passionate about the impact of incentives on decision making and has developed mental models on what success looks like at different stages in a startup’s journey. His role at Eden Block is to find and diligence the very best companies/protocols for Eden Block to invest in, and to arm our portfolio companies with the tools they need to succeed.
Our Thesis in four Paragraphs
Blockchain is not disruptive. As a matter of fact, technology itself is not disruptive at all. Among the blockchain-fanatics, cyber-punks and technological idealists, this statement might get the wrong connotations, but at Eden Block, we’re glad to set the record straight. Disruption itself is a term coined by Clayton Christensen in the 90’s, with a business theory aptly named “Disruptive Innovation”. Like Christensen, we believe that it is the implementation of technology (and other elements) that define an entrant’s disruptive capacities. In short, we propose that business models and incentives that position themselves effectively around innovative technologies, platforms, and other mediums, are the real disruptors. We believe that the most valuable companies in the coming cycle will successfully leverage blockchain as an enabler in tandem with other emerging technologies like AI, cloud, and 5G, creating disruptive solutions backed by innovative products.
We conceptualize the opportunities for ventures (incumbent-led, as well as entrants) to leverage blockchain into four categories:
Our Blockchain Thesis outlines three ways in which non-incumbent, blockchain-enabled ventures are capturing value: By creating foundations for a new or re-imagined market (i), by solving existing problems within existing markets (ii), and by facilitating adoption and improving usability within the new markets conceptualized by DLTs (iii). When constructing a portfolio, we subscribe to those three groups, or “families”, making up the totality of “investable” opportunities within the nascent blockchain industry. However, no venture was created equal, and our cutting-edge research supports our assertion that a sizeable amount of tangible, long-term value will be championed by entrants in the Low Market Disruptor category, for which we allocate considerable capital when constructing a portfolio. The reason for this is simple — Low Market Disruptors address veritable problems that exist in the real world, which means that market sizing, pricing, and other key assumptions can be made with near certainty from the investor’s perspective, with those very solutions servicing immediate markets. The upside of solving the world’s biggest problems befits the hardship. The key challenge for blockchain-enabled Low Market Disruptors will be business model innovation: the ability to align incentives, pricing, and other aspects with a specific blockchain layer without rendering the final product & offering inefficient or too costly.
This challenge of business model alignment is somewhat less present across New Market Disruptor entrants, however. Would-be New Market Disruptors, the much-touted pathways for value creation across the blockchain space, come with problems of their own. The challenges of combining numerous elements such as game theory, technical architecture, economical incentives, and security measures have proven to be a stagnating force on this segment of the blockchain market. Many of the iterations that positioned themselves as New Market Disruptors became nothing more than tools for speculation through “utility” tokens that were found to be less than crucial to the proposed ecosystem. This massive (and necessary) letdown brought the crypto market to its knees — a period commonly referred to as “Crypto Winter” by the community. Some ideas however, were able to grow into massive forces that are now challenging the very fabric of economies and governance models; Defi has been a clear leader in the New Market Disruptor conversation. As investors, we approach New Market entrants with an understanding that these structures will be able to open the floodgates for unbounded value at some point in the future: Defi is worth ~$1 billion today, and we expect this number to grow exponentially. Instead of providing existing markets with a better solution, New Market Disruptors convince us of an entirely new paradigm. A central challenge for these entrants after initial proving, will be their ability to stay relevant and “up-to-date” once live and functioning. Decentralized products are inherently more difficult to control, and so the addition of new features and components will be greatly slowed down compared their centralized, low-market counterparts.
The third subcategory within our mapping of investable blockchain-powered companies is Gateways. Simply put, gateways facilitate our interaction with New Market Disruptors, and give us the tools needed in order to elicit further value from those growing verticals. It’s important to note that so far, most of the unicorns related to the blockchain industry have been Gateways. These companies, in many cases, do not develop products that contain any blockchain whatsoever. Instead, these centralized companies provide services and products, resulting in real revenue. Notable gateways include the likes of Coinbase, Binance, an extremely wide array of custody solutions, and a great host of other companies that aim to capitalize on the forecasted growth of new, emerging markets. An illustration to digest: during the 19th Century Gold Rush, the prospectors feverishly looking for gold did very well, initially. The prospectors’ challenge was to keep on unearthing the precious metal, and this became increasingly difficult. Interestingly, the parties who extracted the most value from the Gold Rush were merchant businesses that had no intention of touching gold at all. Levi Strauss and other merchants saw the opportunity in providing prospectors and miners the tools they needed in order to go about their work. Similarly to Binance or Coinbase, Levi Strauss built incredible value regardless of their clients’ success or failures. When constructing our portfolio, we align Gateway investments with our New Market Disruptor investment strategy as well — meaning that we invest in Gateways directly enabling the New Market Disruptors we believe in. This alignment is paramount, as it provides us with a mandated direction for Gateway sourcing, as well as drives higher levels of synergy within our portfolio.
This unique distribution forms the backbone of Eden Block’s due diligence and sourcing efforts, and allows us to transport a definitive thought model into our verticals of investment. With a particular understanding of how blockchain-enabled ventures create value, our analysis of the sectors most prone to disruption becomes laser-focused and profoundly supportive. In future posts, we will elaborate on our choice to focus on Gateways and Disruptors that operate within three main verticals: supply chains & distribution (i), financial services & assets (ii), and Data, Privacy & Security (iii).
Our Values & Principles
Since inception, Eden Block’s goal has been to link not only between technologies and businesses, but between human values and shared perspectives. As investors, we have been forced to turn down investment opportunities that fit our investment thesis, but lack a fit in mutual values. To work with people is our main mission, and our values are never discounted.
“Put people first” — we get technology, but we invest in people. An understanding of people and incentives is essential for any successful team, technology or business.
“Always follow through” — We walk the extra mile, and then a thousand more. We make unequivocal commitment to outcomes and quality, and we expect our partners to do the same.
“No room for egos” — We have no time for misplaced confidence or egos. It acts as a drag on success and an obstacle to the truth. Talent comes in all shapes and sizes and the best idea must always win.
“Seek the truth” — We are led by our experience, research and theories, but take a bottoms up approach to every investment, and prefer pragmatism over idealism every day. Ideology, history, or bias, must never get in the way of the truth.
Israel, Europe & The Global Ecosystem
Israel is commonly referred to as “Startup Nation”, with the highest number of startups per capita in the world (yes, more than Silicon Valley). Hailed for its ingenuity at solving problems leveraging deeply technical solutions, the Israeli venture landscape has produced numerous b2b success stories over its years of activity. As illustrated in our exploration of Eden Block’s thesis, we believe that many of our targeted investments will leverage blockchain into solutions that will further enhance industries and relevant processes. We believe that as the industry matures, Israel’s pool of talented scientists and driven entrepreneurs will maintain the tradition of mass-producing solutions to massively enhance industries and businesses. Through our initiatives and a HQ in Tel Aviv, Eden Block is committed to create and nurture a vibrant blockchain ecosystem in Israel, providing Israeli companies a global perspective from inception.
Europe’s startup scene has also seen dramatic changes in the last five years. The talent and opportunities have turned Europe into a tech hub of its own, and early-stage fund size has been increasing considerably. Seed investing in Europe has brought tremendous returns to investors as European teams have gone global. With a futuristic view of the possibilities and a creative approach towards enablement, Europe has created a law-friendly and supportive platform for Blockchain ventures. Through our initiatives across Europe and an office located in London, we are committed to working with the finest European teams working on blockchain-enabled solutions.
Decentralization and distribution is not only a hallmark of blockchain technology, but also of its associated, globalized industry. Since 2018, we’ve had the pleasure of interviewing a tremendous number of international, cross-border teams even at Seed stage. Because of the global approach that many blockchain-related projects require, company cap tables have also been extremely eclectic. We believe that it is in the interest of companies to work with a global investor group as early as possible in the process, and our work with co-investors across the US and Asia is fundamental to our approach. We believe that with an investment thesis as specific and integral as ours, Eden Block’s investment lens is highly opportunistic with regards to team locality. Supported by our thesis, we subscribe to working with elite entrepreneurs in Israel, Europe, and the US.
Future & Outlook
In these troubling times, we choose to focus on the very fundamentals that originally brought us to this space. We are confident in humanity’s ability to deal with global hardship such as the recent COVID-19 outbreak, and our hearts go to the families and communities affected around the world. Today, more than ever, we are shown just how important automation, verification, and enhancement of global processes can be for keeping our economies and communities healthy. We see all of the tremendous work executed by groups and individuals championing the use of emerging technologies to limit the deterioration of our economies and our communities. We believe that global challenges such COVID-19 shed light on the truly revolutionary ideas that are being developed by our partners, and other proponents of emerging technologies including blockchain.
While we are always taking a comprehensive and cautious approach given global trends and economic stirrings, we are confident in Software’s ability to continue changing the very fabric of our societies. The fundamental economics of world-class entrepreneurs building the world of tomorrow are today more relevant than ever. At Eden Block, we are confident that enabling world-changing ideas will remain a viable and applicable business model.
Eden Block has been gearing towards scaling a number of its investment activities through numerous initiatives that we will be unveiling in 2020. We’re happy to establish a public and open thread through our Greenhouse publication, the Eden Blog, and other forms of online content. More info coming
Entrepreneurs & founders: as always, we’re open for business. We’d love to hear about your ideas and plans for the future.
Contact:
lior@edenblock.com, dermot@edenblock.com
