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On the other side of the fence: Fractal interviews coparion
Great VCs require entrepreneurs to answer tough questions well. Really great VCs are also not afraid to answer questions themselves. Today Nele Wollert, CMO of Fractal, got to ask Christian Schulte from coparion for his opinion on the state of Blockchain and the role of Fractal ID for the ecosystem.
Christian, as a VC, you have unique visibility into how technologies and markets evolve. Blockchain has been hailed as the tech revolutionising financial markets — or as a pipe dream of people out of touch with reality.
I know you’re very interested in Blockchain FinTechs for example. Where do you believe this space is going, and what signals are informing your opinion?
CS: Blockchain is a paradigm shift that might have a disruption potential beyond the developments we have seen in the online/internet space. Whereas the underlaying technology (cryptography) is rather established than brand new, the current blockchain protocols have reached a sufficient critical mass to start their “mainstream journey”.
Blockchain has the fundamental beauty to transform trust into code. This might sound clear and simple, but I strongly believe that this will fundamentally disrupt the financial industry. Trust and financial stability are THE entry barriers within the financial industry. Why do people prefer big brand names? Why has State Street become such a giant? Because people connect size, stability and this trust with the big financial players. BUT, if most of the people understand that trust can be delivered within the blockchain and that most of the transaction can be automated via smart contracts, the field is open for new, radical entrants that will attack the profit pools of the existing financial industry. Apart from that, blockchain — like the internet — opens up the possibility to de- and re-construct processes, as services become interoperable. These two effects form the foundation of our strong believe of an open infrastructure financial industry and thus was one of the drivers to invest in Fractal.
Coming back to your original question ;-), we currently see the main developments in value generating services or applications “just” using the blockchain. This is, at least in my opinion, a very good signal that blockchain is entering the mass market. Whereas we were flooded with protocols 2 years ago, entrepreneurs now start to build value generating use-cases with blockchain technology as technology framework.
What do you think is needed for the space to grow into its full potential?
CS: I can only talk from an investor’s perspective and thus rarely ask for things that are needed or political support. In our industry it is all about the entrepreneurs and good entrepreneurs — like the Fractal team — simply execute on their visions and navigate their companies through the wild seas.
There was surly some kind of gold-rush sentiment 1–2 years ago and a lot of companies got money for stupid ideas. But you cannot blame this on the the blockchain, when you go back to the “Neue Markt” stock exchange escapades back in 1999/2000 you will find a lot of similarities. These developments are just greed fuelled financial excesses and should not be used as proxies for the evaluation of the underlaying technology or industry.
Whereas a lot of the extreme hype and stupid ideas are gone today, we see a solid second wave of relevant use-cases and strong entrepreneurs now being active in the blockchain arena. I therefore believe that we “just” need the same ingredients as ever before, i.e. vision, courage and endurance.
How are these needs reflected in your investment strategy? What are you looking for?
CS: As I touched a lot of this during my last answers, I think it boils down to two aspects. We rather believe in applications than protocols (from a professional investor’s point of view) and strongly bet on excellent teams. If the teams already successfully mastered their first tough challenges, this is surely a plus.
Apple just announced they are moving into the identity space, Facebook has access to billions of verified identities — where do you see competitive niches in the space?
CS: The big brands enter the blockchain arena, the faster we will see mass-market adoption. This is extremely relevant for every start-up as the market gets bigger & bigger. Surely this also brings relevant competition and not all incumbents will step out of the market because of the new blockchain technology, but generally these environments also lower the success risk for professional investors.
If you see that even in the last 3–5 years very successful internet companies were startet, we at coparion believe that now there is a very favourable climate for blockchain start-ups especially within the FinTech market. This market is simply insanely big.
As a consequence, companies like Fractal have the unique opportunity to position themselves as a neutral bridge between traditional banking, institutional coins and decentralized cryptocurrencies.
About Fractal: Fractal is an identity (KYC/AML) aggregator that comes pre-packaged with best-in-class identification technology, a global vendor network and a user-centric onboarding journey. Fractal IDs are reusable for use in highest-regulated industries, and suited particularly to applications in the large and fast growing global Blockchain FinTech industry.
Visit http://trustfractal.com to find out more!
