I’m so excited to share that we’ve recently launched a special mini-series of The Bootstrapped VC! We’re focusing on blockchain and spotlighting three of our portfolio companies — Seeds, Bandwagon, and Filament — who are all using the blockchain in different ways.
There’s no doubt that there’s a lot of hype around blockchain. At Backstage Capital, we’re bullish for multiple reasons, not the least of which is that it’s a fundamental, underlying technology that can be used for nearly endless purposes.
The Blockchain for Startups Backstory
Earlier this fall, I was greatly inspired by a conversation with one of our founders, Rachel Cook, CEO of Seeds. We talked about her philosophy of a “system of abundance,” which is enabled by crypto and ICOs (initial coin offerings). In less than an hour, I went from feeling serious confusion to excitement and anticipation.
This is a good time to mention that we are not making any recommendations on ICOs, if you should participate in an ICO, or which one to participate.
Rachel shared with me that one of the most compelling aspects of an ICO, and of cryptocurrency, is that it is free from the systemic limitations of existing financial options. The distributed nature of blockchain technology underlying cryptocurrency enables this freedom. As an institutional VC, Backstage plays squarely within a traditional space. We make investments with fiat currency (US $), are regulated by the SEC, and are bound by legal contracts and fiduciary duty to our LPs (Limited Partners — our investors). Yet, our competitive advantage — funding traditionally underestimated founders — exists because of limitations in our legacy structures and systems, and the biases of those that control them. How could blockchain affect change on these structures? The more I learned, the more I wanted to know, and who better to learn from than our founders?
A Bootstrapped VC Special Event: Blockchain for Startups
If you’ve followed Backstage for a while, you probably know our podcast, The Bootstrappd VC. If not, welcome. :) In this series, we’re changing it up to go deep on different applications of the blockchain, what made our founders decide to use the technology, and how it’s adding value to their company. Join me and producer extraordinaire, Bryan Landers, in this four episode series.
Part One — Blockchain Basics
Before we jump in to the blockchain deep end, it’s important to share some basics. So, let’s break this blockchain thing down:
- What is a blockchain? A blockchain is a distributed ledger. What’s a ledger? A ledger is a system of record keeping. For example, a ledger that most of us use in our daily lives is a bank statement — when money comes in or out of the account, it’s noted on the statement (the ledger).
- So, what’s the difference between the blockchain and record keeping systems of the past? The key differences are the distributed structure of the ledger and the fact that there’s no single owner or entity controlling the ledger. Every time a change is made on the blockchain, it’s recorded on every copy of the blockchain. In other words, there’s a way to verify who took an action, what it was, and when it happened.
- What are the implications of this distributed ledger? There are many ways that a blockchain can be used can affect society. It can be used to eliminates vast, systemic inefficiencies, while creating value along the way. While that sounds great, let’s learn from three founders at Backstage who are using blockchain in very specific ways to build towards a better future.
Part Two — Cryptocurrency + ICO
Rachel Cook, founder and CEO of Seeds, walks us through:
- The basics on cryptocurrencies and ICOs, including security vs. utility tokens
- Her background, what led her to start Seeds, challenges and biases she discovered in traditional finance and microlending, and how that can all be upended by blockchain
- The philosophical opportunities created by blockchain, including the philosophy behind a system of scarcity vs. a system of abundance — the concept that kept me up at night and inspired this podcast series.
Part Three — Distributed Ledger Technology
Then, we’ll hear from Harold Hughes, founder and CEO of Bandwagon, which is using the blockchain to improve the live event experience for fans & venues. Bandwagon is:
- Using IBM’s Hyperledger Fabric, and why Hyperledger is so important for Bandwagon.
- How an old business (in-person experiences — think about how old the Olympics are!) can be improved with new technology like blockchain
- The benefits of distributed ledger, and how the implementation of Bandwagon’s technology will will enable transparency in ticket sales across secondary marketplaces and improve the experience for fans everywhere. As an avid sports fan (Go Sharks!), I’m especially excited about Bandwagon’s solution.
Part Four — Smart Contracts
Finally, Allison Clift Jennings, CEO of Filament, will walk us through the intersection of two buzzworthy areas, blockchain and IoT (the Internet of Things), including:
- How industrial IoT companies can benefit from the blockchain — and why this matters to you
- How blockchain tech can enable micropayments between machines without human intervention — this is So. Compelling! The enablement of microeconomies in the IoT is a huge potential value add
- How leveraging the concept of “Smart Contracts” in a distributed system (blockchain) perpetuates equality through open systems
Blockchain tech will change our lives, and Backstage Capital companies are leading the way. Check out the first episode of The Bootstrapped VC: Blockchain for Startups!
We hope you enjoy exploring these use cases as much as we did and we’d love to hear your reactions. What surprised you? What would you like to learn more about? Leave a response or email us. Subscribe to The Bootstrapped VC to listen to the “Blockchain for Startups” and lots more!”