ANNOUNCING BLOCKCHAIN ANGELS
I’ve been investing in and raising money for blockchain start-ups for over 4 years now. Whilst the headline numbers are great: $1bn at the end of 2015 and some people estimating $10bn in 2016 alone money has largely been in Bitcoin or what I term ‘blockchain infrastructure’. Whilst both are entirely understandable and a product of the times raising money for wider use-cases beyond the rush to Capital Markets has been slow to non-existent.
It’s no surprise most start-ups are often self-funded through consulting or financed through personal savings or loans from friends & family.
It’s no surprise most start-ups are often self-funded through consulting or financed through personal savings or loans from friends & family. Without early stage angel investment the ecosystem just won’t be able to get going and many great ideas will never see the light of day. So I somehow ended up taking it upon myself to accelerate the process through something called Blockchain Angels.
HOW DID IT COME ABOUT?
Most people in my network have heard me banging on about blockchain for the last few years. Many are investors now coming to me pro-actively find out more as they increasingly encounter the term in the wider media.
Having recently, after 3 years of self-financing, opened up my fund (Outlier Capital LLP) to external investment I was spending lots of time in one-on-one meetings with people who were getting very excited about the possibilities of the tech. As much as I loved watching the moment when things clicked in their heads it just wasn’t scalable to spend two hours every meeting having these conversations.
Most startups were spending more time explaining blockchain than their own particular application
Knowing most of the early adopters in the space I found others, who had founded their own start-ups, were having the same problem often spending much more time explaining blockchain than their own particular application. This was no surprise and entirely understandable with so much technical jargon and conflicting opinions for even an experienced technology investor to navigate.
With this in mind I decided to herd everyone I knew into a room and do a workshop on how to invest in blockchain start-ups: what you did and didn’t need to know and what to ask. At the end I invited start-ups from my own network to come and pitch providing illustrative colour to the evening and hopefully help them raise some money. It seemed to work with 164 signing up in 1 week and 60 attendees at the first event
SCALING IT
Having got great feedback I decided to regularise the event and Blockchain Angels was born.
Interest started pouring in not just from the UK but across Europe, many of which couldn’t physically make it to a London event, so I decided to take the format on the road and now have events planned in Berlin, Amsterdam, Zurich and Barcelona over the course of the Summer.
We are looking for more cities and try to work through affiliates and partner angel communities so contact me at JB@outlierventures.io if you are interested.
However even then it just seemed too limiting to be confined to a physical space especially when we had an increasing number of start-ups dialling in via Google Hangouts to pitch from as far as the US. So we have now decided we will also hold monthly virtual pitch events (starting end of April) and digitise the workshop so people can learn in their own time.
FOCUS
We have chosen to try to focus on underserved / underinvested areas so deliberately avoid anything too ‘capital markets’, banking or bitcoin specific. These applications, if they are of value, will have no problem raising money and already enjoy an active investor community.
The areas we want to actively support are insure-tech, law-tech, supply-chains, ecommerce, gaming, social good, the sharing economy, IoT & 3D printing.
The areas we want to actively support, but by are no means limited to, are insure-tech, law-tech, supply-chains, ecommerce, gaming, social good, the sharing economy, IoT & 3D printing. We do look at Fin-tech start-ups but only for wider consumer usage beyond crypto-enthusiasts or non-banking B2B.
BUT WHY A SPECIALIST ANGEL NETWORK?
We feel the technology powering the space is so nascent and fast moving that it is not appropriate for a generalist angel investor who is also investing in dog food, beautician apps and property start-ups to be able to confidently assess risk themselves.
As I have previously mentioned for them to be available to invest it requires a huge amount of upfront time from the start-up to explain how it all works, what it is and isn’t. With the emergence of entirely new commercial models alongside it, like Decentralised Autonomous Organisations, this is only going to get harder.
So an investor community well informed of the boarder market and its latest twists and turns is critical to make sure the right start-ups get funded and people don’t get taken for a ride. Investing in a start-up is risky. Investing in a blockchain start-up much more so and yet despite this it is still the investment opportunity of a life-time.
WHY DO STARTUPS NEED ANGELS WHEN THEY CAN JUST RUN A CROWDSALE?
My personal view is crowdfunding is nothing new. The fact you can tokenise it even issue securities on it is great for some uses-cases, largely when building infrastructure like Ethereum or Slock.it, but for many others it is just a fundraising channel to compliment traditional means. It doesn’t replace it.
Nothing beats having a handful of engaged strategic investors who bring experience and contacts there to help you when you’re still figuring things out and so many thing can and will go wrong.
Nothing beats having a handful of engaged strategic investors who bring experience and contacts there to help you when you’re still figuring things out and so many thing can and will go wrong. A crowd can be unforgiving and time consuming to manage which is a huge distraction in the early days. Whilst I love the idea that crowdfunding validates the customer need and feels like easy money how many times do we hear the crowd turning when there are delays or pivots?
IS IT JUST ANGELS OR ALSO FOR VCS?
We also plug in early stage all the way through to later stage VCs. Whilst many of the investment opportunities are too early for them today they are as keen as any other investor to understand the space and can provide great feedback and contacts to help start-ups. Whilst many in the blockchain space deride the VC model the reality is I think their role is perhaps even more critical for blockchain start-ups with big ambitions.
As is often common with blockchain you are either decentralising an Uber, creating a two-sided marketplace or building everything primarily on open-source code. So guess what? You are going to need a VC at some point to go all out and compete. The counter-argument to the corrupting force of VC money in my mind is the fact you can, should you want to, enshrine your ethics in incorruptible smart contracts.
WHY JUST BLOCKCHAIN ANGELS EUROPE?
For now we are only actively looking to raise money from European investors and are not, by law, allowed to market opportunities to citizens in the US. However we can and are helping US start-ups raise money from here in Europe.
Whilst we focus on Europe for practical reasons, its where we live and work, we have trade-marked Blockchain Angels TM and are open to affiliate chapters around the World if others are interested in collaborating. Just get in touch.
BECOMING A BLOCKCHAIN ANGELS REPRESENTATIVE
We are actively recruiting blockchain experts with established investor networks from across Europe and beyond to join the team and help both recruit start-ups local to their market but also actively promote our networks deal-flow to their local investors.
GET IN TOUCH
If you are either an investor or startup in the space please signup here WWW.BLOCKCHAINANGELS.EU
We also have an investors only Linkedin Group.
If you are an potential affiliate please contact me on the below:
Twitter: @Jamie247 | Skype: JamieBurke247 | Linkedin: Jamie Burke
