How Investing in a Tiny Bitcoin Company Completely Changed This Man’s Life
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This is the story of how an up and coming investor turned into the king of funding Bitcoin startups.
In 2012 there was a tiny Bitcoin company fighting to stay alive and build traction. The price of Bitcoin was still under $10, barely any venture capital had been put into the market, and the world had no idea that this magic decentralized currency was about to take over.
This is when Adam Draper, a fourth generation venture capitalist with some monster shoes to fill, was pitched by the founder of this Bitcoin startup called “Coinbase”. He had only recently started investing in companies, he had no investment focus, and he knew absolutely nothing about Bitcoin.
It was two years ago, basically to the day. I met Brian Armstrong at a coffee shop called Red Rock in down town Mountain View (non-necessary details).
At this time, I had not heard of Bitcoin or Digital Currency before, but the concept intrigued me when I read up on the company. So I reached out and we set up a meeting.
I started the meeting with the one question that he dreaded most, “What is this Bitcoin thing?”. I could tell he had pitched a lot of people before, and had to answer this question multiple times. And my guess would have been that he had limited success pitching.
Brian Armstrong, CEO of this small, barely noticeable, company called Coinbase, is the one Adam met with a little over two years ago. Today Coinbase is one of the easiest ways to purchase Bitcoin. With over $31 million in funding from top tier investors like Andreessen Horowitz, they aren’t so small anymore.
But, back then, nobody knew that Coinbase was going to be such a success.
The difficult thing about Brian’s business at this time was, he had to educate EVERYONE he pitched on Bitcoin and then he had to pitch what his business did on top of Bitcoin. This has changed in the last 8–10 months.
So Brian pitched me. He was smart, he had started a few companies before with varying success, he had worked at AirBnB… Basically he had learned a lot from a lot of experiences. And now he was going into an industry where the market cap in total was $200m. Which is low. Extremely low for a total market cap of industry. I should say that at this time, the price of BTC was $10–15.
Little did Adam know that this meeting was about to completely change how he did investing from this moment on.
In the end, what made me convinced was a question I asked myself — Why is this super talented, experienced, entrepreneur going to spend the next 7 years of his life in an industry that he knows is currently small? My conclusion was that he saw the world changing, and he wanted to be the catalyst of it.
So I took a gamble, a calculated gamble, but still a risk. And as of now it has probably been the most defining investment I have made. Because that was the start of the Bitcoin rabbit hole for me. I learned from Coinbase, and since have accelerated 27 companies in Boost in the Bitcoin sector.
After Adam invested in Coinbase in 2012 he decided to focus all of his energy on finding and funding the best Bitcoin companies in the world via Boost VC, his very own startup accelerator.
So far he has invested in 27 Bitcoin companies, some of which have gone on to raise millions of dollars in additional venture capital. Adam has publicly promised to invest in 100 Bitcoin companies by the end of 2017.
None of this would have happened if Brian Armstrong, CEO of Coinbase, hadn’t convinced Adam that Bitcoin was going to be a huge market.
Brian Armstrong is a fantastic guy, and he deserves all of his success. He saw how the world was going to be and created it.
In short, I invested in Brian because -
1. I liked him.
2. He proved to be talented.
3. He was very receptive of feedback (still is)
4. I liked Bitcoin after researching more thoroughly.
5. I like to reward great people with insane ideas.
6. He had the eye of the tiger.
At the seed stage, investments are often made because of the people not the product. Something that entrepreneurs should know.
One criticism at the time for Brian that we discussed at length was that he needed a co-founder. He had been coding alone in his room (quite literally), he needed someone in the trenches with him. Fred Ehrsam was added to the team shortly after… Fred and Brian are unstoppable.