Sometimes, making an exception can pay off.
That’s what happened to Version One Ventures, which typically invests in early-stage startups but veered off course to make a bet on a fast-growing cryptocurrency company four years ago.
That investment in Coinbase “ended up as a multiple fund maker,” noted Version One General Partner Boris Wertz, who started the firm out of Vancouver, B.C. in 2012. Verison One invested in Coinbase partly because it believed blockchain/crypto would be the next computing platform.
Coinbase reached a massive valuation of $85 billion after its first day as a public company Wednesday. Firms such as Version One and others including Silicon Valley’s Andreessen Horowitz, Union Square Ventures, Initialized Capital, and Ribbit Capital saw huge windfalls thanks to their earlier Coinbase investments.
Coinbase, which lets people buy and sell cryptocurrency such as Bitcoin, is the first crypto company to list shares on a U.S. stock exchange.
I funded Coinbase in 2012. 6000x on my best startup investment yet.https://t.co/95aHoWTkBg pic.twitter.com/N5wC72SzTa
— Garry Tan (@garrytan) April 14, 2021
Version One is the only investor with Pacific Northwest DNA that backed the cryptocurrency startup.
That got us wondering — how are other investors across Seattle and the Pacific Northwest thinking about cryptocurrency and related technology such as blockchain, the technical backbone of cryptocurrencies?
The Seattle region is not exactly a hotbed for crypto, though a group of tech leaders are trying to help the area morph into a fintech hub. There are some crypto startups such as Strix Leviathan, Bittrex, Unikrn, Coinme, Stably, and CryptoSlate; many are part of the Cascadia Blockchain Council established by the Washington Technology Industry Association (WTIA).
Amazon and Microsoft have blockchain-related products as part of their cloud computing services, but neither have dabbled much in crypto — not yet, at least.
We reached out to a handful of firms to get their thesis on cryptocurrency investments. Some said it wasn’t a focus area; others weren’t ready to share their strategy. But many are bullish about crypto and blockchain opportunities.
Kirby Winfield, founding general partner at Ascend.vc: “We believe that as cryptocurrency matures as an asset class, a purpose-built financial ecosystem will emerge that mirrors the one supporting the equity/fiat investment markets. This thesis informed our investment in Seattle’s Makara, the first direct-to-consumer mutual fund/ETF for the crypto ecosystem!”
Heather Redman, managing partner at Flying Fish Partners: “As you know, we are a bit unusual among Seattle-area investors because we’re specialists in AI/ML rather than generalists, so we don’t see as much crypto or blockchain as some. I’m personally a crypto investor (gave up on gold!), and am super curious and bullish about how it moves forward. Software is definitely eating financial services generally (see Jamie Dimon’s recent statements) and crypto is playing an increasing role in that. We’re hanging around the hoop looking for the perfect AI/crypto mashup, and I hope it’s right here in our backyard.”
Aviel Ginzburg, general partner at Founders’ Co-op: “For context, Founders’ Co-op’s only crypto investment has been into Jesse Proudman’s Strix Leviathan and Makara. We are neither crypto bulls nor bears but believe that cryptocurrencies will play a growing role in the global economy as both a digital store of value and as a means for financial transactions. With regards to exactly what that looks like (NFTs/etc.) we don’t pretend know or have a specific thesis, but see lots of opportunities at the picks and shovels/infrastructure level. The Coinbase IPO finally brings widespread institutional legitimacy to the space and we expect things to only accelerate from here.”
Cameron Borumand, general partner at Fuse Venture Partners: “We wake up every day to support emerging entrepreneurs within the Pacific Northwest and we see the crypto market as one that will be critical to this entire technology ecosystem. There are three areas that we find most compelling within the crypto-landscape: 1. Financial services infrastructure that enable other businesses and applications to utilize the power of decentralized currencies and services; 2. Compliance services for corporations that will hold and actively manage cryptocurrencies; 3. We think that the non-fungible token market will move from consumer-friendly applications (ex. NBA Top Shot) to that of B2B applications, so we are looking for folks that are building those decentralized services.”
S. “Soma” Somasegar, managing director at Madrona Venture Group: “We are absolutely tracking the latest developments and advances enabled by blockchain technologies and are excited by what we see — and the potential for growth. Cryptocurrency is one such technology. We have been monitoring where they are finding traction in the market for some time and expect to be highly selective on opportunities.”
Ben Gilbert, managing director at Pioneer Square Labs: “Cryptocurrencies — especially Bitcoin and Ethereum — have now been legitimized as stores of value by big institutional players and large corporations. Coinbase going public represents a big step in that continued move into the mainstream. We believe that new infrastructure companies will continue to be built to support this ecosystem — after all, there are far more companies required to maintain the public stock market ecosystem than just a stock exchange.”
James Newell, partner at Voyager Capital: “‘Crypto’ is really just an implementation of a broader underlying technology shift toward blockchain and we are intentional about not using those terms interchangeably. We focus on how big underlying shifts, including blockchain, will solve problems for customers and cross the chasm from early adopters who just love buying cool things to massive adoption. Much of the ‘heat’ in the space thus far has been consumer driven and somewhat speculative, but it has now proven technical feasibility and evangelized the space in a major way. So we are highly focused right now on finding use cases within the enterprise as the underlying technology proliferates.”
Anthony Bontrager, managing director at WestRiver Group: “For our part, WestRiver has always believed in the fundamental power of blockchain technology to reshape various industries. Our investment focus does include a blockchain element, but one centered on the underlying technological elements as opposed to those centered on currencies. The former we believe, has and will continue to have applicability across a number of markets, while the latter poses a number of risk elements that we don’t feel are appropriate for our specific fund. That said, it’s a very exciting space.”
