COVID-19 Changes Some Things…
Our venture fund, gumi Cryptos Capital continues to deploy our significant dry-powder cash reserve into blockchain and cryptographic asset startups. We continue to deploy capital during this unprecedented COVID-19 pandemic
The Fund Thesis Remains Unchanged.
The vast majority of our thesis remains intact, namely that blockchain represents a generational opportunity and that we continue to invest in an “L-shaped” pattern, investing in deep horizontal technologies including novel consensus (for example Spacemesh) and generally avoid most vertical applications sectors other than Financial Services (whether centralized or decentralized) and Gaming.
Provable Value Today
Given our desire to continue to deploy capital on behalf of our partnership, we also need to be responsibly aware of the generational impact of the COVID-19 phenomenon and its impact to the broader economy. Because of this we increasingly separate blockchain projects into those providing provable value today and ones that remain distant speculation.
Practical Blockchain Use Cases Have Emerged Already
Just within our portfolio, we have a privacy-preserving KEYLESS who helps secure the remote workforce using biometric identity and a unique zero-knowledge privacy protocol that enables enterprises to comply with privacy regulations such as GDPR. KEYLESS has recently secured their first Enterprise sale and are accelerating their business during COVID-19.
Financial Services
Blockchains can solve problems of trust, audit, privacy, value storage, value transfer and contractual or programmable value transformation or transport. Our portfolio companies like Agoric help enterprises develop secure smart contracts using JavaScript, one of the most popular programming languages in the world. Our portfolio company Tassat provides Signature Bank with the payment rails that powers Signet, their intra-bank payment rails system that provides fully compliant faster and cheaper bank transfer and payment. Our portfolio company VEGA protocol provides a DeFi mechanism for creating derivative financial products. Also from our portfolio, The ABE exchange addresses issues of capital market access and capital formation.
In addition to these real-world use cases we see more “pure play” use cases that directly address needs of early adopters in the cryptographic asset space. Evercoin provides the most secure mobile wallet and exchange for crypto asset users. This by no means is an exhaustive list but just a subset of solid use cases from our portfolio.
Our Fund Cash Position Continues to be Strong
Our firm, gumi Cryptos Capital continues to deploy our significant capital during this downturn. As we stated before being bold when others are fearful continues to be how we plan to provide venture-class returns to our partnership. As before we continue to focus on equity and equity-like investment opportunities.
Our Continued Focus
Many things remain unchanged for our fund, among them being a continued focus on:
- Blockchain and cryptographic asset startups
- Excellent management teams and execution
- Equity and equity-like convertible instruments, not token-only
- Venture-class growth opportunities
What has changed?
What has changed? We are closely tracking the evolution of the blockchain startup space. We are aware of the separation between projects like the few mentioned above who continue to gain traction and product/market fit even in this economic downturn. We continue unchanged in the conviction that the space broadly represents a generational opportunity.
gumi’s Evaluation Criteria
But this downturn is sorting the emerging blockchain economy into increasingly clear categories. We feel that companies able to deliver real economic value, real product-market fit, generate real recurring revenues and increase growth and traction will be the survivors and ultimately the winners in this time. Because of this conviction we are strongly evaluating companies on the basis of revenue traction and product-market fit. Growth matters significantly as does an eventual path to profitability. Attainable profitability means “infinite runway” and whether companies attain this through a combination of lean operations and growing revenue, we want to back companies with these characteristics.
We are aware that there may be large opportunities in projects that are years away from traction, but such projects need very unusual characteristics such as open source engineering teams or DAOs which create an effectively zero-cost engineering construct (such as Bitcoin). But these kinds of projects rarely produce venture-class investment opportunities.
Therefore please have a look at these guidelines when submitting proposals for gumi Cryptos Capital.
Sharpened Focus on Traction
Therefore our focus has sharpened on:
- Traction, revenue and product-market fit
We are increasingly focused on practical entrepreneurs with great management, proven execution and solid traction.
Conclusion
This market continues to challenge even the best entrepreneurs. As we build the future together, we need the vision, drive and passion of new ideas and great execution. We continue to be passionately committed to the entrepreneurs who through their bold action are creating this future through delivering real-world value.
Disclaimer
Information is provided for general educational purposes only. This presentation is not an offer to sell securities or a solicitation of offers to buy securities. Nothing contained herein constitutes investment or other advice nor is it to be relied on in making an investment decision. For more important information, please see disclaimer
