Blockchain tech has fuelled an incredible wave of high quality startups all over Europe, says Sunny Dhillon.
Numbers show that venture capitalists are investing more into startups and entrepreneurs. Is this the case in the United States or also in Europe?
I’m largely a US-focused investor so I can only speak to the domestic market. In the first half of 2018 alone, $58bn was deployed across 4,000 startup companies. Silicon Valley is a rare ecosystem of entrepreneurs, investors, mentors, academics, and technology research and development that has grown into the centre of the global technology industry since giving birth to technology giants such as Atari, Genentech, Apple, Hewlett Packard in the 1960s and 70s.
I was a tech investment banker and early startup founding team employee in London in the mid 2000s and I’m thrilled to see how much bigger and more robust the startup environment is whenever I’m back in the capital.
I’ve been investing for the last decade and the early onset of blockchain tech is the first time I’ve seen such an incredible wave of high quality startups emerging all over Europe and Asia, as well as Silicon Valley.
How can startups, especially the early stage ones, manage to attract the right investment?
I focus on early stage seed and series A investments across consumer and enterprise technology startups. I have a particular interest in e-commerce, digital marketplaces, media content related businesses, and frontier tech such as artificial intelligence and blockchain. We’re constantly looking to work with experienced technical founders who are building impactful businesses.
Almost always, the first thing I’ll pay attention to is the quality of the team. Who are they? What have they done previously? How well do they know one another? Are they the right team to go after this particular problem?
Next, we’ll focus on the market opportunity. If we’re seeing yet another photo and video sharing app or another e-mail management software tool, I’ll likely pass on any further meetings as these markets have just become far too crowded. There has to be real growth opportunity on the horizon for the startup, with the genuine potential to 100 times in size within a few years. Tying to the earlier ‘team’ point, the founding team should be very well suited, both in terms of experience and expertise, to make them the right team to tackle the market problem that is in need of being solved.
Without a doubt, financial services infrastructure will be made more efficient with blockchain technology
Furthermore, understanding how to craft a compelling story is important. What’s the problem being solved? Who is the team? Who are our competitors and why are we better than them to address the market need? What is our go-to-market strategy? How will we use the VC investment funds that we’re currently raising? What are the performance milestones we’ll deliver before raising follow on rounds of funding?
Blockchain is still dividing nations and economies. In the end, who will be on the right side of history?
History teaches us that efforts to quell technological progress are almost always thwarted by Schumpeterian creative destruction. Without a doubt, financial services infrastructure will be made more efficient with blockchain technology.
Payments, voting, healthcare - they can all be made more transparent and efficient through blockchain integration of some kind.
We have a long way to go until we reach mainstream adoption and integration of the technology, but it’s still very early. Governments that provide clear regulatory guidelines will see blockchain startups follow.
Malta is pitching itself as ‘Blockchain Island’. Does it have the right requisites to deliver on this pitch?
I’m not too familiar with Malta’s specific blockchain policies, but look forward to learning more during my visit, particularly on this topic.
I know that Binance and other exchanges have relocated their operations to Malta and I’m sure it won’t be long before Gemini and others follow suit.
You recently wrote how, while cryptos have generated the lion’s share of attention and investment, security tokens could be the next big thing. What are your predictions based upon?
My predictions are based on what I’ve seen through my investments so far. Skale Labs helps scale transaction throughput for decentralised exchanges and the latter are growing in popularity - still small compared to the big central exchanges, but growing in transaction volume. Harbor is an automated compliance platform for securitising and tokenising real world assets such as real estate. Trust Token is collateralising real world currencies, starting with the US Dollar to bring a trust-worthy stable coin to market.
You will soon be present at the Malta Blockchain Summit. What are your expectations?
I’m always in learning-mode and my attendance in Malta will be no different. We’re all ‘new to the space’ and I’m particularly interested to learn more about base layer infrastructure improvements, financial infrastructure innovations, and entertainment applications of blockchain tech.
Sunny Dhillon is a founding partner at Signia Ventures, an $85m seed and series A venture capital firm based in the San Francisco Bay Area and backed by a couple of LA movie studios, the Smithsonian Museum, and a Chinese internet company. He previously worked as the first business development employee at a venture backed spin-off of New Line Cinema, directly for the Lord of the Rings trilogy producers, as well as in corporate strategy for Warner Bros., before launching his own startup and becoming an investor. Either personally or through Signia, Dhillon has invested in the following blockchain projects over the last two years: Dfinity, Basis, Harbor, Tzero, Polkadot, Polychain Capital, 0x, Skale Labs, Trust Token, and Orchid Protocol. Through these projects he is a coinvestor with Andreessen Horowitz, Founders Fund, and Pantera Capital, among others. Dhillon’s writing on blockchain tech has appeared in Forbes and TechCrunch.
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