J2 AG 10 ConsenSys Q&A w/ Kavita Gupta + Jerome de Tychey Investing & helping the Ecosystem grow

so how many of you guys are actually making projects and looking for funding okay make sense so you guys should be talking to me separately instead of listening to this it's not a [Music] well Jerome is not very technical savvy so he's gonna figure out his PowerPoint presentation oh my god you took out Ventures already do you know how to use computer it's not your day okay how many of you guys know about consensus ventures wow that's impressive how many of you know about one or two companies which we have invested in okay let's see which one nope we read this this is one of your question which you should ask okay which one those are spokes not from ventures oh I wish I could invest in Newport they don't want my money I love you port okay I'm sorry no another spoke anyone in the room any of the ventures put folio companies guys check TechCrunch okay so I think we should start with something which you guys picked up consensus has to investment ventures model the first one is the incubation the innovation incubation lab where when you come in with a great idea and a team who can actually either technically or with respect to deep knowledge in that space can execute the project come in as a joint ventures with consensus which is like somewhere anywhere between 40 to 50 percent of equity is held by consensus but they bankroll the project from day zero and the bankrolling means anything and everything oh we got ventures uh he finally learned how to use laptop should I continue or do you want to jump the only way to interrupt or something yeah so what we do is when you start as a spoke anything and everything from a deep rooting ecosystem support getting lot helping you hiring ingenious building up your team marketing legal token launches everything is taken care by consensus so you can actually just focus on your product that's what the spoke model is which we call innovation / incubation lab ventures was started in 2017 September but the idea that the etherium ecosystem has become so big that just incubating everything inside is just virtually impossible for consensus so we still want to be part of lot of projects around but we mean do not want to be so deeply involved that we are building up the whole team with respect to hiring and providing support so that's how Ventures comes in how do you pick a venture or it spoke spoke how do you choose that's completely depends upon the company that's the company we always give them both options if you want to just take liquidity and a strategic partnership where we can help you connect with our engineers our thought leaders to brainstorm but not necessarily them being on the project go of adventures if you just want to come build a product and you need all the services because you don't want to build your own company at least for some time and you want to focus on it then grow the spoke route and what are the adverse changes for consensus don't say won't you grow in number of people already 700 plus we are growing crazily every day maybe we are already like 750 plus by today who knows we had over 28 countries the last one and the latest one is we just open an office in India and yeah consensus is growing okay I didn't know we are in office in India it was last week okay so you come from a VC background right okay so what's different from your past job compare today's job being VC in the normal industry compared to being VC in the production industry this industry is like a candy store you walk in and each and every project you look at you just have to like figure out how to invest and what to do with the project in a traditional VC world you are so sector specific you are looking for a long-term 10 year to 15 year of investment cycle your exit is basically if the company is gonna get acquired if the company is gonna go through IPO or there is going to be an M&A otherwise your money is stuck and now you are talking about a project where you go in and your liquidity Jackson in six months if they are doing tokens and even if they don't do tokens the option of that creates albrecht liquid market out there so the cycle you are looking for investment is anywhere between six months to three years and what is the competition for ventures or for companies for ventures I think every 21-year old kid has a crypto hedge fund today anyone who has bought either at $3 or $4 $10 $20 has a fun today I think but that's where the consensus part comes in because anyone can go and open up a fund but how many of them can actually create a strategic partnership of providing an ecosystem across the world getting some of the core coders on the call for helping if you are stuck in something getting the specific technical industry help if you want to expand into a particular space I think the type of strategic partnership which we bring in for our portfolio companies is unmatchable in the venture world so far if you don't any venture in France already in France yeah yes I don't know if we have we have one portfolio company a dieter yo yeah we have dieter here which is our first company from France okay Howdy's weren't like what was the process of how did they get selected how did they get selected I can't be honest now we have found us in the audience you have to be super nice no I think we get pictures from like pretty much like 50 to 60 companies which makes it to my inbox which means it already goes through like two three level so we are very fortunate the space where we are where we get so many interesting projects all the time the process is that the project really stands out with respect to application that this is actually going to take the atheneum ecosystem to a next level it's going to make a process anything to do with the ecosystem easier and adoptable and the team actually has the potential to execute it then we go over that so when in case of data it's basically how do you adopt payment of eater in the physical shops and for me that's the most exciting one because if you're creating an app and you can use that app to pay and any of Macy's or wherever you walk in using your crypto including tokens then you basically create the adoption at the another level so it for you de exit strategy is having the teacher talking listed somewhere and be able to sell those no so that's not an exit strategy that's definitely a part of building the company up because and that is not because from the valuation side but actually if the dieter tokens are gonna be in the market there's gonna be more circulation there's going to be more usage that's all we thing we are not one of those funds who will just take your tokens and dump it in the market after two months or three months and 8x 20x return and out of the market what we are actually doing is we want them to be everywhere so that there is a circulation but we will whenever we go towards our liquidation which is definitely not going to happen for next year or two till the market is market has enough liquidity of dethaw tokens there's an enough supply to actually work with the entrepreneurs to have small small batches in which ends up making the market up instead of dumping something and taking the market down so we work very closely with our entrepreneurs even during the time when we are exiting from the company and after you invested do you sit on the border do you always take the boots see okay we are taking what's it in your company so when we say helping the ecosystem grows does that mean that you do something from the regulation side up having a better understanding from the regulation authority of what the token is this kind of stuff yeah Brooklyn project how many of you guys know about Brooklyn project in Paris oh wow yeah with some friends here yeah everybody that you know they're actually consensus though so we actually the legal team at consensus have worked very closely with SEC consensus being the leader in the space also wanted to come up with certain standards or at least a stand on how tokens should be created traded invested or bought in this ecosystem and that's what Brooklyn project is and how do we how do we create certain standards which is what via as consensus should stick to and hopefully the market would follow so saft is a complete nono even if you are taking discounts how do we really show like it should not be a discount for Bob because we are buying as an investor if you are actually providing services as an advisor to a company that's the only way we should get advisory tokens so there's a lot of a Brooklyn project actually details on the public sale versus private sales or somebody has to add a value not just liquidity to get any discounts okay so is the broken project a way for consensus to keep a monopoly on the good the good I SEOs they could token launches how would that create monopoly at all because we actually are reducing with lot of people are making money and right now so when I'm going in the market and buying I'm saying we need minimum six months of lock-in period we actually going and saying we will not dump your tokens we will hold it for the longer time that is an vial all the other investors even today are not doing lock-ins so they have all the flexibility we are taking owners on ourselves and saying we want to make the market the second thing is we are saying don't give us deeper discounts if we are not really providing any services to you and that is matched with all the services we promised this is a red flag for you and someone say you come on be the venture for my company and I will give you a discount happens all the time it's no more normal conversation people even send us an email say whether on official consensus email have got so many emails saying we will just transfer it to you personally just I put your name on it and like they don't even want to do a pitch they just want to send tokens they directly asked for the wallet account so that's just the reality of the this whole token craziness in this market that is why a project like Brooklyn Project is so needed to have some sort of a sanity in the space okay any question from the room yep yeah so the valuation really varies project to project there is no standard there is no benchmark to be super honest every term sheet which we have done is unique with respect to how we have crafted we started thinking that we're gonna do equity in some tokens and some over time it evolved into equity and token combination now it's more evolving into how do we even value equity into tokens even if they are not doing token so it's it's a daily changing market but what we really believe when we are looking at a company and really want to invest first thing as any VC would say is their real use for blockchain if there's a block use used for blockchain is it actually gonna this uses neither like in next 1 year or this uses neither like after 5 years like we can live without at first other parts are needed the third part is if the team is building it how many how many holes are there for this team to actually be able to do it over the next 6 months to ear because the barrier to entry is so low you can have somebody sitting second-year students sitting in their dorm room can come up with the company competitive company in 3 months without you even knowing it so I think if the team can quickly turn it around at least an MVP where now they're gonna hit the main net if the team actually understand the technology part apart from the industry for which they are launching because now you have two big sectors which has to come together and if we come on board as consensus which is a very big plan what do we bring on table so based on that we goes from one valuation to another lot of times we say because we are going as a strategic partner our valuation may be little lower then lot of liquidity player could give and so we end up doing a bridge round instead of the price round but in either cases we always try to have a token economics on top of it which is on another bottom altogether because lot of times we do precede and see it lot of times when we go into the company they don't even have a defined token design so sometimes that's a good flexibility to have and sometimes it could really mess up our valuation after the dump sheets it's closed so hi my name is ish so how do you handle a pitch which probably competes with one of your spokes or the work that you do at consensus the consulting arm I mean if it competes with one of your spokes or the main thing that you do at consensus yeah so most of the time if let's say this ecosystem is so big that you need couple of products a couple of different way of looking at the same solution but what we do is we go completely honest if we see something which is directly competing with one of our spokes we actually get both parties on the call together and it actually helps us also to understand how those two are thinking on the same solution in a different way and if we still feel after that that we are still super interested in this company irrespective we actually have done one of our companies we have gone and invested in them but we have tried to create some synergies if possible until and unless the entrepreneur absolutely want to keep up full Chinese well then that's acceptable too but so far 95% of the situation we have seen the etherium ecosystem is so collaborative and so supportive most of our spokes have actually come and held these companies to go to a next level so it's been Dutch where it has been a good journey so far please just the microphone is needed for the streaming so thank you are you looking only the companies that are extending ethereal Mecca system or blockchain ecosystem in general so what about other block chains private chains and so on so we are only investing 100% aetherium blockchain system I mean there's no prizes for guessing because it's Joseph Levine's company but looking at I don't I personally so far every other other blockchain solutions I have seen I haven't seen the developer community or the product ready itself while comparing it to whatever we are getting in etherium to even be interested in it that's the first problem which I have so far said that if three years four years down the lane there's a big community coming from the other blockchain and the project makes sense we may so I won't say never but I don't see it for next couple of years on your second question on the often solutions we do I mean we all accept that etherium still has certain limitations so we do look how entrepreneurs are pouring off change solutions on chain solutions and being super creative about it the more creative they are and taking care of all the scalability issues or the gas price issues and figuring it out outside the blockchain and using blockchain for the core part of it that actually ends up being a better solution for us and more creative so I can't take their name because we are still closing okay he's not happy we have to repeat okay can you just give you give us a few names of startups that you've been impressed with of change solutions I'm not sure how much I can take the name but a lot of startups are using like AWS and ipfs and then they are also doing they go through a verification process then after verification go off channel of the state channels to all the computation and come back on the authentication side and then go towards the last mode so we are seeing a lot of very creative solutions around it said that I think more and more creative solutions are gonna come on people are creating like top players over blockchain which not only do does computation but also is taking care of lot of verification and then just have a unique identifier to go back on the main chain so that's super exciting - are there any specific sectors that you focus on I saw for example you involved in the blockchain for social impact coalition there are specific ones that you that you're interested in sector wise I have to say social impact Vanessa is sitting right in front who leads our social impact job at consensus I think as a portfolio what we are creating is a big circular economy where every company can feed to and feed from so basically the whole stack you want to invest in everything I am very bullish on a lot of exchanges because that also provides a lot of help and liquidity to the whole portfolio I'm also looking for a great hardware security solutions and a software security solutions both on the wallet side and also on the data side when you basically move off channel off chain the other thing which I am apart from applications like that tons of applications you can go on land titling registration hell internationally our there's a lot of innovative media and publishing coming but on the protocol layer I have heard tons of pitches on media a level but I actually haven't worked out a single one which can do a content publishing from that protocol layer in a very innovative way instead of just taking it and putting it on blockchain and saying now people can make money because of just the data decentralization so I'm looking more innovation out there I always Consensus offended with it how are you funded what is your source of fund how is consensus funding so far it's all as much as I know it's Jews dragon money interesting thank you all the game of throne lovers would get this joke by the way if not then watch the TV series that's it thank you so back to the election for a social impact question what is your policy for let's say social impact businesses that are not really nonprofits but rather pursuing a social goal and the goal is not to give money to the investors but you impact society with metrics like life save things like that is it interesting to you from the Mincher perspective or consensus is social impact standard from inches okay so if they have a strong social message like for an example low-income housing non fungible tokens so you are doing it with a very strong social message but you are still creating an economy around it which will help not only the stakeholders who probably would need help but also have a very good return value then that's a perfect example for us to go so of course we would love those projects and I think that's pretty much a wrap so all the cool ideas I do want to hear that so I'm gonna be outside I want at least three awesome companies out of France that's what jerome promised me before I leave so please find me outside thank you so much guys