Fifth Era/Blockchain Coinvestors Update #22

Given we have just opened a new subscription window for Blockchain Coinvestors, we are using this week's newsletter to reiterate our purpose and investment strategy and assess the degree to which it makes sense in light of 2020 challenges.

Purpose
Blockchain Coinvestors’ goals are to provide broad coverage of the emerging unicorns and fastest growth blockchain companies and to capture superior returns from investing in the leading blockchain venture partnerships:

  • Investing in pure-play blockchain venture capital funds

  • Maintaining relationships with the leaders in this field

  • Equity investing in real companies with real businesses

  • Active coinvestment program across portfolio funds

We continue to believe that this is the right purpose and are excited to be focused on it.

Investment Thesis
Our investment thesis is as follows:

  1. Invest into the Fifth Era. We believe we are transitioning from the fourth Industrial Era into a new Fifth Era in which a global digital world will transform everything humans do. Those companies that leverage new technologies to create new business models and customer offerings and build strong innovation muscle and capabilities will create enormous market value and those that don’t will flounder. We are living in unprecedented times in which technology and innovation are the leitmotifs of our lives and power our global economy and the human experience. To learn more we invite you to download a free copy of our introductory book The Fifth Era.

  2. Emphasize Digital Monies and Assets. For more than 20 years we have been Internet, Digital Content and Fintech investors. As such, we have an in-depth understanding that a global digital world can't be built without native digital monies and digital assets. The world needs to move paper based and legacy monies, payment systems, commerce platforms, financing of all types, investments, and other financial assets onto new infrastructure and enormous value will be captured by the leading companies that help the world's governments, financial institutions, corporations, and 8 billion people transition into this future. We have outlined our thinking in our book Blockchain Competitive Advantage.

  3. Focus on Early Stage Technology Investing. Investing in disruptive technology companies in their early stages of existence continues to be one of the highest performing asset classes as consistently shown by asset class performance trackers and academic studies. We emphasize early stage in our own investing and in our vehicles. We have also written extensively on the facts and figures here and are happy to share this too.

  4. Back Blockchain and Associated Technologies. We are not slaves to any specific technology, believing that the best disruptive companies and teams apply the technologies they need to meet the needs of the use cases they are solving for. However, we do believe that blockchain provides a powerful enabling and transforming technology. Look no further than Bitcoin to see just how it can unlock value on a global scale.

  5. Ensure Diversification. While early stage technology investing is high return, it is also high risk in terms of the likelihood of any specific company succeeding. So we stick to a strategy of very broad diversification. We need our capital to be invested into hundreds not tens of investments.

  6. Invest with the best. In early stage technology investing there is a big spread between the best investors' returns and the average. You simply have to invest with the best blockchain and digital money and asset investors to be sure of getting exposure to the most promising opportunities. We have spent more than 6 years gaining that access and are sharing it with you through Blockchain Coinvestors.

  7. Seek out selective follow-on coinvestments. Now that we have a very large (more than 200 company) combined portfolio in this space, we are actively monitoring it for the most promising follow-on rounds from the companies with the greatest potential and momentum. We also share these coinvestments with our investor circle through our active coinvestment program.

  8. Be Highly Professional and Very Low Cost. Given our provenance we believe in building our investment platform in a highly professional way, leveraging the best professional service providers and the most talented and experienced advisors. We also abhor high fees and costs. Just as when we helped launch iShares under Alison's leadership at BGI/Blackrock, we have taken out every element of cost possible so that we can maximize returns on the capital that is being invested at Blockchain Coinvestors.

2020 Outlook
We had wondered as Covid hit, whether our investment thesis would stand-up and as good investors should, we paused to re-evaluate. But in fact 2020 has only reinforced our view that the Blockchain Coinvestors investment thesis is the correct one:

  1. The pandemic has greatly steepened the adoption curves of the Fifth Era and the digitization of everything we all do. There is no going back.

  2. Governments, financial institutions, and large corporations are now fully committed to moving to digital monies and assets - though for many of them it is very hard to do given their legacy infrastructure.

  3. On the other hand, the disruptive technology companies are seeing their businesses grow very rapidly - from Binance to Coinbase to Robinhood to Uphold. Enormous value is being created in this window.

  4. At the other end of the spectrum, peer to peer finance is finally seeing the light of day in the very promising DeFi (Decentralized Finance) movement. We have seen centralized peer to peer lending (e.g. Lending Club, Prosper) and crowdfunding (e.g. AngelList, Indigogo, Kickstarter, Seedrs) before, but now blockchain based technologies are taking away the need for intermediaries sitting between the sides of each transaction.

We see no need to change our Blockchain Coinvestor's investment thesis. Rather we are motivated to do much more in support of it.

Subscription Window Open
We have just opened a new subscription window for Blockchain Coinvestors. To learn more, all you need to do is visit www.blockchaincoinvestors.com and signup. This will allow us to share the details of what we are doing with you. We hope you will want to learn more.

Thank you for reading.

Alison Davis

Matthew C. Le Merle

Matthew Le Merle