THE PUBLIC BLOCKCHAINS ARE COMING !

Fifth Era/Blockchain Coinvestors Newsletter

Vol. 3, No. 10, May 2021

The Public Blockchain Products are Coming !

Regardless of whether Paul Revere really said "The British are coming," it seems a fitting way to begin this edition of our newsletter wherein we outline how the East Coast (financial) community is getting awoken to the arrival of a host of public blockchain companies and the products that follow.

Context

Newsletter Vol 3., No. 8. outlined the arrival of public pureplay blockchain companies as we discussed SPACs and why they are relevant to blockchain and crypto. With the enormous value creation in the blockchain sector, a subset of the unicorn blockchain companies and projects are now in the throes of deciding whether or not to become public companies. We predicted that by the end of 2021 there will be 20 to 30 pureplay public blockchain companies, with many more on the horizon.

Critical Mass Now Reached

Today, we think critical mass has been reached. There are now enough pureplay blockchain and 'substantially focused on crypto' public companies that it makes sense to create products built on top of them: Indexes, mutual funds, ETFs, and so on.

The principal pureplay blockchain public companies are Coinbase, Galaxy Digital, Riot Blockchain, Voyager Digital, Canaan, Bitfarms, Hive Blockchain, and Ebang with eToro and Bakkt in the de-spac process. In addition, there are a number of public companies that are substantially focused on crypto. Microstrategy has turned itself into a Bitcoin tracker stock, technology companies including Northern Data, Marathon Digital, and Nvidia and Fintechs like PayPal and Square have leaned into the space and more and more of their EBITDA is driven by blockchain and crypto activities. There are others as well.

We have reached the point where an index of 30 public crypto companies is a possibility.

Public Blockchain Products are Coming

So it is no surprise to us that Bitwise, the leading crypto index and fund company (we are early investors and Alison is senior advisor to the board) has just announced the launch of its Bitwise Crypto Innovators 30 Index and its new Bitwise Crypto Industry Innovators ETF (NYSE Arca: BITQ).

ETFs are superior products over most other fund formats as we discovered in the process of strategising and launching iShares in the 1990's - today the world's most valuable branded product bar none. For many investors, including most large institutional investors, ETFs are their most efficient way to invest in public markets. The advantages are ease of access, low cost, tradeability and liquidity and in the case of blockchain ETFs, the promise of high performance in a market that is starved for returns.

Opening up blockchain to these enormous institutional sources of capital, which are hungry for returns and increasingly interested in accessing exponential technologies like blockchain is likely to be extremely important to the sector.

Conclusion

BITQ is the first ETF that the SEC has authorized to use 'crypto' in its name. It will not be the last. Just as the distributed movement wants to democratize access and reduce costs and friction, so Bitwise is helping to do so with this first crypto focused ETF. We expect a great deal of interest among institutional investors now that they can invest into pureplay blockchain companies within their existing investment processes.

We believe they deserve a round of applause.

Thank you for reading.

Alison Davis
Matthew C. Le Merle

ABOUT BLOCKCHAIN COINVESTORS

Since 2014 our goals have been 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. The strategy is now entering its 8th year, and so far we are investors in 25 pure-play blockchain venture funds in the Americas, Asia and Europe and in a combined portfolio of more than 300+ blockchain and crypto projects including 30+ blockchain unicorns. Simply put, our funds, SPVs and syndicates represent the best way to invest in blockchain businesses.

FUND PERFORMANCE

Blockchain Coinvestors Funds are continuing to generate strong returns. To date, over 80% of the funds we are invested in are performing as top quartile funds against the Cambridge Associates benchmark. This remarkable performance results from powerful tailwinds driving the world towards a future in which digital monies and digital assets are ubiquitous and the businesses and projects providing blockchain and crypto products, services, and infrastructure benefit disproportionately.

BLOCKCHAIN COINVESTORS FUNDS

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:

  • Fund III is open only to investors who meet the Qualified Purchaser definition with a minimum subscription of $250,000.

    • A “qualified purchaser” is an individual or a family-owned business that owns $5 million or more in investments. The term “investments” shouldn't include a primary residence or any property used for business.

  • Fund III Parallel is open to investors who meet the Qualified Client definition with a minimum subscription level of $250,000 at the discretion of the Manager. Please contact ir@fifthera.com if the minimum is of concern.

    • Currently, an individual or entity is a qualified client if he, she, or it: (i) has a net worth of $2,100,000 prior to investment in the fund (excluding the value of his or her primary residence).

While the two funds are substantially the same, there may be some funds and investments that are only available in the Qualified Purchaser vehicle. Blockchain Coinvestors funds can take investments via IRAs. We support several providers, including AlgoIRA, Kingdom Trust, Millennium Trust Company and Pacific Premier Trust Company (Pensco).

Please visit the Blockchain Coinvestors website to learn more about our offerings. You can also reach our Investor Relations team directly at ir@fifthera.com.

BLOCKCHAIN COINVESTORS SWISS

We are excited to announce that Blockchain Coinvestors Funds are now available through Swiss certificates for those of our non-US investors who prefer this approach. The underlying fund is the same, however, our Zurich based team at Blockchain Coinvestors Swiss, who will introduce in future weeks, can provide detailed information regarding this investment option. Email us at mlemerle@fifthera.com to learn more.

LINQTO
'Private Investing Made Simple'

While our funds are only available to Accredited Investors who are also Qualified Clients we believe in the democratization of investment access to all investors and look forward to that day. In the interim, we have partnered with Linqto which is an easy to use Mobile and Web app that makes it exceptionally easy to invest into attractive opportunities. The provide access to Accredited not Qualified Client investors as well as much lower minimums. Go to Linqto.com or download the app from your App store to use this approach.

BLOCKCHAIN COINVESTORS ANGELLIST SYNDICATE

Continuing the theme of the democratization of investing, we have a rapidly growing Blockchain Coinvestors syndicate on AngelList providing access to selected coinvestments. Please join us and our partner Lou Kerner on AngelList.

REGISTER NOW FOR UPCOMING WEBINARS AND CALLS

Our investment team hosts bi-monthly webinars and calls to help educate our community about the Fifth Era, fintech, blockchain and crypto. We discuss important trends, tailwinds and investment themes including what we have learned and how we are using our knowledge to inform our own investment thesis and actions. Below is a list of upcoming webinars for which you can register by clicking the links:

Options for Investing in Blockchain & Crypto

- May 24th, 7:00am PST

- May 24th, 12:00pm PST

Blockchain Coinvestors Fund III First Closing

- June 7th, 7:00am PST

- June 7th, 12:00pm PST

Options for Investing in Blockchain & Crypto

- June 28th, 7:00am PST

- June 28th, 12:00pm PST


Recordings of past webinars and calls can be found at www.fifthera.com/webinars.

RECENT PRESS

"The best way to invest in Blockchain businesses"

Matthew Le Merle