Venture capital funding has played a huge role in the success of high growth businesses over the past decades. Instagram, Uber and Snapchat are just three relatively recent venture capital (VC) winners, with earlier examples Amazon, Facebook and Google rolling off the tongue as easy as ABC.
But will venture capital be as relevant to the Bitcoin economy as it has been to the giants of Silicon Valley?
In the second installment of the CambrianSV debate series, CoinGeek’s Charles Miller pitted two brains from the Bitcoin bootcamp in Lisbon against each other to argue their cases and share their views on the topic. Aaron Burns, CFO of social media platform Twetch and Jackson Laskey, a venture capitalist for Unbounded Capital, went head to head in a heated session.
Favouring a return to angel investors over VCs, Aaron was adamant from the start that venture capital would be of “very little importance” in the Bitcoin world. He pointed to the sour taste felt by many in Silicon Valley when start-ups put in the hard work, only to have “three fat cats come in with some smooth talk and get you to sign a contract and give away 35% of your company for peanuts”. Then if the company fails, it’s burdened with returning the cash.
Jackson prefaced his opening argument by noting that the room was rightfully critical of the way some venture capitalists have operated, particularly in Silicon Valley, up to this point. Nevertheless, he was adamant that leaving VCs out of the equation would be a mistake, “akin to the ‘full node’ fallacy of everyone needs to run their own node, or the ‘decentralised everything’ fallacy that has sort of destroyed Ethereum.”
The heat turned up when Jackson attempted to squash Aaron’s argument outright, by stating that angel investors are the same as venture capitalists. Aaron was quick to fire back at this, calling out the VC industry as wolves in sheep clothing; or as he put it, VC’s “place bets on a million horses and they’ve rigged the entire game in favour of themselves”.
Charles brought the debaters back to the central issue of whether the Bitcoin economy will allow start-ups to liberate themselves from needing VCs. Aaron pointed to the number of millionaires in the Bitcoin world and thus the option of finding investors with an actual interest in the futures of those that they put their money behind. And whilst Jackson acknowledged that the lower development costs associated with building businesses on chain may allow people to make revenue quicker, this was a far cry from the realities of turning into profit-making entities.
Jackson explained that the job of VCs is to identify ventures that are less risky than the market perceives. Speaking to a room of people who have chosen to build on BSV, Jackson said: “don’t you think everyone in the world is going to say, that’s crazy. That’s incredibly risky. You’re building on an industry that’s not established. You’re not building on the major chain. But I’m here and I know there’s no risk on building on BSV… I can give you guys money at a more favourable rate than almost anyone else can.”
It appears risk is in the eye of the beholder.
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