Sramana Mitra: Let’s double-click down on each of those categories. Give us some examples of ventures that you have invested in that particularly stand out as great examples of leveraging Blockchain to address one or the other of your two categories.
Brock Pierce: I started Blockchain Capital back in 2013. It was the first venture fund in this sector back then. I’ll use one example. I think we’ve invested in over 70 Blockchain companies. I still am the most active venture investor in the ecosystem. There are now plenty of funds doing this. I’m always going to where the market is going and what is needed most. I consider myself a servant.
Abra is a very interesting one. The founder is a very experienced fintech entrepreneur having built multiple companies. Abra is taking advantage of regulatory arbitrage. PayPal is in only about 30 countries or so. That’s because of financial regulation. It’s very difficult for businesses doing fintech to expand into nations. You have to abide by the laws of the land.
To be financially regulated is very complicated. Therefore, there are no global financial systems. They are confined and limited by the laws of the land. Abra is recognizing that with Blockchain technology, you are not a custodian of your customer’s fund. You are not holding their money in custody. You are just providing software for them to be in custody of their own asset.
Therefore, the regulations are different because you are not holding your customer’s funds. You are not restricted by the same regulations. Abra is essentially the first truly global financial system. Think about WhatsApp for money. Abra is doing a great job in providing users around the world with the tools to be able to send money from place to place, from person to person.
Sramana Mitra: Is that a consumer brand or is it going to market through financial institutions? What is its go-to market?
Brock Pierce: It’s consumer. Financial institutions are confined by the countries in which they’re regulated. This is the first application that I’m aware of that is bringing financial tools to consumers all over the world. That company is funded by American Express and many of the top financial institutions in the world. They understand how limited their businesses are by these regulations.
Sramana Mitra: This is fascinating. Let’s do another example.
Brock Pierce: I gave you a consumer application. Let me try and think of a good example of the developed world and tools for big companies or traditional institutions that are upgrading themselves. From an infrastructure perspective, it’s not the sexy side of the industry. You have groups that are developing open source software in much the same way that you had Linux and Red Hat.
I’ll use one for example called Block One. Block One raised a small seed round near $10 million. That business raised a small amount of money to create an open source protocol known as EOS. That business brought in over $4 billion of profit in its first year making it the most profitable startup in the history of the world.
Sramana Mitra: What does the protocol enable?
Brock Pierce: It’s scalable million transactions per second. It enables, what will be, the upgrading of the internet today. It’s the most profitable startup in the world by more than 10 times to its closest contender. It would make investing in Facebook look like it was a mediocre investment. That’s an example of an interesting startup we funded less than two years ago.