Today, large companies dominate the world’s wealth and resources. The world’s ten largest banks hold $25 trillion USD in wealth, roughly a third of the global GDP. Almost all consumer product brands that we see in North America are controlled by just ten companies. The digital world is no different. New York Times notes that Amazon, Apple, Facebook, Google and Microsoft are “getting larger, more entrenched in their own sectors, more powerful in new sectors and better insulated against surprising competition from upstarts”.
While the increase in sharing economies has helped to create opportunities outside of established markets, these economies are still centrally managed by intermediary companies such as Uber, Airbnb and Instagram. The result is that shareholders of these companies often receive more financial benefits than the network participants. Similarly, platforms that host ads directed at consumers take all the revenue from those ads, even though it’s the views and clicks from those consumers that generate the revenue. Google and Facebook, for instance, take 73% of all ad dollars and 99% of all growth.
We believe that blockchain’s qualities — notably decentralized governance, an open, immutable ledger and the ability for peer-to-peer transactions — will provide the infrastructure to enable trustless systems that replace intermediaries and redistribute financial power and democratic participation.
Decentralized networks are not without challenges, especially in areas of governance structure, achieving consensus and interacting with off-chain apps and programs, among others. But already many exciting companies have come to existence.
Take, for instance, the Brave browser which aims to improve the efficiency of digital advertising. Brave created a new token, Basic Attention Token (BAT) that is exchanged between the users, advertisers and publishers — the only participants in the advertising loop on Brave. Blockchain is used to track user attention and BAT is awarded to both publishers for the ads that garner user attention and users for viewing ads. Through this model, the middlemen are cut out and there is direct, incentivized interactions between the publishers and the customers.
Golem is creating a decentralized sharing economy of computing power that provides a global, open source supercomputer that anyone can access — a system which may be able to compete with the likes of AWS cloud computing and Microsoft Azure in the future.
Take, also, Aragon, a community governed decentralized organization whose goal is to act as an online decentralized court system that isn’t bound by geographic or national boundaries. Members of the Aragon community hold Aragon Network Tokens (ANT) which provides them governing power to affect future rules of the community.
In 2017, more than $900M in VC investment and 300 deals were made in blockchain worldwide, excluding ICOs. Blockchain is part of the next wave of innovation whose growth is akin to the apps boom and the dot com boom that came before. The number of apps grew by 2000 times from 500 to a over a million in six years. We look forward to more companies that use blockchain and decentralized systems to be created.
Today we are officially announcing Hex Capital, a $10M venture fund that will invest in crypto assets and blockchain companies. Notable investors in the fund are Xsquared Ventures LLC, 7 Gate Ventures, Hamed Shahbazi. Notable investments so far include CryptoKitties, Basis, Bloom and Vault12.
Our fund operates with the following principles:
- We focus on the founders. We know that early stage ideas face a lot of uncertainties, so we work together with founders and equip them with resources to tackle problems and keep going
- We are in it for the long-haul. We back founders who want to build durable ventures that challenge the status quo and we support them from beginning to end
- We believe in exploration and experimentation. We believe that blockchain enables new companies and models that we are not yet aware. So we support founders to explore and build new innovations in the crypto ecosystem
- We invest in early stage companies. We’d like to bring our capital and expertise to a company from the very beginning
- We apply a data driven approach to investing in and managing companies. We spend time helping founders define metrics and use analytics to scale their platforms
If you are an working on a crypto project, please reach out to us — we’d love to connect.