Investor Outlook 7 | The future of crypto and blockchain
These words mean a lot to some businesses, and nothing to others. Our featured investors weigh in on the role of crypto and blockchain for future start-ups.
Today’s Question: Crypto/blockchain companies seem to be in a freefall. What is your prediction for start-ups in that space over the next several years?
Ken Woody, President and Partner, Innova: Pretty much any deal involving Crypto/ICO (initial coin offering) is Dead on Arrival. Way too toxic right now. Blockchain technology is showing up in more and more companies though, and that trend is very welcome. We need more transparency in agriculture – where does the crop originate, how is it transported, etc. Crypto will bounce back, but investor interest has really dried up for now.
David Adair, Co-Founder and Managing Partner, Solas BioVentures: We believe it is unfair to lump crypto and its underlying Blockchain technology together. Blockchain technology, the platform underlying most crypto currencies, is fundamentally a way to address several complicated issues, such as asset tracking, drug delivery and medical records. One such company exploiting that underlying technology is EIR Systems of Chattanooga, a Solas BioVentures seed investment that utilizes blockchain to revolutionize pharmaceutical prescription management. Solas and its principals have not invested, nor will we invest, in the crypto arena, but strongly believe the blockchain technology has great potential to advance several areas in the healthcare environment.
Derren Burrell, Founder, President and General Partner, Veteran Ventures Capital: We do not currently have subject-matter expertise in crypto, placing instead our focus on national security and defense-related companies. While one of our portfolio companies (VeriTX) is utilizing blockchain technology, it is focused on streamlining inventory management within Department of Defense channels (severely needed in light of current world events), and VeriTX seems to be unaffected by the recent decline in industry trends.
Eric Dobson, Chief Executive Officer, Sheltowee Angel Network: After the FTX debacle, I believe the entire industry will accelerate into freefall (one person’s opinion). Crypto acts like a stock with no asset underlying it. And, with no fiat, its value is based purely on speculation. This is the epitome of the next-greater-fool theory in action. At the same time, there are many underlying reasons that crypto will continue as a commodity, some good and some nefarious. I think weak crypto offerings are going to collapse. But, the established/proven offerings, like Bitcoin, will continue to proliferate. I would expect additional scrutiny and oversight of these digital assets in the future by the SEC (Securities and Exchange Commission) simply due to the runaway stupidity, almost certainly in the zone of criminality, of FTX.
Scott Ewing, Principal Business Analyst, Appalachian Investors Alliance: We have mixed opinions on Bitcoin or crypto and blockchain within our network. It hasn’t been an area of prime interest to our investors.
Tony Lettich, Managing Director, The Angel Roundtable: The uncertainties and confusion which now appear in the Crypto/Blockchain world are, in our opinion, likely to make it much more difficult for start-ups in this space over the next few years. Reputations are important, and this segment’s “Rep” has been deeply tarnished. The loss of confidence following the FTX debacle implies it may be the first of many, and at a minimum, one might expect there to be significant calls for regulation in the “wild west like” Crypto/Blockchain world.
Grady Vanderhoofven, President and Chief Executive Officer, Three Roots Capital: I don’t have one. I do believe it may be worthwhile to distinguish between questions regarding cryptocurrencies as legitimate mechanisms to store value and predictions about the likelihood that a new wave of start-ups in the space may get traction.
