What that $50M ConsenSys venture fund means for cryptocurrencies, and for Brooklyn - Technical.ly Brooklyn

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Sep. 7, 2017 12:58 pm

What that $50M ConsenSys venture fund means for cryptocurrencies, and for Brooklyn

Other Brooklyn venture capitalists think it could help the startup ecosystem here.

Is Ethereum the future of contracts?

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Correction: Kavita Gupta did not manage the Eric Schmidt Family Foundation, she did impact investing there. The story has been updated. (9/11/17, 9:46 a.m.)
The new, $50 million venture fund dedicated solely to blockchain startups will bolster the volatile world of cryptocurrency, but it might have even more impact in making Brooklyn a center of the blockchain world.

The fund belongs to ConsenSys, a blockchain application studio led by one of the creators of the Ethereum blockchain, Joseph Lubin.

“Joe wants to explore every possibility to extend the ecosystem, to have entrepreneurs from all over the world come on the blockchain space,” explained the fund’s founding managing partner, Kavita Gupta, who was kind enough to talk to us while running late for a flight after traffic in the Lincoln Tunnel. “You are doing a business, so of course you want to make money … it’s not a foundation. But the reason we’re investing with a deep focus on the blockchain world is that we do think the blockchain will impact every aspect of our world.”

ConsenSys Ventures founding managing partner Kavita Gupta.

Kavita Gupta. (Courtesy image)

ConsenSys Ventures will fund blockchain startups at the seed level, between $100,000 and $1 million, Gupta said.

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Gupta comes most recently from the family foundation of Eric Schmidt, the former CEO of Google and the executive chairman of Alphabet. Before working in impact investment there, she served in the investment arm of the International Finance Corporation, a part of the World Bank that focuses on economic development in the developing world through private ventures.

“I used to invest in Africa and the Middle East, and I have seen firsthand in Kenya, Congo, Egypt, Syria, Lebanon, how changing technologies can really build up a whole new economy,” she said. “Blockchain takes down the costs of transactions, authenticating documents and developing markets and emerging economies are the biggest opportunity.”

Some think the Bushwick-based fund will have impacts closer to home too.

“I think it’s huge, maybe more so for Brooklyn than for the blockchain or crypto world given that $50 million deployed over a few years is a drop in the bucket relative to the ICOs and big VC funding in the blockchain tech space,” said J.J. Kasper, a founder and partner at Blue {Seed} Collective, a Brooklyn venture capital fund. “There is big need and opportunity for ‘smart dollars’ in the blockchain and crypto world and the Consensys team seems to know what they’re doing.”

While Gupta did not want to get into the specifics of where the $50 million for the fund came from, she did say that the fund is an arm of the ConsenSys company, which is owned by Lubin.

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Given that Lubin is one of the creators of Ethereum and so likely has large holdings of it, and that the price of the Ethereum token, Ether, has risen 2,811 percent in the last year, from $11 to $337 currently, it’s likely that at least some portion of the fund comes from that cryptocurrency appreciation.

Other Brooklyn VCs struck a tone of cautious optimism, seeing the use cases for blockchain startups but wondering about the possibility of governmental regulation.

“[We] look at the application of blockchain and the Ethereum ecosystem as a great opportunity to address all sorts of urban impact opportunities — whether it is distributed energy, citizen-government transactions, shared mobility and, of course, disintermediated marketplaces,” Mark Paris, the cofounder and managing partner of Urban.Us wrote in an email.

His fund is another new one on the Brooklyn scene, and will announce its latest cohort of portfolio companies later this month in conjunction with Greenpoint’s Urban-X accelerator.

“We see no shortage of capital for this space. [Union Square Ventures] has been active and a host of other traditional private equity vehicles are involved,” Paris said. “In addition, we have also witnessed multiple ICO-based funding modalities to drive capital into startups and their use cases, although we are going to continue to watch where US (and international) regulators come out in regards to this.”

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Tyler Woods

Tyler Woods is the lead reporter for Technical.ly Brooklyn. His work has previously appeared in the San Francisco Chronicle, the Houston Chronicle, CT Financial News and the New Canaan News. There's little he loves more than great tweets on Twitter.com.

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