The venture capital industry is 60 years old and set in its ways. That is about to change.
VC terms are frozen in time. GPs offer self-liquidating LP funds, with a 2 and 20 list price, and a 10 year fund lifespan. The first fund with this structure was offered in 1958.
Since then the deal documents have become optimized around use of cash, incentives, and taxes. It works! Assets in LP funds have ballooned to over $5T, with over $1B in venture capital. …
Banks currently hold about $100T worth of deposits globally. A lot of this money is underused and earning very low rates of interest. DeFi will make this money more useful. Interest-earning stablecoins such as our new MaxUSD can replace bank accounts.
MaxUSD will provide benefits for customers that hold it.
Blockchains use consensus protocols to bring strangers into agreement, at huge scale. It’s time for finance to catch up. Launchpools is a consensus protocol for fundraising. Investors can indicate interest in a deal by submitting refundable stakes. Fundraisers (sponsors) can engage quickly with potential investors, and then build consensus around final terms.
Rental deposits are a headache for everyone. Tenants tie up their cash with near-zero return, and have to beg their landlord to give it back at the end of the lease. Landlords have to set up a bank account and do bookkeeping.
dEscrow handles these deposits with a smart contract. Tenants will find it easier to get deposits back, and they will earn interest on their money. Landlords get simple compliance.
Apartment deposits are a simple example of an escrow and arbitration workflow. “Escrow” is the process of putting up money to guarantee an agreement, in this case, the apartment…
Last fall I pitched my friend Sesha with “DeFi is fantastic. Let’s apply the Flagship model to DeFi.” That model is a “venture studio,” where we do the work to create and spin out a series of protocols.
Venture studios succeed by producing extra unicorns. According to CB Insights, about 1.28% of funded companies go on to become unicorns. Idealab reports a 5% success rate, and Flagship Pioneering reports a 25% success rate.
Flagship Pioneering companies take 6–8 years to reach IPO. One of their most successful is Moderna, which stepped up to save the world with Covid vaccines. They…
DeFi is the best business opportunity I have seen in my career. Let’s look at the numbers.
This chart from May is out of date — the current asset measure is $63B , but one fact remains true: DeFi assets and revenue have grown more than 60X in one year. Growth is what creates opportunities for startups.
Almost all of this growth is inside services for crypto trading and leveraging. That’s just a small bit of the financial services industry.
Amazingly, this growth rate can continue. The available asset base in financial services is thousands of times larger.
DeFi is moving so fast that we are investing in offers that don’t exist yet. Launch pools give investors a way to engage early. They combine features from escrow, SPACs, Kickstarter, and DAOs, using some magic that is only available in the world of DeFi.
Investors can put refundable stakes into a “launch pool.” This gives them votes, and a place in line, with rewards for early staking. When the investment is fully defined, they can commit to it. This mechanism can reduce startup cost, risk and time.
An entrepreneur considers a lot of up front costs and decisions before…
DeFi is the best business opportunity that I have seen in my career. It’s a hot market, delivering real consumer benefits. Fortunately, I have been able to persuade seven entrepreneurs to join me in building products for “real-world DeFi.”
Maxos is working on a pipeline of projects that we describe as a “venture studio”. This helps us to break the huge restructuring of the financial industry into specific projects that we can contribute to. We are using a weekly group call, a stage-gate process, and a set of private and public Discord channels.
I’m honored to be working with:
Bitcoin is up, leaving crypto owners with a Lambo-load of value correlated with bitcoin. This increases the volatility of their portfolio and their risk of losses. They will be tempted to “rebalance”, to sell some of their winnings, and look for new opportunities with new upside.
People do this instinctively. And their instinct is supported by math. Modern Portfolio Theory tells us that we can make more money, with less risk, if we own “uncorrelated” assets. This carries us through times when BTC is going nowhere, but other assets are on average going up.
“When the apocalypse comes, everyone will be on their own to buy healthcare.” Dave “ePatient” DeBronkart dropped this casually into a phone call. I had to ask about the apocalypse. “It’s when the system collapses under it’s own cost and complexity”. Our conversation happened a month before the COVID epidemic wiped out revenue for hospitals and pushed them toward bankruptcy.
Maybe this will be good! Maybe we will find that we can buy great healthcare with the money that we save because we were too sick to go out and buy a $4 coffee. Maybe machines will concoct a personalized…
SaaS entrepreneur/engineer. Founder of MAXOS, Real World DeFi. Previously founded Assembla, PowerSteering Software, on team at SNL Financial.