We Need to Go Deeper: Crypto at Speedinvest

Even though Speedinvest might appear like a generalist fund from the outside, with our six deeply specialized vertical teams (Deep Tech, Fintech, Health, Industrial Tech, Marketplaces & Consumer, SaaS & Infra), we invest in pretty much everything tech, software, and hardware that is out there.

So it’s unlikely to surprise anyone that we are also deeply interested and actively investing in crypto.

Given the current volatility in crypto this might seem like odd timing, but from our point of view markets exaggerate in both directions. Unlike traders who have to be dialed into short-term movements, we follow a long-term investment strategy and track the progress of the underlying technology rather than the current market sentiment. We are convinced that crypto will be an important building block for products for years to come. Short-term market madness isn’t a concern.

You might also think “Oh jeez, another TradFi VC fund announcing that they are venturing deeper into crypto”. Point taken. Let’s unpack how we look at crypto: what we are interested in, what we did so far, where we’ll go from here, and why our deep sector expertise enables us to provide a unique value-proposition.

But first, why crypto at all?

Whereas most technologies tend to automate workers on the periphery doing menial tasks, blockchains automate away the center. Instead of putting the taxi driver out of a job, blockchain puts Uber out of a job and lets the taxi drivers work with the customer directly.

- Vitalik Buterin, co-founder of Ethereum

With the constant stream of news of hacks, scams, unethical crypto influencers, collapsing ponzis, crypto volatility and the whole debate on the environmental havoc of crypto (which, luckily, is being taken seriously) it is easy to dismiss the whole space as a fad. But after cutting through all of this noise, the core idea of crypto to enable open, trustless and permissionless interactions remains sound.

Platform and technology shifts tend to happen gradually, then suddenly. Not too long ago, people were still scratching their heads about how open source software might ever “conquer the enterprise” and if we’d ever see open source companies as category leaders, but we all know how that played out. Crypto is unlikely to be different.

Just like any open source product can be built as a closed source product, anything that can be built with a blockchain can be built as a centralized product on top of a database. But similar to the vast open source ecosystem, blockchains enable composability and on top of that a shared trusted canvas for developers to build their applications:

With blockchains you get credible [sic.] neutrality out of the box. Different developers are comfortable building inside a shared execution environment. If Western Union built a smart contract execution system, you'd have a much, much harder time convincing developers to build inside of it than you would on Ethereum. It would be much less likely that Ethereum would shut off, change the rules, ban you from the platform, etc.

The advantage that blockchains give is composability. Thousands of different applications can instantly talk to one another using standardized calls inside atomic transactions. Databases by contrast are siloed. So they work really well if you stay within the application that database was built for. [...] Imagine how hard it would be and how many hoops you would have to jump through to be able to use Venmo to buy Nasdaq listed stocks. In contrast USDC and Uniswap work together seamlessly because they're both built on the same common credibly neutral layer, Ethereum.

- Doug Colkitt on Hacker News 

Blockchains are changing the way we interact with the internet, how value is created, transacted, and transferred across it. We expect blockchains to power the backend of many (financial) applications, replace intermediaries and enable all sorts of peer-to-peer marketplaces in a not too distant future.

There is a lot more to crypto though — crypto will redefine every vertical in the economy and that’s precisely where our broad sectoral coverage and expertise comes in handy.

Deep Tech

With our Deep Tech team we cover everything from AI to quantum technologies and materials to biotechnology — whether teams are spinning out academic research, or experienced engineers are building the next essential platform. At its core, crypto relies on cutting-edge research and cryptography: Zero-Knowledge Proofs (so called ZKPs) and Scaling solutions (so called L2s) such as Optimistic Rollups and Zero-Knowledge Rollups to name a few.

Fintech

Crypto plays a big role in Fintech with 9 companies in the space becoming part of the Forbes Fintech 50 2022. From providing financial services for the previously unbanked to developing new financial products. Fintech innovation in crypto is happening at break-neck speed and we’ve been very active over the years.

One of our earliest crypto investments was Bitpanda, a neobroker that is now a unicorn. But that was only the beginning. We've sinced invested in:

• ‍Flowdesk, a market maker specialized in crypto exchanges
• ‍Upvest, offering an investment API spanning both traditional finance and the DeFi space
• ‍Fiat Republic, enabling fiat rail access for the web3 economy
• ‍Octav, providing users with comprehensive DeFi portfolio data
• ‍Exa Finance, a multi-asset swap exchange enabling seamless transactions between fungible and non-fungible tokens
• Unstoppable Finance, building a user-friendly crypto wallet providing a “front-door” to the crypto economy
• consola.finance, the first end-to-end finance and crypto accounting collaboration platform for web3 firms

Health

Blockchain technology has the potential to revolutionize the healthcare system. Both on the side of medical data, by increasing security, interoperability and eliminating costs and on the R&D side of things, by making the funding process for scientific research more transparent and efficient. Our investment in Molecule was based precisely on this angle: Molecule is connecting leading researchers to funding by turning intellectual property and its development into a liquid and easily investable asset.

Industrial Tech

Food & Ag, Manufacturing, Construction, Energy, Logistics or Mobility — our Industrial Tech team deeply understands these sectors and has strong connections to the industrial world.

When it comes to crypto, we are deeply interested in topics like decentralized infrastructure, decentralized IP, carbon credits, fix food & ag, protect nature and clean up industry through circular economy. DeFi attracts new investors to solve the climate crisis, increases transparency, accessibility and profitability of climate positive projects. We are keeping a close eye on this potential, especially with our Climate & Industry Opportunity fund.

Marketplaces & Consumer

Our Marketplaces & Consumer team is deep into all things B2B and B2C at the intersection of marketplaces, eCommerce 2.0 and consumer subscriptions. Network effects are the driver behind the digital platforms that are redefining our everyday lives. Crypto enables new platforms, new ways to transact peer-to-peer and puts creators back into the driver’s seat — read all about it in our Web3 Creator Economy report. And while you’re at it, make sure to check out our portfolio company OBEY - a platform that allows fans to invest in music futures.

SaaS & Infra

Last but not least, crypto is not just an application layer phenomenon — it is a new way to build applications, that comes with new building blocks and requires new (developer) tools. When building in crypto, developers have to think differently about their dev environments, how to do application performance monitoring, how to debug smart contracts, how to think about and monitor security, how to handle deployments and lots of other things. We look at the full stack, including the API & infra layer, and all the picks and shovels required by builders and have invested in quite a few crypto companies already. Just to name a few:

Starton enables developers to build blockchain applications and makes it easy to integrate blockchain features into their applications. Gitpod is also a great tool for blockchain development — both Chainlink and NEAR rely on it. WebAssembly is hugely relevant in crypto and our portfolio company Wasmer is at the forefront of it. walt.id provides identity infra for a wallet-centric world.

We are only scratching the surface, but the point we hopefully brought across is, that we are deeply focussed on crypto and while Speedinvest is of course not a pure-play crypto fund, we bring a lot more to the table by combining crypto with deep industry expertise in each and every of our vertical teams.

Stay tuned…

Over the next months, we will dive deeper into crypto, showcasing more of our exciting portfolio companies and insights from our vertical teams. In the meantime, keep an eye on our crypto portfolio, get in touch with comments, feedback or amazing companies at saas@speedinvest.com or find us on LinkedIn and Twitter: @AudreyHandem, @DominikTo, @fredhgnr, @markus0lang, and @YTR4N_.

Learn more about the Speedinvest SaaS & Infra team, our crypto activities, and sign up for our newsletter to get our exclusive content delivered straight to your inbox.