Oddbean

I shouldn’t be so shocked, but when a high-quality, venture-backable idea/team comes along in bitcoin there is no at-scale capital provider to serve them today. Some good angels/small-seed-funds, but no one around who can write a series A check.

Which company are you thinking of? From what I’ve looked at, there’s not all that many good equity investments to make at growth stage Which is why there isn’t yet a fund operating at that point. Happy to be wrong as would love to allocate to it In general early stage equity investing in Bitcoin companies is very very hard with BTC as your hurdle rate

idk if I can name names yet… I’ll ask the founder I agree there’s not that many good equity investments yet which is, I think to your point, why there aren’t any funds that can do larger checks. It’s a bit of a chicken-and-egg thing. Maybe the market grows up and today’s seed funds have winners which let them grow AUM and write bigger checks, but it’s so extremely inefficient right now my eyes are bleeding. :P Early stage equity investment from an illiquid captive-capital/blind-pool can’t typically allocate more than 20% to liquid assets at the manager’s discretion. So the actual hurdle would be alternative illiquid equity investments. Maybe these LPs should just be all-in bitcoin, but if they’ve already decided to invest in a fund of illiquid technology ventures the hurdle is the alternatives from that asset class. As an independent with your own portfolio you have more latitude so everything gets priced against bitcoin.

“So the actual hurdle would be alternative illiquid equity investments” I disagree with you here. Anyone who is trying to find equity opportunities in Bitcoin companies, has generally speaking done their research, owns Bitcoin, and wants to support its development. If the equity opportunity doesn’t have the ability to hurdle Bitcoin, then why not own more Bitcoin? Yes perhaps you’re right from a fund management perspective, with existing funds under management, to compare illiquid But for raising a btc focused equity growth fund, you have to be able to beat Bitcoin Let’s say this is an opportunity / problem, how would you solve it?

Yeah, I guess I’m talking more about existing funds. There are plenty of funds with a broader mandate than bitcoin which are not crypto funds, but might invest across technology… e.g., maybe generalists, but with a fin-tech focus. They should be salivating on this opportunity. I agree that to raise a new btc-focused equity fund at substantial scale today would generally be a difficult proposition. Any LP would need to be educated enough about bitcoin and own enough already, but see value in building things which accelerate adoption of bitcoin compared to just owning more of the underlying asset. It’s not quite philanthropy, but it takes a certain disposition. I believe there are individual opportunities that can beat a bitcoin hurdle (and I invest in them myself as a small angel), but I think this get much harder to do when the volatility gets dampened with a portfolio. I guess if you want to solve for at-scale capital to invest in bitcoin companies that are breaking out there are probably two paths: 1) build deal-by-deal SPV syndicates for the rare occasions that these opportunities present themselves 2) build a more generalist technology venture fund with a close eye toward bitcoin when these opportunities do emerge idk, wdyt?

I like the idea of 1) Bide your time, be opportunistic, & jump when your insights scream massive potential This would be a great podcast episode btw 😜 I’ve thought a lot about a BTC startup podcast that could be a deal flow generator (which would now also look at Nostr ofc)

Well said. I think the money is available but *some* of them don’t see the usage of Bitcoin in innovative ways. With that said, I’m hopeful. There are roughly 8 billion people on Earth. Connections can happen in the right place at the right time.

If you look at low time preference funds I and II, according to https://ten31.vc/funds: LTM 1 deployed $5M for 12 companies LTM 2 deployed $125M for 28 companies So those investments per company (my calculations) comes to $400k (fund 1) and $4.5M (fund 2) per company — pretty hefty numbers! (pre-seed through series B are all lumped together; idk the breakdown)

yup, it’s gonna happen, just a matter of timing. I guess the higher the bitcoin price goes the lower the return hurdle rate will be relative to equity investments and the more prominent/top-of-mind the utility of the asset will be. Maybe we cross-over soon? 🤞 anyway, nostr on! we are so early

We're not really early at all, nostr is 1/8th the age of the web. These things are not happening for a reason. Developers are getting blocked, and it's usually the guy at the top with another agenda. All the competition is marching ahead with inferior experiences. NIP centralization is holding nostr back alot. This stuff should have all been there years ago. Something needs to kickstart innovation, because the project is set up badly compared to other OSS peers. Things have slowed down alot, but hopefully something can bring back innovation. Remember when the nostr report reported several new projects a day? We dont have that any more. A change is needed.

your math checks, but the experience on nostr feels about the same as the first 4 years of the web. while the web was technically invented in 1989 we didn’t even get Mosaic’s (Netscape) initial release until 1993. It was very slow going at the start. Damus/Primal feel like Netscape quality browsers to me, but public messaging is not as underserved as web browsing was back then so history doesn’t exactly repeat. I think there’s something yet undiscovered that will feel really different and will demonstrate the power of nostr. I suspect it involves zaps and algorithms.

Note: Tim Berners-Lee, CERN March 1989, May 1990 It sat on a shelf for 14 months. This is quite similar to the best financial proposals not making it in nostr, right now. It's incredibly easy in centralized decision making to shut things down, or kick them into the long grass. The reason is that for any OSS project to make it, everything has to go right, so 99% fail. One thing going wrong, is enough to derail something, and that happens over and over in nostr rn. Luckily the web made it, we take it for granted today, but it was a chance meeting at a party 14 months later that allowed the project to live, "what happened to that information management proposal of yours?" -- "It's still waiting for approval" -- Send it again. Tim made a point of writing both dates on it! The first web site and ANN was in fact 33 years ago in late1991. https://www.w3.org/History/1989/proposal.html