Why Bitcoin companies should consider VC funding

[BruceFenton]

Some say that Bitcoin companies don't need outside help.

One of the big advantages they miss which VCs bring is their connections experience and know how.

Companies like GoDaddy are capable of handling huge volumes of complex transactions.

VCs can bring this level of experience to a Bitcoin startup and help them avoid pitfalls which we see sometimes with companies who grew faster than management experience was capable of handling.

[Maged]

Until recently, no VC would even acknowledge bitcoin's existence, let alone fund a bitcoin startup. Getting VC funding is easier said than done...

[justusranvier]

Not everything they bring is good.

http://bitcoinism.blogspot.com/2013/08/trust-no-us-companies-with-future-of.html

[BruceFenton]

Until recently, no VC would even acknowledge bitcoin's existence, let alone fund a bitcoin startup. Getting VC funding is easier said than done...

Yes, it's definitely hard and frankly there are very few companies in the a Bitcoin space who are close to being of interest.

Main point was in response to lots of comments a month or so ago which were hostile to Wall St. and established firms.   More of the "they don't get it, Bitcoin will replace all banks" kind of thing.

[Ragnarly]

Not everything they bring is good.

http://bitcoinism.blogspot.com/2013/08/trust-no-us-companies-with-future-of.html

In speaking with new-to-the-scene VCs/ Angels and hearing them speak at various panels, it's undeniable most of them want Bitcoin regulated. On one hand, more investment capital helps Bitcoin, but regulation strangles it. Bootstrapping, (Modest) pre-mining, and crowd funding gets you the former without the latter. Good investment partners are the early miners or the Roger Ver types.   

[BruceFenton]

Not everything they bring is good.

http://bitcoinism.blogspot.com/2013/08/trust-no-us-companies-with-future-of.html

In speaking with new-to-the-scene VCs/ Angels and hearing them speak at various panels, it's undeniable most of them want Bitcoin regulated. On one hand, more investment capital helps Bitcoin, but regulation strangles it. Bootstrapping, (Modest) pre-mining, and crowd funding gets you the former without the latter. Good investment partners are the early miners or the Roger Ver types.   

Well the only two guys on the NY panel against regulation were the two VCs.

Early stage miners can be okay capital partners.....but there is way more to a business than capital.....VCs bring expertise, connections etc.

Roger is one of a kind, personally I think he'd be an awesome partner....but even he doesn't have the network and operational support that a Kliener Perkins or Andreessen Horowitz can bring.   He's probably more of a perfect early to seed stage/ first round VC partner.   I'd gladly work with him or recommend it to another.

[Ragnarly]

Well the only two guys on the NY panel against regulation were the two VCs.

Early stage miners can be okay capital partners.....but there is way more to a business than capital.....VCs bring expertise, connections etc.

Roger is one of a kind, personally I think he'd be an awesome partner....but even he doesn't have the network and operational support that a Kliener Perkins or Andreessen Horowitz can bring.   He's probably more of a perfect early to seed stage/ first round VC partner.   I'd gladly work with him or recommend it to another.

By VCs I also meant capital market guys and attorneys.

"Mark T. Williams, a professor at Boston University School of Management and upcoming panel speaker, described the comments by Barry Silbert, founder and CEO of SecondMarket; Jeremy Liew, partner at Lightspeed Venture Partners; Fred Wilson, partner at Union Square Ventures; and the Winklevoss brothers as being undeniably pro-regulation."
http://www.coindesk.com/bitcoin-hearings-day-1-bitcoin-hits-tipping-point-new-york-regulators/


At the Las Vegas Inside Bitcoins panel "Moving Bitcoin Forward", Robert Cho, Adam Ettinger, Izzy Klein, and Adam Lukasiewicz all advocated regulating Bitcoin. The memorable dissent came Andreas Antonopoulos.
http://www.coinsiderthis.com/2013/12/30/inside-bitcoins-panel-moving-bitcoin-forward/


"Jeremy Allaire, who founded the bitcoin payments company Circle, which raised $9m in venture capital funding and is due to launch later this year, is one of the people arguing that bitcoiners should work with governments to establish regulations for bitcoin.

"If your goals are to create a sort of shadow financial system that runs in offshore jurisdictions and is attractive for anarchists and criminals, then maybe [regulation] is not important,” he told CoinDesk on a recent visit to London.

But if your goal is to ensure widespread adoption of bitcoin, there needs to be rules around its use, he says, arguing that it’s not good enough to imagine bitcoin can exist above society:

“A lot of the safeguards that businesses and consumers take for granted in their everyday interactions and payments don’t exist in bitcoin, so [...] how do we understand those risks? How do we address those risks? That’s actually going to be the path forward, not saying, ‘well bitcoin is superior to all things, it’s going to undermine all of these things.’”
http://www.coindesk.com/bitcoin-abandons-anti-establishment-wall-street/


I agree with you that VCs can bring value. I think entrepreneurs should thoroughly investigate a potential investment partner to see if he wants Bitcoin regulated. Because if he does, he'll want your project to comply with those regulations. That could be anathema.

[rasengan]

My humble opinion is that VCs can be good or bad depending on the situation, terms, and so forth.  VCs, in general, are looking for a large return on their investment within a certain amount of time.  There are pros and cons to this.

That being said, each situation should be reviewed on a case by case basis.

[BruceFenton]

Yes, that's a good point, there are some which are counterproductive.

I'm firmly against new regulation.   So key is to find high quality VCs who will provide expertise and connections and not push for regs....maybe even push against regs.

[bgaer]

It is interesting you mention Go Daddy - I wish they would, but i have it on good authority (I work for them)  that they are not currently interested at this time - hoping that changes soon though.   I think some of the recent bad press would need to fade before they would consider it though.   

Go Daddy is in a uniquely powerful position to do very well in cryptocurrencies, help their small business customers and increase usage and acceptance of Bitcoin due to their very large volume of small business accounts that use them as both a registrar and host.

[BTCisthefuture]

OP has it backwards,  rarely is it that companies don't want financial backing.  It's that no one will invest in them.

There may be a few cases of someone wanting to go it alone, but typically when running a business you would love to have someone giving you millions to hundreds of millions of dollars for you to have the funds to run your company how you want and try to see it reach it's potential.

[BruceFenton]

OP has it backwards,  rarely is it that companies don't want financial backing.  It's that no one will invest in them.

There may be a few cases of someone wanting to go it alone, but typically when running a business you would love to have someone giving you millions to hundreds of millions of dollars for you to have the funds to run your company how you want and try to see it reach it's potential.

Oh that's definitely true --- its not like VCs are banging down doors of Bitcoin companies....most companies are not at VC caliber yet.

Mainly was referring to helping people recognize that there can be value and not everyone in a Wall St type world is an enemy (only some)