This document discusses opportunities and challenges around venture financing in a decentralized world enabled by cryptocurrency tokens. It outlines pain points in traditional venture capital including risk profile, illiquidity, and centralized control. The rise of tokens is transforming the model by allowing global and inclusive access to capital and growth. New decentralized financial players are emerging, and tokenization could expand to other asset classes. However, challenges also exist around regulation, evaluation methods, liquidity and infrastructure maturity. Overall the document argues tokenization is just beginning and represents a large opportunity, while discussing hurdles that remain.

1. Venture Financing in a decentralized world
Alexander Lange

2. 2
Agenda
1. The pain points of Venture Financing
2. The rise and rise of crypto tokens
3. New kids from the “block”
4. Opportunities and challenges

3. 3
Source: Earlybird, AL
The struggles of Venture Financing
Startup VC
LP
• Risk return profile against other assets
• 6+ months roadshow
• Access to capital (pre
IPO)
• “Hit big, miss big”
• Illiquidity of assets

4. 4
Source: Earlybird
How ”hit big” led to a centralized world
• Network- & Lock in effects
• Hyper growth mechanics
• Creation of gigantic new
markets
• Shaping / creating new
economies

5. Centralized networks come with downsides
5
Algorithmic abuse
Censorship
Single points of failure
Wealth creation for very few
Mass Surveillance
Lack of innovation
Filter bubbles
Transaction costs

6. 6
Agenda
1. The pain points of Venture Financing
2. The rise and rise of crypto tokens
3. Introducing the new kids from the “block”
4. Opportunities and challenges

7. A growing community rewires the internet
7

8. What’s so special about crypto tokens?
8
Equity Tokens
Liquidity low high
Access exclusive, local inclusive, global
Growth mechanism NW effect NWO effect
Execution of rights courts automated
Capital efficiency milestone based “all in” ICO
DD & Regulation standardized wild west
Tokens represent an atomic unit of an organization’s business
model.

9. Will crypto tokens make VCs disappear?
9
„(...) You can
basically throw the
venture playbook out of
the window.
This completely
destroys the existing
Venture business model,
which is based on
proprietary access
early on. Now everybody
has that.“
Naval Ravikant
Founder & CEO AngelList & Coinlist
(@Blockstack Conference, Aug. 2017)

10. ICOs outvalue early stage VC funding
10

11. Token Distribution BAT
11
Brave (Basic Attention Token)
May 2017
Amount raised: 35mn USD
Pre-sale (no)
Top 100 own 88.64 %

12. Token Distribution ANT
12
Aragon
May 2017
Amount raised: 24.75mn USD
Pre-sale (15% early contributors)
Top 100 own 82.02%

13. Token Distribution BNT
13
Bancor
June 2017
Amount raised: 152mn USD
Pre-sale (10% for early contributors)
Top 100 own 87.60%

14. 14
Agenda
1. The pain points of Venture Financing
2. The rise and rise of crypto tokens
3. Introducing the new kids from the “block”
4. Opportunities and Challenges

15. 15
New financial players drive the ecosystem

16. 50 shades of smart smoney
16
Limited Partners
Inv. Strategy
Portfolio
Market Position Independent Strategic
Inst./Accr. Public
Value Inv. Trading
Hybird Tokens only

17. 17
Agenda
1. The pain points of Venture Financing
2. The rise and rise of crypto tokens
3. Introducing the new kids from the “block”
4. Opportunities and Challenges

18. Opportunity: Tokenization just started
18
2013
<$5bn
2014
$10bn
$6bn
2016
$15bn
2027*2015
$100bn
2017e
Sources: Coinmarketcap.com, WEF. 10% of global GDP (today 80 tn).
http://www3.weforum.org/docs/WEF_GAC15_Technological_Tipping_Points_report_2015.pdf
$8tn
80x
. . . . . . . .
Software Tokens are eating the world
• Private Equity
• Stocks
• Real Estate
• Fine Art
• Commodities
• Gaming / itmens

19. Discussing the challenges ahead
19
• ICO structuring & crypto economic design
• No standardized Evaluation methods & DD processes
• No sufficient Market Liquidity
• Immature technical infrastructure / security
• No Investor protection rights
• High Regulatory uncertainty

20. Looking forward to getting in touch!
20
@EarlybirdVC
alex@earlybird.com
@EarlybirdVC
https://medium.com/birds-view
@alexruppertVC