LPs include Horsley Bridge, Thiel Capital, Marc Andreessen, Chris Dixon, and Mark Cuban among others
Today I’m excited to announce the official close of 1confirmation Fund I, a $26M seed fund to support entrepreneurs who are fueling the decentralization of the web and society at the earliest stages of project development.
Over the next decade, the world will become more decentralized as people around the world use the combination of cryptography and incentives to empower people. We feel lucky to play a small role in the shift that is underway by supporting founders who are leading this movement.
Many believe decentralization is an amorphous ideal that has no purpose in practice. We disagree. The main practical purposes of decentralized systems are:
- Decentralized systems give more power to people: In centralized systems (corporations and governments), leadership groups often collude in ways that benefit themselves but harm less well-coordinated people. In decentralized systems, it is much harder for participants to collude to act in ways that benefit them at the expense of other participants. Bitcoin is the first and most well-known example of a decentralized system that empowers people, and there are many others emerging.
- Decentralized systems offer more security and reliability than centralized systems: No central point of failure means decentralized systems are more resistant to security attacks and service disruptions. It costs a lot more to attack a decentralized system than a centralized one, and having a variety of nodes rather than one centralized node makes the systems more reliable.
Decentralization is just beginning to be quantified and improved. We think this is the most important trend of our lifetime.
Sounds good, but over $4B has been raised in token sales this year! Why start a new fund when it has never been easier for an entrepreneur to raise money?
Ethereum makes it simple for anyone to raise funds via token offerings from a global investor base that has demonstrated a tremendous appetite to fund new projects. Many see this trend and think that the role of the professional venture capital investor may be going away.
Our view is that there is more of a need than ever for investors with deep knowledge of the space who are serious about dedicating skills, time and energy to supporting entrepreneurs at the earliest stages of product development.
While raising huge amounts of money pre-product is seductive, history has proven that this is not a sound approach for long-term success. A better approach for long-term success may be raising high quality capital to fund product development and regulatory compliance at the earliest stages. That is where we come in. Once the product is built and a compliant legal approach is in place, it makes more sense to do a larger token sale to the crowd, giving ownership of the product to users and creating stronger network effects to bootstrap the network.
In addition to money, projects we invest in get the benefit of:
- Business development, community building and marketing support from a leader who has worked at the earliest stages of a successful startup
- A disciplined evaluation process and a strong network of engineers, lawyers and business people to engage and help
1confirmation Fund I
1confirmation Fund I will be making initial investments of between $50K and $750K into tokens, equity, SAFTs, SAFEs and other vehicles that may emerge in the coming years. We’ve already made three public investments: Maker, dYdX, and Basecoin and two others that are not yet public.
We’ve been lucky to get early support from a number of individuals and institutions from around the world including: Mark Cuban, Peter Thiel, Chris Dixon, Marc Andreessen, Peter Briger, Balaji Srinivasan, Brendan Eich, David Vorick, Andre Bliznyuk, Josh Guttman, Pawel Chudzinski, Semil Shah, Steve Jang, Sam Hinkie, John Borthwick, Horsley Bridge, Runa Capital, Real Ventures, and many others.
If you’re interested in what we’re doing, don’t hesitate to reach out at @NTmoney or email@example.com.
Q: Are you just another crypto hedge fund?
A: No, we take an early-stage venture approach to token-based projects. We help founders with all non-technical work at the earliest stages (community building, business development, external communications, etc.) as needed, and we take long-term (5+ year) positions in the projects we support. We don’t do active management of large portfolios of existing cryptocurrencies, we don’t get caught up in short-term price movements or massive fundraising efforts; we are instead laser-focused on helping founders at the earliest stages lead projects over the course of many years.
Q: Why would an entrepreneur take your money when it’s so easy to raise millions in an ICO?
A: We provide a smaller amount of capital at the earliest stages to fund product development, which may precede a larger token sale that makes more sense when an actual product exists. We also provide support for founders on things like community building, marketing and business development. Many of the best entrepreneurs recognize that raising a lot of money from the crowd pre-product is not the best way to build a successful project in the long-term.
Q: Why didn’t 1confirmation do a token sale?
A: Right now we believe tokens make sense for some projects but not all projects. If you’re building a peer-to-peer product that could benefit from stronger network effects and you don’t care about getting high quality capital from strategic investors, tokens may make sense. We’re not building a peer-to-peer product and we prefer to get started with strategic capital from people we know to support us in our earliest stage of development, so a token didn’t make sense for us.
Q: The total market value of digital assets has gone from $20B to $600B this year. Don’t you think it’s a bad time to launch a crypto fund?
A: No, there’s more innovation happening at the earliest stages than ever before. The mania we’re in right now will eventually die down at some point, but we think the long-term trend remains incredibly positive.
Q: What types of projects are you most interested in right now?
A: For the next few years, we’re most interested in projects that are providing infrastructure and middleware for the decentralized web. We strongly believe that decentralized applications will ultimately be used globally by the masses, but first there must to be more middleware and infrastructure in place for developers to build decentralized apps with great user experiences that scale. Many of these tools come with tokens to align incentives of all participants.
More specifically, we’re interested in projects based on “work tokens” — tokens that give individuals the right to contribute work to a system to allow it to function properly (see MakerDAO as an example of an interesting project based on a work token).
Q: How does 1confirmation tie into your other projects?
Q: Are you hiring?
A: Yes, please shoot me a note at firstname.lastname@example.org if interested.