Where Is Venture Capital Investing In Bitcoin Companies?

Rather than trying to convince people that they want bitcoin, investors are looking for products that use Bitcoin to meet people where they are.

This is a transcribed excerpt of the “Bitcoin Magazine Podcast,” hosted by P and Q. In this episode, they are joined by Alyse Killeen to talk about what is happening in the VC space in relation to Bitcoin and what hidden gems are ripe for investment right now.

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Alyse Killeen: I'm curious with so much going on, how you all think about the important things to pay attention to in the innovation space. We talked a little bit about Swan's acquisition, which is exciting because it's a company that has maintained such a commitment to their community, so I’m excited to see them grow.

We talked about Taro and what that does for adoption. I wonder how you all think about it. So from Stillmark's perspective, just to lead with an answer here, from Stillmark's perspective, what we like to do is look at where the protocols are going and then to anticipate what that means for entrepreneurs and infrastructure and apps.

I gave the example of talking about seeing Segwit activate in 2017, and knowing what that meant for Lightning Network or for entrepreneurship and innovation in absent infrastructure that would be built on top of Lightning Network. So we see it in that sort of progressive buildup, but I'm curious from your perspective, how things rise to the top of your list in terms of what's important and exciting.

P: Man, that is a fantastic question. I'll give my thoughts and I'd love to hear Q’s as well. I think, as I mentioned earlier, one of the most significant challenges that we face in the Bitcoin space is the UX problem. How can we increase the average person's ability to adopt bitcoin?

In the U.S., we have a level of financial privilege, given that we exist within the country that is currently the world's reserve currency, but in so many other places that is not the case. I think technologies like Fedimint and things that make it easy for people who aren't interested in bitcoin for the broad reasons that we all are, to adopt it and immediately see those positives — people that are operating in oppressive financial regimes, people that are trying to figure out how they can maintain and persist the value that they've earned over time and space because they have real, lived experience of their governments confiscating that wealth. I think those are the most interesting technologies to me.

Second, I would say technologies that allow us to more effectively preserve our financial privacy and freedom in developed countries. We've been talking a lot about CBDCs (central bank digital currencies). We talked yesterday with Natalie Smolinski, who's gonna be testifying in a congressional hearing tomorrow about how CBDCs are a sales funnel for Satan.

I think technologies that allow the average person — who isn't by default fixated on financial privacy — technologies that allow them to adopt that really easily and natively are gonna become more and more important as the challenges that we face in the world continue to heat up.

Those are the things that are most interesting to me.

Killeen: So P, I was just going to say that we see things similarly here, and what one of the things that Stillmark does is look at how the technology can be used to meet people where they are in terms of both adopting BTC, the asset, and Bitcoin, the protocol.

So I'm gonna give an interesting example of this, which is a company that we fairly recently invested in called Pink Frog. And so what Pink Frog is really, it's a game studio, but what they're going to do is they're going to integrate Lightning Network in order to provide a better community experience for their gamers, and they're going to use sats as rewards in the game, and also rewards between users.

We've seen that before and maybe that's not interesting described in the way that I just laid it out, but here's the detail that I think really makes it compelling and shows an advancement in the Bitcoin ecosystem, broadly. This is a team that is not coming from the Bitcoin perspective, but is coming from the gaming perspective.

So a team coming from King, which is one of the most prestigious studios and successful studios in the gaming world, and it's the team that introduced and grew Candy Crush. And Candy Crush is a game that has seen 100 million monthly active users as an example of the adoption that this team has been able to achieve.

Now, what they did when they left King and launched Pink Frog is they thought deeply about the gaming experience and how it could be made better for their gamers. And what they're doing is they're looking at a young millennial, a Gen Z audience. So they're looking at like the TikTok audience and they're trying to see how technology or other sorts of innovations can interweave with what these gamers are looking for.

So they're not really trying to force bitcoin in, they're identifying Bitcoin as a way to serve a need and a want that they've observed in their user base. And so it's really exciting to see the technologies be used in this way, which is just to solve problems or to offer some sort fun response to a thing that people want.

And rather than trying to convince people that they want bitcoin, it’s using Bitcoin technologies to meet people where they are and to integrate with their lives or the way that they're spending their time. Pink Frog is a nice, fun example of that. Then, going back to the very beginning of our conversation, Taro was the serious application of that, where when we introduced Lightning Network in emerging markets, and I'll use El Salvador again as the example, we saw that people really needed to be banked through Bitcoin and through Lightning Network. They needed to be able to engage with their local community and online, without a debit or credit card, and really that was Lightning Network for them. But BTC’s volatility was difficult for people of lower socioeconomic status. So Taro comes in to meet people exactly where they're at and to offer a solution for something that they know they need, which are tools to engage both in their local and in the global economy.

What you're saying really resonates with me because I'm excited about exactly the same, which is the way that Bitcoin can rise to a variety of challenges that future users have.

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