Venture capital in the crypto space: How do VCs work?

How do experts assess start-ups in the crypto field? We provide an insight into Benjamin Horvath’s daily work. He is the founding partner of Blockrocket, a Berlin-based venture capital firm.

You search, evaluate, analyze and ultimately flop your crypto investment still. After you have already told all your friends that you want to get rich with Shitcoin, now go back. Therefore, we would like to give you an insight into the venture capital Blockrocket. A few tips should also help you evaluate the next crypto startup.

First of all, what exactly is a “VC” (venture capital)?

In everyday life, we often use VC for the underlying company / person who makes venture capital available. It is investors who invest in the very early stages of a business. For example, Blockrocket invests in a company’s pre-seed and seed phase.

According to Benjamin, all projects that have “Pre-Product Market Fit” are eligible. Sales or growth are not predictable for such companies, at least for the time being.

“It can really range from three guys and girls in the garage to a finished product – we invest in different projects.”

The garage product that becomes a bestseller from one day to the next sounds more like a Hollywood movie, but it actually corresponds to reality. “We are talking about companies that are in the life cycle between 6 and 18 months,” says Benjamin.

Blockrocket usually invests between 100 and 500,000 euros in projects – in return, there are either shares or tokens in the company.

What exactly does venture capital look like in projects?

The question of question: How do I get money from VCs as a newly started founder? Benjamin confirms that it is not an easy question to answer. In fact, it varies from company to company, industry to industry.

“We try to keep it as simple as possible. Companies with a high probability of winning are the ones we are looking for.”

A bet on the future, outsiders could describe it all.

“And it’s bloody hard to predict the future.”

Benjamin’s approach is to use the time efficiently to find out as much as possible about the company. What criteria does he look at more closely?

According to him, the question should rather be: Which exclusion criteria should not occur? Basically, his job is to look for bugs, as it is much easier to find them than to find one or two things that stand out.

The team is by far the most important factor. It is best to have experience in a specific industry: “If you have a team that develops a solution in the financial industry, they must also have experience. Between 5, 10 or 15 years, depending on what they did. “

Opportunity costs can also be a factor. If a founder could earn 200,000 euros a year in, for example, a bank, but choosing the start-up is also a plus – but is by no means a success criterion.

What Blockrocket also does is broadcast personality ratings. Some of these consist of 2-300 questions and should, among other things, help to find out if the founder can use knowledge from his previous jobs for the start-up.

Is an idea alone enough to make money?

The answer may be: If the team has experience and a sophisticated concept, it can get capital even without a prototype.

So nothing can stand in the way of a successful start-up in Germany, right?

Crypto in Germany – A hate-love relationship

Why did Germany overshadow the development around Web 2.0, and what do we need to do to be more successful with Web 3.0? According to Benjamin, we need to create ecosystems where the best people love to be.

“People also go to Silicon Valley because they know it’s there, the best companies, VCs, the most money and the most knowledge are.”

In his view, Germany should aim for this goal. It is still unknown whether many small ecosystems will actually evolve because employees prefer to work remotely. According to Benjamin’s personal experience, it is a disaster to bring skilled workers from abroad to Germany, at least at the federal level.

An image from BeInCrypto

Benjamin does not see the whole issue of cryptoregulation as a problem. However, he would like the politicians to be a little more aware of the whole crypto space. “Politicians should better ask society what their opinion is about the rules. Fortunately, there are community initiatives against certain initiatives,” he says.

He wants politicians to think long-term, because investors in the VC sector also think with a horizon of 5 to 10 years. We should constantly work on the prosperity we currently have.

Benjamin does not want to give us a price forecast for Bitcoin 2025, but he refers to a report from the American investment company Ark Invest: According to calculations, analysts come there with a price for Bitcoin of around 300 to 400,000 US dollars.

“Of course, when companies and governments invest in bitcoin, the price goes up.”

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