Jake Dwyer
Introducing Factor Capital
First Close of Venture Fund I
Why Blockchain is on the Cusp of Mainstream Adoption
Investing in Businesses With Real-World Impact
Today, I am excited to officially announce the launch of Factor Capital and the first close of Venture Fund I.
Factor Capital was formed earlier this year with a mission to apply lessons learned from 20+ years spent working on and studying businesses that successfully harness technology and data to drive progress, efficiency, and impact.
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Venture Fund I will write $500k-$1m checks to back exceptional, creative entrepreneurs at the earliest stages of company development, tackling problems of global importance using blockchain technology. Fund I is backed by my former colleagues at GSR Markets and Two Sigma Investments, Theta Capital Management, founders of Multicoin Capital, Lattice Capital, Cosmos Network, and other inspiring individuals and family offices.
Roughly once a decade, new technology platforms appear that ultimately touch every aspect of our society. When the public first becomes aware of them, many are unimpressed by the state of the art in its earliest form.
The temptation is to either ignore this innovation or dismiss it as not solving a real problem because viable alternatives exist to accomplish everything this new technology purports to address. Meanwhile, early adopters and developers see unusual promise and potential in these platforms and excitedly commit themselves to expand upon their utility. On this spectrum from Skeptics vs. True Believers, I have generally gravitated toward a position of rational optimism.
It is often said that all overnight success is ten years in the making - and we have seen in each prior cycle that public perceptions of new technology can quickly change. After years of work by these early adopters to improve the technology, it is finally packaged in a way that focuses on mainstream utility and ease of use. The fabled “Netscape Moment” or “iPhone Moment” occurs. The technology suddenly fades into the background.
Yet despite these technologies digitally transforming many parts of our lives, numerous systems and institutions still feel woefully outdated. Since the introduction of Bitcoin over a decade ago, Blockchain technology has promised to change that dynamic.
Similar to many disruptive technology platforms prior, the early applications most people associate with the technology come across as frivolous, impossible to understand, fraught with risk, and not generally useful. True believers cite the ability to send a Bitcoin to anyone worldwide and have an immediate settlement. But Venmo/AliPay/Paytm and other tools are easier and more accessible, even if you have to depend on banks and centralized service providers as intermediaries. The prevailing use cases have been so overtly “Crypto” and speculation-driven that they deter mainstream users.
The promise of an immutable ledger that enables digitizing data, identity, and assets and introduces trustless efficiencies in archaic analog systems is exciting in theory. Yet hardly a week goes by without someone asking me, “But what is it used for today, really?”
Having observed the evolution of this technology from launch, we are finally at the point where this question can reasonably be answered. For example, stablecoins backed by the US Dollar are now a >$120bn market and are being increasingly adopted in emerging markets. India and Nigeria top the 2023 Global Crypto Adoption Index. Turkey ranks fourth globally in raw crypto transaction volume, receiving around $170 billion last year, behind only the US, India, and the UK.
In Fund I, we have already made a number of investments in companies using this technology to solve real problems today. Companies like Koywe are driving significant efficiencies for businesses and consumers exchanging currency across Latin America. Jasmine Energy and Neutral are reducing costs in renewable energy markets, disintermediating costly brokers. Parcl is creating entirely new ways to participate in Real Estate investing.
These are just some of the daily examples I see, including innovative forms of financing for scientific research and advancements in AI and data science. The applications we’re investing in don’t require businesses or consumers to actively adopt or understand the technology and have already begun to generate actual revenue on the back of sustainable business models.
Our thesis is basic: now is a unique time to invest in this innovation's early stages as this mainstream impact accelerates. With advances in AI and the permissionless nature of decentralized blockchains, it is easier than ever for small teams to bring high-impact visions to life from anywhere in the world. I am excited to continue to partner with founders and investors who align with this vision - and to be back on a startup journey of my own through the launch of Factor.
To our LPs and our portfolio companies, thank you for joining us on this journey.
If you’re a founder who is building in this area or interested in doing so, we are open for business, so please get in touch.
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