Sean Walsh of Redwood City Ventures on Facilitating US/Chinese Bitcoin Collaborations
Redwood City Ventures is a new name in the Bitcoin industry that people are just starting to see some of their work appearing. RWCV are focusing on helping different companies and startups that are trying to bring collaboration between the US and Chinese companies to the Bitcoin ecosystem. One of the first ventures that people are seeing is blockC.co. Redwood City Ventures brokered a deal between blockC.co and Avalon/Canaan-Creative to be the global master distributor for Avalon Bitcoin miners, beginning with the Avalon6. Moves like this are just the start as we find out in an interview Bitcoinist was able to get with Sean Walsh, CEO of Redwood City Ventures to learn more about the company and where it is going.
Could you first give Bitcoinist some background on Redwood City Ventures?
Sure. I started Redwood City Ventures a couple months ago, after leaving my Vice President role at a Bay Area $1B+ mid-market Private Equity firm. I wanted to focus 100% on FinTech/Blockchain ventures. To date, I’ve made angel investments into two Bitcoin ventures, the most notable being blockC.co.
One of my goals with Redwood City Ventures is to facilitate partnerships, and cross-border investments between China and the US. For a couple of reasons, the two econsystems are particularly well suited to this.
We’ve already seen many industry examples of China-US collaboration. In fact, the appetite on both sides is quite high. To wit, I’ve received a growing number of inquiries from Chinese investors, and investment managers in recent months. They’re universally expressing interest in deploying capital into US FinTech startups. Frankly, it makes perfect sense, given the complimentary aspects of our two countries, economies, and Bitcoin ecosystems.
Formal fundraising for RWCV Fund 1 has not yet begun. We plan to begin after the Chinese New Year. One never knows what to expect, but if these early signs are indicative, we will achieve a successful outcome.
Business relations between the US and Chinese Bitcoin companies are difficult at the best of times to bring to fruition. What are things Redwood City Ventures can bring to the table to facilitate new ventures in the Bitcoin industry across these borders?
I think that characterization is overly harsh.
My experience with China-US collaboration is actually quite positive. Of course, there are significant language and cultural barriers. Frankly, even the 14-15 hour time difference is difficult. However, beneath these superficial challenges, I believe the appetite for cooperation is enormous. Plus, some of the various government incentives are quite appealing, like certain US Visa Classifications available to Chinese nationals.
In any business partnership, the most valuable asset is trust. This (fact) is true when partners are next door to each other, and even more so when separated by 15 time zones, and a continent or two. Redwood City Ventures seeks to deliver this priceless asset to potential partners. Building trust takes patience and an investment of time. I’ve visited China three times in the last year and expect I’ll do double that in the coming 12-months. We have developed a strong reputation in the Chinese Bitcoin community, and we have earned a great deal of trust. We have sent and received millions of dollars of assets, and this trust is the necessary condition for any of it to happen.
Could you tell Bitcoinist about the team and what are some of their backgrounds and how they can put the pieces together?
We’ll make some announcements on the team in the coming month or two. In the mean time, I can give you the following preview bullets:
1. If you’ve read The Age of Cryptocurrency and Digital Gold, you will recognize some names on the roster.
2. We have contributed to the Bitcoin core, developed notable alt-coins, other blockchain-based system, and blockchain-based solutions for non-financial use cases.
3. In addition to my investment and portfolio company responsibilities, I co-founded a software incubator inside my old private equity firm. We launched a number of self-funded enterprise software startups. Some of them have even won awards in their respective industries. Our incubator earned widespread industry acclaim and publicity for being a fundamentally disruptive force in the trillion-dollar Private Equity middle market.
4. We’ve founded numerous startups, and enjoyed a few exits.
5. We’ve run businesses up to $120 million in annual revenue.
6. We’ve held executive positions in Fortune 50 companies.
7. We’ve previously facilitated the placement of hundreds of millions of RMB into the US market.
8. We’ve run and invested in businesses in Hong Kong, and key Chinese tech hubs.
9. We’ve grown online and mobile user bases from 0 to 10 million people.
10. We’ve run the 8th largest online advertising program on the planet.
Sean’s level of experience in handling major multinational deals has given him a solid base to start. The ability to create and make partnerships with key people in the Bitcoin industry is an even bigger positive in this highly competitive industry. Sean has started that with the Avalon/Canaan-Creative deal for blockC.co. We asked him about this next as the rebirth of Avalon under Canaan-Creative has been a good thing in the mining industry where there are fewer and fewer manufacturers making ASICs.
The deal between Avalon/Canaan and blockC.co looks to be one of the first deals the public is now seeing. Are there others that are of note or coming up that we should be looking to see pop up soon?
True. And yes, we are excited about a couple of deals in the process. You’ll probably have to have to wait a month, or two for announcements on these, but I can tell you that we’re particularly focused on so-called mainstream Bitcoin on-ramps. At present, there are about 400k Bitcoin wallets containing one or more BTC. We hope to add a zero to that figure in the near future.
Actively Pursuing Appropriate Regulatory Frameworks
What are some of the issues that you have run into with regulations in the different countries that are unique to Bitcoin and its industries that are notable in the process of creating these ventures?
Well, for one thing… the US and Chinese airport security and customs agents seem to make a sport out of asking to inspect the Bitcoins in our luggage! :-)
More seriously, though, regulatory constraints haven’t been an obstacle for our current ventures for two reasons: 1) they’re largely focused on network infrastructure, as opposed to Money Service Business models, and 2) as with most tech startups, we develop new reality very quickly. This (model) means we can discover efficient solutions, and then help create appropriate regulatory frameworks. We’ve found Perianne Boring and the Digital Chamber of Commerce to be a great facilitation resource for this development process.
Mining ventures have been difficult to make profitable in the US due to the rising hash rate, difficulty, and power prices. What does RWCV bring to the game to help facilitate deals that can make mining more competitive for US miners?
Well, blockC.co brings a great deal to the table to achieve this goal. The two primary value propositions are:
1) Industry insight: they have a concrete knowledge of the operating efficiency that is required to succeed with a Bitcoin mining operation. It is crucial for a prospective operator to understand what their input costs must be to succeed before they make investments into the space. We believe Bitcoin “mining” is rapidly evolving into a more stable business model, like so many utility service businesses before. Like electrical utilities, ISPs, cellular networks, etc., the Bitcoin mining model will necessarily become more stable. We don’t see it as the gold rush of 2013-2014 but as a dividend producing annuity with permanent viability. There is a reason the Utility squares are attractive in Monopoly. Frankly, we believe this transition must occur if anything else in the Bitcoin ecosystem is to survive. Everything else is built atop Blockchain Security and Construction, previously known as “mining.” We will be happy to see a more fitting name applied to this critical piece of the Bitcoin ecosystem.
2) Vertical Integration in the USA: by acting as Avalon’s global master distributor, blockC.co ensures US miners much better access to the top of the line mining servers. Not only do they offer access to this equipment at fair prices, they actually deliver on their commitments. Sadly, trustworthiness and accountability have been in woefully short supply in the mining hardware supply market. Who would have thought that blockC.co could distinguish themselves with trivial items like: posting a phone number on the website, answering the phone, keeping customers apprised of delivery status, and actually delivering functional equipment on time?
Sean’s Thoughts On The Bitcoin Block size Debate
The block size debate has been going on for quite a while now. What effects has this current impasse had on creating new opportunities for investment and expansion and what are your thoughts on a solution?
Yes, it has, and the effects have been significant. For one thing, it seems to have contributed to BTC price weakness this year. As much as people want to ignore Bitcoin exchange rates, it’s simply impossible to ignore that BTC price has an enormous influence on public perception. In the recent run-up, news outlets that had previously (wrongly) pronounced Bitcoin dead, immediately exclaimed that Bitcoin was “back.” Of course, we know Bitcoin never left and is steadily grown in popularity throughout its existence. Regardless, Bitcoin is still in the early innings of its user adoption curve. As such, we need to strike the chords that resonate with the mainstream. As they say, perception is reality.
Regarding the technical discussion on block size and how to scale Bitcoin network capacity, I favor action over inaction. I very much want to see block size increased immediately. More importantly, though, I’d like to shield the non-technical public from these debates that are confusing and alienating. I believe we need to sell Bitcoin like an Apple product, not a Microsoft product. The message to our target market should focus on the functional benefits, over the technical details. To the extent we’re able to achieve that, adoption will accelerate. And, needless to say, the functional benefits of Bitcoin are monumental. The iPod launched on the back of “1,000 songs in your pocket”, and Bitcoin now puts so much more into that same pocket.
You have mentioned a Road Show for building investments for Chinese/US startups. Did you have any tentative dates and conferences you will be doing this?
Well, the “road show” meetings themselves will be conducted privately for prospective LPs. However, my scheduled speaking engagements include:
1. SVIEF 2015 (Sept 27) Done
2. Silicon Valley Insight with Dr. Wallace Lynch (Nov 12) Done
4. Silicon Valley Plug & Play FinTech Showcase (Nov 18) Done
5. AngelsGlobal Startup Contest Palo Alto, Judge (Dec 5) Done
7. BTC Miami (Jan 21)
Where do you see the industry going over the next six months?
It’s difficult to predict at that time horizon. I hope we’ll have larger blocks by then. I also think the roster of Wall-Street and political heavyweights in this industry will receive some remarkable global additions. This will further legitimize what we’ve built here.
Perhaps a more interesting question is where the global geopolitical and economic balance is headed in this time. It seems many situations are nearing their respective boiling points, their phase transitions. These transitions between points of dynamic equilibrium are wildly unpredictable and exhibit chaotic short-term swings.
Sean also has some very interesting observations on Bitcoin, the industry and how it can help people throughout the world.
A few facts…
1. Exponential growth never feels like exponential growth until a certain inflection point is reached, that hockey-stick moment. Afterward, growth is shockingly fast. Mathematically, Bitcoin is experiencing exponential growth. This (growth) is fascinating to experience, and I feel blessed to be a part of it.
2. There are currently more than 1 Billion adults in the world who have Internet access, but no bank account. As a result, they are neither able to obtain financial resources to improve their condition, nor participate in the numerous exploding online economies. This population is expected to double, to 2 Billion, in the next five years. Bitcoin is the gateway to a better life for so many people around the world.
3. Bitcoin is probably the best tool ever developed for identifying many types of financial crimes. I consider it a great boon to global government and law enforcement. All transactions are automatically recorded, fiat gateways are easily monitored, and the network operates at a cost efficiency at least one order of magnitude better than traditional systems. This (system) means a safer world for all of us.
Sean’s first venture with blockC.co is off to a solid start. Sean exhibits an excellent understanding of both the business and financial aspects of Bitcoin and what it can and does bring to the world. Also adding the knowledge and business plan for Bitcoin mining the underpinning of the entire industry shows forethought and knowledge of the entire ecosystem and how they support each other. Bitcoinist is interviewing one of the managers of blockC.co to get find out more about the deal with Avalon, the data center what their plans are for the future. Stay tuned.
What do you think about Redwood City Ventures and their work to facilitate more collaborations between countries? Let us know in the comments below!
Images courtesy of RedwoodCityVentures.com, tebogomogashoa.com