The Inquisitive VC - Paul Veradittakit, investor at Pantera Capital
Paul Veradittakit grew up in Los Angeles and graduated from UC Berkeley in 2005. He went on to work as an economic consultant. In 2011, he joined a mobile focussed VC fund called Strive Capital.
Strive Capital is a quantitative and analytics-driven VC fund, which was formed in 2011. Strive Capitals initially focused on mobile application but now focus on consumer and enterprise software, and deep tech, in particular AI.
“I thought that was great, if you are going to build up some differentiation, you might as well start early in an exciting, budding space,” Veradittakit stated an interview with Brave New Coin, in reference to the focus of Strive Capital.” I was able to dive deep into one sector, know it very well, and build up expertise around it. It really set up a great foundation for getting into another space and being focused on blockchain.”
Veradittakit was at Strive Capital for over three years. While working for the company, he became an early investor in a company called App Anni, which offers a mobile app analytics platform.
Strive Capital participated in the App Annies Series B round, in which the startup raised US$6M led by venture capital firm Greycroft. The company has gone on to raise a total of US$150M from investors including Sequoia Capital and Greenspring Associates.
While still at Strive, Veradittakit heard about bitcoin from his other VC friends. According to Veradittakit, “I realised that this is potentially super disruptive and I wanted to be able to do something in the space.”
Eventually, Veradittakit was connected with Pantera Capital, a Bitcoin and Blockchain focussed venture fund. The firm was started by Dan Morehead, the ex-CFO and Head of Macro Trading of Tiger Management, an American hedge fund and the family office of billionaire Julian Robertson. Pantera was one of the first specialist blockchain Venture Capital (VC) companies.
Veradittakit thought that his venture capital experience would complement Dan Morehead’s hedge fund experience and ended up joining Pantera Capital in 2014. He has noticed three key changes in venture capital in crypto in the past six years.
The first thing that has changed is the makeup of the teams. In 2014 Pantera saw a lot of great ideas, a lot of great technologies but didn’t see a lot of great teams.
Teams started to get better, there were experienced serial entrepreneurs who had built large successful companies now joining the industry. At the same time, large enterprises and institutions were conducting sandboxes and therefore introducing and legitimizing the technology.
The type of companies that are being built has also changed. In 2014 the companies were mostly focused on cryptocurrencies, how they were acquired, how they were stored, and how they were secured. As the technology started to mature firms started focussing on everything from scalability to tooling to consumer applications, games, and asset management.
Another change is the increase in the number of firms that are looking to invest in Blockchain technology. “Back then it was just Pantera, Digital Currency Group, and Blockchain Capital, “Veradittakit states. “Now we have partners from the likes of Sequoia, Lightspeed, and Benchmark starting funds. The competition, the number of firms and capital has really transformed quite a bit.”
Since there are now many “specialist” funds and big-name generalist funds, like a16z and Union Square Ventures, Veradittakit stated, “it does get more competitive because some of those entrepreneurs do have an existing relationship.”
However, he is confident in Panteras standing. The company has been focussed on the space for the last six years. As a result, the team has built up a lot of expertise, a lot of connections, and a portfolio of companies that potential new investments can plug in to and use to accelerate business development.
To cater to the wave of blockchain startups, Verdittakit helped launch Pantera Venture Fund II and the firm’s cryptocurrency funds, executing over sixty investments. As a result of this Pantera now has separate funds for separate types of assets.
The venture fund invests mostly in equity, though the deal could involve tokens as well. There is also an ICO fund that invests into pre-sales of tokens and a digital asset fund that invests into secondary assets listed on exchanges.
Pantera Capital’s most recent publicly announced investment was in the Series A round of Amber Group. Amber provides a crypto finance platform for institutional investors, that connects a range of services such as market making, OTC, lending, trading and more
Amber Group raised US$28M in the round which was co-led by Pantera Capital and Paradigm. Other participants in the round include Coinbase Ventures, Fenbushi Capital, Polychain Capital, and Blockchain.com Ventures. “Amber is providing a solution that Pantera has seen as being very valuable and we think it will grow as more and more institutional investors get into the space,” Verdittakit stated.
In spite of the current COVID-19 pandemic, Verdittakit mentions that it is a good time to be investing. While it will be challenging for entrepreneurs to close deals, they might find discounted valuations, depending on the company, the founders are, and what their traction is.
“I think it’s going to be a good exercise for entrepreneurs to really evaluate their spending and make sure they have enough money to last however long this situation lasts,” Verdittakit said. “Companies that know how to navigate this well can really come out in a much better position.”
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Nawaz Ahmed, Khareem Sudlow
