Announcing Blockwall Insights

Dear Investors, Founders & Friends,

As we forge ahead into an increasingly interconnected and digitalized world, the imperative for clarity, insight, and trusted expertise has never been greater. Recognizing this, we are excited to announce the launch of Blockwall Insights — an extension of our commitment to fostering innovation and empowering informed decision-making in the Web3 sphere.

Through these publications, we will share a wealth of knowledge accumulated through years of hands-on experience, rigorous research, and investments. Expect comprehensive examinations into trending topics in the Web3 ecosystem, transparent discussions about the rationale behind our key investments in early-stage projects, and regular updates on market dynamics, emergent technologies, and regulatory changes that impact the landscape.

With this we hope to create an intellectual space that offers value, sparks dialogue, and encourages a collaborative approach to navigating the intricacies of Web3.

As we kick off this new chapter, we are thrilled to share an opening article written some time ago by Dominic, General Partner at Blockwall. In this piece, Dominic delves into the fundamental questions that guide our work as venture capitalists and offers valuable insights into the philosophy that shapes our investment decisions.

Ask Why - The Core of Venture Investing

As a venture capitalist, “Why” is probably the most asked question I have to answer myself when talking to LPs but at the same time “Why” is the question I ask the most when talking to founders – nevertheless, I have the feeling that this question is not asked often enough in our ecosystem.

This reminded me of a talk I attended last year around the same time… I was lucky enough to hear David Fialkow from General Catalyst speak at the Annual General Meeting of Global Ventures.

Something which resonated the most with me were the closing remarks by David:

The greatest companies in the world and which we will see in our lifetime have probably not been started yet.

Why do people start businesses – not necessarily because of financial gain, or because they have a burning desire to take their business public, but because they are deeply passionate about their solution – and very often that solution is derived from a personal desire/motivation. It is a product that they need, a solution they want, it is a cure someone couldn’t get, it is a way to do business, a way to live their life, that they can’t do because that product or solution does not exist. A founder that truly cares is so passionate about their business, that they can’t imagine why somebody would not use their solution.

Being a great founder requires passion above all, talent, and incredible resilience to see it through and see their business come to life.

And if a founder truly loves what they are doing, then they need a partner at their side who believes in them and supports them on their way to become a company. This is the role we play as venture capitalists. The world does not need another VC firm, but what the world needs are investors who care about their founders, investors with empathy, people who care so much about their founders that they are willing to go above and beyond to support them.

Now looking at the industry we are focusing on – Web3 – it is often scary for people to invest in an area or theme, they do not understand. Asking the question “WHY” brings us a little closer to the truth – so why do we care so much about what we do and why do we focus on Web3?

We live in a world where “access” has become a synonym for good living standard and wealth – access to banking, access to healthcare and medical products, access to a good education, and in some places around the world still unfortunately access to the basic things we need to survive. Often a common denominator and a first step (not to all problems obviously) is simple - access to our digital world. Access to the internet has become the prerequisite to participate in our global economy and defines how we share information and connect with other people.

Why is this relevant?

Two-thirds of the world’s population has access to the internet globally – One-third does not. Adoption rate is increasing. We have roughly 15bn devices connected to the internet which is expected to double until 2030. At the same time our devices are becoming more powerful and objects of our daily life smarter; our car, our home, and even our cities. Massive amounts of data are exchanged as well as value. It is estimated that >90% of the world’s currency is digital already.

But unfortunately, our digital way of life is associated with certain risks.

• Privacy abuse
• Data monopolies
• Fraud
• Data hacks
• Lack of transparency

In fact, the internet we know today has originally not been designed for the usage of today. That is why the web has been continuously improved since it’s very beginning.

Explaining it, on a very high level, there is a constant feedback loop between the infrastructure layer (e.g. the protocols we know such as Voice over IP - VoIP) and the application layer (e.g. Skype). Limitations and flaws in the system naturally leads to an improvement. Without the improved functionalities on the infrastructure layer, new solutions/ services/ products would not be possible on the application layer. Seeing the flaws of our internet, the infrastructure had to be improved. This is the reason why we are seeing a movement from Web2 to Web3 – to improve the status quo and build the foundation for the future of our digital world – preparing for more users, more devices, more data being exchanged.

The same way we need a secure, transparent, trustworthy infrastructure and system in the real world, we also need to make sure that we digitally engage in a web which is secure, transparent, trustworthy and as efficient as possible. And the more intertwined the real world is becoming with our digital world – e.g. smart city, smart vehicle, smart home, payments – the more important it becomes that we care about how our digital world is built. The infrastructure will be a feature set and combination of different technologies, such as Distributed Ledger Technologies (e.g. Blockchain) as well as technological innovations within AI, Big Data, Cyber Security, VR/AR etc.

As history has shown us, these technologies however will also be improved over time – when the internet enabled us to send emails for the first time, we also could not have imagined a world where we would be able to stream videos, or carry 100k pictures in our pocket…

Following the same logic as the web has evolved over time, the ever-improving web infrastructure will enable founders to create solutions to some of the most challenging problems of our time.

• Enabling access to healthcare system and medical products which are not forged
• Enabling a supply chain and global economy with no possibility for fraud and malicious acting
• Enabling a secure access to digital education and improved virtual learning experiences
• Enabling a more sustainable energy production and supply
• Enabling a more efficient mobility system
• Personal and secure connectivity and interaction in a digital world
• Privacy of data and of the individual in a digital world
• Digital financial system and access to financial products
• Digital security and transparency

So when investing in Web3 you have to be aware of both layers. At what stage is the infrastructure and what can it enable and what applications or services does the current or potential future state of the infrastructure enable. Maybe this simplified analogy helps…it is similar to a highway connecting two cities – how many cars can the highway handle (does this highway have 2 lanes or 4), is there a speed limit, how much is the toll for using the road, etc. The infrastructure alone however would have no use, if there were no cars driving on the road, if these cars were not serviced, or if these cars could not refill with gas or charge – and what is actually the purpose of the car’s trip and what is actually happening in the ecosystem at the car’s origin or destination?

Long story short – with the innovation on the infrastructure layer, a whole new universe of business models and opportunities is emerging – either reinventing or improving existing products and solutions.

So what do we look at before investing in a founder in the Web3 space (simplified: the same logic as in any other innovative space)? We want to understand the real purpose and passion behind the founder’s idea. Why do I need this product or service? Why is the market or the customer desperate for using this product or service? Which problems or challenges does your product or service address? Is Distributed Ledger Technology/ Blockchain needed or nice to have? Why do you think the time is now? Why do you think that you are the right team to execute on your idea? Is your service or product truly a new innovation and why would it be so unique and superior to existing solutions?

Most founders in Web3 who I know don’t care about the next article on the current Bitcoin price, or crypto bubble – they are thinking of how they can build the infrastructure for our digital future, how they can change the world with what they are building, how they can improve our digital life, digital experience, digital connections, security in our digital world. Our dependency on our digital infrastructure is only increasing in the years to come. So we need bold and passionate founders tackling these challenges as well as visionary and bold VCs to back and support these founders.

As always and this is true for any venture segment, there are people who seek shortcuts, the quick buck, don’t care about the consequences of their actions. But in general, founders have good intentions, just because the business did not work, does not mean that they are a scam – this is called venture economics. Good, and generational companies take time to build.

The question is, is this company worth building – so ask Why!