Many more investment firms are tracking #cryptotwitter than might have been the case even a year ago, but True Ventures isn't necessarily among them, suggests co-founder Jon Callaghan. As with hardware, synthetic biology and a lot of other areas where True has made early and often lucrative bets, True was pulled into the world of digital assets back in 2014 largely by founders it backed previously and who have increasingly moved into this brave new realm. There are a lot of them. Callaghan says that of the 388 founders in the "active" True Ventures portfolio, 55 are currently working on digital assets.
Investing in some of these tokens and protocols and DAOs -- decentralized autonomous organizations with no central leadership but instead a community that's organized around a specific set of rules -- isn't for the faint of heart. But that's kind of the idea. Like a lot of early investors in the space, Callaghan is counting on a willingness to leap into the great abyss to produce outsize returns in the future. He likens investing in decentralized assets to more traditional venture investing, with a major "asterisk."
As he explains it, "We're always looking at people, people, people, then market, then tech." With digital assets, there is a comparatively new facet, "which is the structure, which is totally different." While some deals may involve good old-fashioned equity, in other cases, True "might be buying rights to token sales, and tokens are also different because they might have governance rights or voting rights or vesting [schedules] or lock-ups," he says. Or, they might not.
Of course, Callaghan isn't crazy. Though the firm's limited partners are pleased that early investments that made them nervous -- including in Bitcoin and Ethereum -- now look prescient, True's team knows what it doesn't know, which is why it just brought aboard Gus Coldebella to focus on global public policy and regulation.
Coldebella spent the last year as the general counsel and chief compliance officer of Paradigm, the crypto-focused investment firm that is reportedly closing a giant new fund. He also spent a little more than a year with the digital currency company Circle, where he served as the company's chief legal officer.
Most important to True, perhaps, Coldebella was the chief legal officer at the U.S. Department of Homeland Security for a stretch during the aughts, and he still has relationships with regulators, which can be exceedingly helpful when you're trying to invest in digital assets.
Indeed, Coldebella's considerable task at True will largely be to help the firm -- and its portfolio companies -- navigate new and changing regulations as they are written and to work closely with the firm's internal crypto team, which comprises partner Adam D'Augelli; firm associate John O'Connell; Dave Balter, who is the founder and CEO of the crypto analytics platform Flipside Crypto; and entrepreneur and True partner Kevin Rose, who also produces the highly popular "Modern Finance" podcast.
He'll have a lot of people to keep updated. Among True's many related bets, it has poured money into the digital asset protocols Ampleforth and Reflexer (which built Rai Protocol); into the trading platform FutureSwap; into Art Blocks, a project that generates original artwork on the Ethereum blockchain; and into infrastructure software, like that of Forta.
The larger question Coldebella will be trying to help True answer, of course, is how a venture firm smartly and safely participates in something that's not even a company. And that's a question "that’s not just germane and critical for us and our funds," notes Callaghan, "but it's something that the SEC and global governments are trying to figure out, too."