Still Curious: Costanoa VC Crypto Fellowship

What drives your career decisions?

Lifestyle? Money? Happenstance? Friends?

Curiosity + luck has consistently led the way for me.

I've found that curiosity is strong enough to help create your own luck. I've been fortunate to work in the fintech startup world for the last ~15 years. Most of my time was spent in the BNPL space and recently in crypto at BlockFi.

With that context, it's understandable why my next move is a shift towards investing from operating. I've now worked at every stage company and have been through multiple exit types (acquihire, opportunistic m&a, IPO) – From day 0 (pre-seed) to a 'legacy' bank, and every stage in between. I've seen and been through a lot. But there's still so much I want to learn and do.

This move will help me do that while broadening my reach and impact on the world by supporting multiple companies instead of just one. And there's quite a bit of overlap. Most products (and therefore early-stage investing) come down to a few essential elements around Desirability, Feasibility, and Durability.

Costanoa Crypto Fellowship

I'm joining Costanoa VC as a Fellow to focus on crypto ecosystem investments. My curiosity + a little luck landed me in this fortunate position. That's also what primarily led me to Bitcoin and then the world of crypto, to begin with. I couldn't be more excited to join this thoughtful, successful, experienced, and curious team.

I'm equally as excited to meet and support early-stage founders.

Costanoa has made several early-stage crypto related investments recently, in addition to all of the other sectors we're active in (fintech, dev tools, security, and modern SaaS). We can invest in both tokens and make equity investments. Many of these have synergies with the rest of our portfolio, making us value-added beyond just $. Not to mention, we love incubating and are actively helping a few founding teams with crypto ideas right now. My job is to help accelerate their activity in the sector.

Opportunities, Problems, and Thoughts

People often ask me questions regarding crypto resources or my crypto thesis and investment ideas.

I reply generically to most of my friends – 'when you invest often matters more than what you invest in. Just stick with quality and invest consistently for a while. Fight FOMO. And whatever you do, don't capitulate.'

But I'd love to go deeper with any of you who are building or even just thinking of building. Here are some thoughts going through my head these days:

Mindset

I frequently have to remind myself how early it is. It's really, really early—proof of concept early. Yes, a new financial system is being built, but it all sucks right now. Leapfrogging will happen. Explore with patience. Remain mindful of investing vs. trading vs. gambling. Maximalism will never die, and maximalism is blinding.

For example, the masses won't value decentralization for all use cases. It's not even crucial for all applications, just like blockchains aren't always necessary. Don't be dogmatic. Focus on value. The word "Web3" incites controversy. Let's focus on value creation and creating a future better than the past. Strike that balance between open-mindedness and closed, with a slight hint of naivety. Opportunities live in the middle. Independent thinkers win big.

Fintech & CeFi - Helpful enablers of mass adoption

Crypto has reached cultural and institutional acceptance. "It" is more than just money now. ATH's, DeFi, and NFTs dominated 2021. Coinbase went public. We'll see media cycles about CeFi vs. TradFi as incumbents and startups aggressively converge on similar roadmaps. Corporate VC arms like Binance, Coinbase, FTX, Gemini, and Kraken will continue to be highly active, as will M&A activity. Talent is a bottleneck, while the TAM is growing by the day. Fintech, serving as just a better interface and distribution arm for banks, will soon pivot to bridging organizations and people with crypto as well.

These players will be a key accelerant to mass adoption. With that said, please don't confuse this belief with obliviousness. The real magic is made possible by all of you "shadowy super coders." But fintech startups will be helpful mass adoption enablers of the primitives that you continue to develop.

Just raise the bar

While understandable and explicable given how early it is, the bar is currently quite low, creating massive early-stage opportunities. There's a burning need for more and better infrastructure and services for every player in the ecosystem – web3 developers, fintech startups, financial services incumbents, consumers, and 'modern organizations' (aka businesses). Custody, insurance, development tooling, auditing, education, accounting, operations, fraud, risk and compliance enablers, etc.

Take wallets, for instance. A 2021 wave of new entrants who came for NFTs will inevitably lose access to theirs over the next 2 years. We'll lose these retail participants forever. Key management aside, most wallets have been designed for holding, transferring, and swapping digital tokens. New wallets need to emerge as more use cases are born. Perhaps wallets & DeFi dashboards will converge? Perhaps wallets make bridges invisible? Perhaps "wallet" will be replaced by a new name and app that looks and functions differently than those most popular today.

Choose an area, and you'll inevitably raise the bar, playing a critical part in the path towards mass adoption.

The great convergence

What's a business? What's a SMB? What's a consumer? What's a retail vs. professional investor? What's a finance executive? B2b, B2c, C2c... everyone is converging. Hell, what will we call gamers in the future– SMB owner/investor? Definitions and roles are evolving. How exciting is the office of an ambitious CFO for their future finance stack? Corporate treasury tooling, yield options, fundraising solutions, payment services, etc. Everyone is essentially becoming an active mini CFO these days, managing the cash flow and treasury of their household or organization with more tools than ever before.

The playing field is leveling, and we've barely scratched the surface. We have yet to see the killer marketplaces be developed or the enablers of undercollateralized lending. This great convergence colliding with network effects made possible in web3 commands respect.

So... Dear Founder,

Crypto and Web3 are changing incentive mechanisms, creating massive shifts in behaviors. We have an incredible opportunity to partner and push this ecosystem forward by building things that will bridge or leapfrog the old and create value for people across the world in unprecedented ways.

I don't have a magic 8-ball, but I've developed decent pattern recognition regarding people and products over the years. Like you, I'm still on a journey of discovering the difference between knowing and firmly believing. You know, like how we all knew that we'd see new all-time highs again during every bear market. If you know you have a great product or idea, then let's chat. Especially if you, too, grew up in the 2010-2020 era of cloud-native + pretty on the front, mainframe core banking + sponsor bank in the back. If you know, you know.

Costanoa likes to lead pre-seeds, seeds, and A's. We have the experience, funding, and connections to help move you forward during the good times and the tough, during the bulls and the bears. By the way, most of our team is in the bay area. I'm in south Florida. We'll back you wherever you are.

I look forward to meeting you if anything in this post piqued your interest. Connect with me on LinkedIn, Twitter, or email me at jared@costanoavc.com. Especially if you're anti-hype, value integrity, and have a great idea or early product in the crypto/web3 ecosystem.