CambrianSV Lisbon: How to back a Bitcoin SV business

The culture of startups backed by venture capital funds has worked spectacularly to create Silicon Valley tech giants. But is that the right model for Bitcoin businesses? 

That was the subject under discussion at the CambrianSV bootcamp in Lisbon today. Jack Liu of RelayX and founder of CambrianSV chaired a panel on business models (above). Jack has also launched his own fund, Output Capital, this week.

Output is far from a traditional venture capital fund. It offers up to $20,000 in Bitcoin to entrepreneurs in return for a revenue share that halves every four years (does that ring any bells?).

Output startups will begin repaying their investor from the first day thanks to the ability of a Bitcoin transaction to be paid to multiple parties. “We’ll take our royalties that way,” Jack says. There’ll be no single exit point in waiting for a sale or IPO. 

Sitting next to Jack on the panel was Aaron Burns, CFO of the Bitcoin social media platform Twetch. Aaron had just made his own announcement—that Twetch was launching an SDK (software development kit) to allow the creation of customised versions of Twetch.

In return, developers will earn a ten per cent revenue share as Twetch tests the market with this new model. “I’d really like to see how people get coding and what they can build,” Aaron says. 

For Aaron, there’s no role for traditional venture capital in Bitcoin businesses: “I think people are going through the motions of a traditional Silicon Valley startup where they hear they need venture capital, so they seek venture capital.”

Whilst Bitcoin businesses, according to Aaron, aren’t best served by venture capital, it may also be that the nature of those businesses isn’t what traditional investors are looking for anyway. As Jack explains: “when you put transactions on chain, that data can be interoperable with any other service provider”. The whole appeal of Bitcoin is that you can own your own data. And so, instead of accumulating assets, the value of a Bitcoin business lies in its “ingenuity and innovation”. 

Aaron agrees that we shouldn’t be expecting to see the huge companies that have grown up on the Internet: “we’ll see exponential growth, but we’ll see it from tiny teams. And those tiny teams will be able to scale massively because they don’t have to worry about the same kinds of costs and problems that a traditional company has to worry about on the traditional Internet.”

“The traditional Internet”? Is the familiar online world becoming like the canal system at the time the railways were being laid? The Bitcoin builders of Cambrian SV wouldn’t argue with that.

Check out our daily reports from the CambrianSV Bootcamp in Lisbon: Day 0, Day 1, Day 2, and Day 3.