Tag: blockchain

Enterprise SoftwareVenture Capital

boldstart in 2017, enterprise tech in 2018

Posted on by Ed Sim

2017 Recap

2017 was another year of growing, learning, investing and partnering with amazing founders. Once again, we are grateful to have the opportunity to work with so many amazing founders, advisors, co-investors, and other collaborators to bring the boldstart family together.

Before diving into yet another year and list of predictions for enterprise in 2018, we’d like to recap a few thoughts and moments from 2017.

  1. We were first check leads in 8 founding teams including Wallaroo Labs, MState (fka hyperfab), blockdaemon, and 5 in stealth.
  2. Thematically our new investments include 4 targeting the “Rise of the Developer,” 3 in “Intelligent Automation,” and 1 in “Decentralized Computing;” geographically 4 are in NYC, 3 in Bay Area, and 1 in LA (more on our themes)
  3. 6 portfolio companies raised Series A financings including Manifold, Hypr, and 4 unannounced, 1 raised a Series B (unannounced), and Security Scorecard raised a $28mm Series C.
  4. 2 exits including yhat (sold to Alteryx — AYX NYSE) and init.ai, one an early investment in a data science platform and the other on NLP for developers.
  5. We co-founded MState (fka hyperfab, read Coindesk article) with Rob Bailey to help bring enterprise company building expertise and Fortune 500 connections to the blockchain community. Our partners include IBM and one unannounced Fortune 50.
  6. We built out our CXO advisory board and further cemented our Fortune 500 relationships to help our portfolio cos scale from “founder-market” fit to product market fit in an accelerated timeframe (meet our advisors). This resulted in tons of collaboration with large enterprises ranging from product feedback to pilots and customer relationships.

Enterprise Tech in 2018:

“The Law of Accelerating Returns” by Ray Kurzweil is truer than ever before: the rate of change in a wide variety of evolutionary systems (including but not limited to the growth of technologies) tends to increase exponentially.

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In other words, today is the slowest rate of technological change you will ever experience in your life and doing nothing is worse than doing something. Keep this in the back of your mind as you think about the biggest transformation in enterprise tech; the re-platforming of corporate America from legacy to cloud/hybrid cloud and monolithic software apps to microservices driven development. With this pace of change accelerating, everyone will have to move earlier in the food chain; corporates will need to work with earlier stage startups (we are experiencing that phenomenon in our portfolio) and VCs will have to go earlier to invest in those founders before they take off.

  1. NYC has deep enterprise tech: the NYC you imagine that is full of ad tech and media is not the NYC that we see. Some of our latest investments in NYC include founders building companies in serverless, open source data streaming, decentralized biometric security, splunk for customer data, and developer productivity for dynamic code testing. There will be more deep enterprise tech startups founded, funded, launched, and scaled out of NYC in 2018. The talent base is improving, the customers are here, and the west coast VCs are paying attention. A sidebar is that NYC is and will continue to be one of the best places to launch any crypto-related company with Consensys as a base, the large number of fin tech entrepreneurs in NYC, and also with IBM in close proximity, one of the leaders in the enterprise blockchain. That is why we are also so excited about Mstate.
  2. Continued barbelling of VC will continue in 2018:. Either we see lots of smaller or seed funds at one end of the barbell or mega funds on the other end. It’s increasingly becoming tough to be caught in the middle to maintain ownership in your winners, and we will see more established VCs like Sequoia raise mega funds to counter the Softbank Vision effect. As for us, we are continuing to double down on our old school VC model, first check in, leading or co-leading, and rolling up our sleeves.
  3. CIOs are the new VCs: this is the year that Chief Information Officers start acting more like VCs. Corporate America is pressured to decrease costs and improve customer interactions and every Fortune 500 is a technology company. Expect this trend to continue and what this means is that CIOs will take a portfolio approach, make some bets, and double down on their winners. There will be lots of room for startups to wedge their way into large corporates and they will have every opportunity to turn pilots into production. This speed of adoption of new tech will accelerate at the largest enterprises, and they will be reliant on early stage startups to do so.
  4. Rise of the developer in the Fortune 1000: According to Gartner 75% of app development supporting digital business will be built, not bought. There are more devs, more corporates who need more dev tools and services, and we are seeing continued adoption in the largest companies. Tied to this will be a need for a hybrid, cloud/on-prem deployment and we are excited about portfolio companies like replicated that play to this future.
  5. GDPR is the next Y2K: GDPR kicks off in May 2018, and we are convinced it is going to be a massive problem and will sneak up on many enterprises.GDPR is all encompassing and focuses on protecting a customer’s PII (personally identifiable information) and hits every segment of the data pipeline from how developers access data as they create new apps to finding and monitoring all of a company’s PII to eventually allowing end users the right to be forgotten. This will be a huge boon in data and security spend in 2018 directly tied to this.
  6. Enterprise blockchain will prove itself: Cryptocurrencies are hot but the tech powering this, blockchain gets less attention. 2018 will be the year that many Fortune 500s that are piloting this tech will bring applications into production. There’s been lots of buzz for the need for a shared, distributed ledger but 2018 is the year we see production level use cases in the wild.
  7. Rise of Chief Data Officers: As the value of an organization’s data continues to rise, we will see many more Fortune 500s create the Chief Data Officer position. This is a trend that kicked off over the last 2 years and will only accelerate in 2018. This role is crucial as companies look to consolidate to a data lake (cloud or hybrid cloud) to prep for a future driven by AI and machine learning. Investment opportunities will abound as data ops becomes the new dev ops and the need for pipelining software to go from raw data to prepped data increases. This Chief Data Officer will also be responsible to manage the impact of GDPR (see above).
  8. AI is not a market, AI is embedded in every application: AI is not a market, it’s an enabling technology just like Java, wireless, and blockchain are. We said this in our predictions last year for 2017 (AI is table stakes) and this will accelerate in 2018. Some call this “ambient AI” and I just call it software. The real enterprise use cases that will continue to scale is the automation of the back office and the move away from robotic process automation (RPA) to Intelligent Automation (cognitive layer) and the continued move from AI in the back office and moving to the front office in every industry.
  9. Move to cloud accelerates, serverless hits early majority: We are still at the tip of the iceberg as enterprises move from legacy to cloud or hyrbrid/cloud. AWS has dominant market share but multi-cloud becomes a must-have for most Fortune 1000 organizations. This includes choosing best of breed by cloud vendor (Google for tensorflow, AWS for s3 and serverless, etc) and also distributing workloads over multiple clouds. With this, serverless and event-driven workloads will continue to proliferate as companies move beyond AWS Lambda and start using Google Cloud Functions and other solutions.
  10. Dev Sec Ops is the hot topic in security: With the velocity of software development and the reuse of software components, building in security at developer level becomes a must have. Securing open source dependencies like our portfolio co Snyk, managing service to service authentication and policy, encrypting traffic and more become hot areas in 2018.
  11. Quantum dabbling: We will hear about more and more enterprises explore the use of quantum. In 2017, new languages were created from companies like Microsoft and IBM to take classical algorithms and help repurpose for quantum, and this will accelerate in 2018 as the Fortune 500s start building out skunkworks teams to explore use cases. We are still a few years away from having a quantum computer perform calculations faster than a classical machine but once that happens, there will be tremendous opportunity for startup activity.

Previously posted on Medium

Decentralized Computing

All Platforms Need a Killer App – Cryptokitties is the one for blockchain

Posted on by Ed Sim

I’ve always loved investing in companies that can become platforms but not investing in platforms. What does that mean? Well, to be succinct, it’s quite hard to sell a platform. You need to show users/customers how your platform can solve problems. Every platform needs a killer app to demonstrate the power of the platform – show don’t tell. Going back to webmethods, it was how DHL used WIDL (precursor to XML) to embed tracking information in other websites. For twilio, it’s first big opportunity was becoming the SMS provider for Uber. For the blockchain, it’s bitcoin and for ethereum and smart contracts, it’s Cryptokitties. Yes, cryptokitties.

It’s taking over the ethereum blockchain and despite all of the ideas for enterprise smart contracts and tracking assets on the blockchain, cryptokitties is the first killer app (outside of the currencies) showing end users how they can create unique assets on the blockchain and create, share, track, trade and sell digital goods. To date, estimates have transaction volume of over $10mm and individual kitties selling for over $100k. Yes, those numbers sound insane but my point is that decentralized apps like this open the world to the power of the ethereum blockchain.

According to the crytokittie site:

CryptoKitties is one of the world’s first games to be built on blockchain technology—the same breakthrough that makes things like Bitcoin and Ethereum possible. Bitcoin and ether are cryptocurrencies but CryptoKitties are cryptocollectibles. You can buy, sell, or trade your CryptoKitty like it was a traditional collectible, secure in the knowledge that blockchain will track ownership securely.

To get onboarded, we need to start with a Metamask.io plugin to connect our browser to the ethereum blockchain and the world of distributed apps. It’s pretty simple and once you get up and running, you need to add some Ethereum to your account via Coinbase or direct transfer. Once you have Ether in your account, you can buy a kittie and enter the world of blockchain without even knowing it.

So despite all of our discussion on putting car titles, real estate titles, and other unique assets on the blockchain, cryptokitties, a fun and addictive game, is the one application showing how powerful the blockchain can be for asset tracking and ownership. And it’s not so far a leap to think about what other enterprise digital assets can be similarly put on the blockchain.