Recently, Jatin Madhra of BTCWIRES caught up with Andrea Bonaceto, the Founding Partner and CEO at blockchain-oriented investment fund Eterna Capital. What followed was an insightful discussion about the reality of operating in the space of blockchain investments.
You can watch the full interview here:
Andrea heads Eterna Capital, which he launched alongside three former employees of BlackRock. The fund has been named by Forbes as one of the top three funds operating in the blockchain space globally and has been covered by media houses such as Bloomberg, Forbes, Investment Week and Financial News.
Andrea is an Imperial College, London alumnus – he has been a part of two of the Big Four companies: Deloitte and KPMG, and gone on to co-found a graduate recruiting startup called HiredGrad.
Following is an abridged transcript of the conversation between Mr Madhra and Andrea Bonaceto.
Madhra: Since you had started your career at Eterna Capital just a year ago, what are the challenges you have faced in trying to establish your identity in the investor market?
The first challenge we faced while establishing Eterna Capital was to identify the right legal structure to follow. This is in context of lack of clarity in a regulatory framework. We looked at the issue thoroughly, spoke to major lawyers in key jurisdictions. It wasn’t an easy process.
He continued, saying,
The second challenge was to ensure we have a robust due diligence framework for investing in the right blockchain projects. At Eterna Capital, we are following a systematic investment approach to ensure we are making the right investment decisions. We understood the importance of having a strong presence in the market to secure allocations into largely oversubscribed deals. Eterna Capital has been featured by traditional media outlets houses such as Bloomberg, Forbes, The National, Investment Week and Financial News and crypto media outlets such as Coindesk and Cointelegraph. This coverage helped us achieve visibility in the space.
Madhra: Tell us a little about your journey, how you came to the blockchain space.
In response, Bonaceto first told us a little about his professional and academic background, adding,
I started researching into blockchain several years ago, and I was immediately fascinated by its potential. I started brainstorming about this new technology with Nassim Olive, who studied with me at Imperial College London and was employed by Blackrock at the time. Nassim introduced me to 2 of his Blackrock colleagues, Asim Ahmad and Mattia Mrvosevic, and we decided to set up an investment fund to allow professional investors to get exposure to this new asset class. We followed a very rigorous approach, as we aim to bring asset management standards to investing into the blockchain space.
Madhra: How much do you think the market has changed since your HiredGrad days? Do you think the changes can be credited to blockchain technology?
There has indeed been a lot of change from the regulatory standpoint, with some countries being more proactive than others. It’s great to see large economies such as the UK proactively looking at the space and establishing sandboxes where blockchain startups can engage directly with the regulator. The main point is to regulate without stopping technological development. At Eterna Capital, we are supportive of regulation in the blockchain space, as long as it does not represent a roadblock for innovation.
There has been an improvement in the education and awareness around the asset class itself. It is no longer restricted to crypto nerds. Established investors are also looking into this space. Although the past year has been bearish in terms of prices, the market has been quite bullish from a technology perspective. Many established companies are looking to invest in the space. As “Deloitte’s 2018 Global Blockchain Survey” showed, 95% of over 1000 companies surveyed are already investing or are planning to invest in this new technology.
Madhra: Tell us a little about the projects Eterna Capital is funding or is looking to fund. Please elaborate on how the market is seeing a great deal of innovation, as you said.
At Eterna Capital, we are sector-agnostic while investing in blockchain projects- we invest in platforms, decentralized apps etc. We are early investors in Origin Protocol, which is a protocol for building sharing economy application on the blockchain, and three more DLT platforms: Dfinity, Algorand and Hedera Hashgraph.
I think these are very innovative projects with strong teams. We are not just investing; we are also constantly supporting them, by leveraging our broad network.
Madhra: Do you think cryptocurrencies are the best use case of blockchain or do you see the technology going much bigger?
Cryptocurrencies are just one application of blockchain technology, but there are many other use cases. Media often considers cryptocurrencies and blockchain as synonymous, but it is not the right approach. There are major use cases for instance in the field of supply chain management, big data, personal data, decentralizing computing power, etc. which do not require cryptocurrencies.
Madhra: As an investor, what are the top three considerations that help you decide whether a project is worth your time or not?
Firstly, we invest in extremely strong teams with a very clear vision. Secondly, we assess whether a project genuinely needs blockchain to solve a problem or whether it is only riding the blockchain hype. Thirdly, we look at the token economics in details and analyse the underlying dynamics.
Madhra: You have worked with blockchain as well as AI and Singularity. Which one do you think is the most futuristic technology? Or do you think it is a mixture of these?
Both blockchain and AI are disruptive technologies and can work in conjunction. SingularityNET is an example of that. Combining blockchain and AI will help AI develop faster as it will be able to access more data. We are moving from a situation where mainly big corporates invest in AI to a situation where everything is much more open, with platforms allowing users and developers to seamlessly acquire and sell AI services, without the need of any trusted third party in between.
AI became very accurate in fields such as face recognition, but in many other fields which do not represent a focus for large corporations, AI research is still underfunded. One example is proving mathematical theorems. About 70% of mathematical theorems at the PhD level can be proved by AI, but not many resources are deployed by corporates in that direction. If AI gets more democratised, new fields could see faster development. Blockchain could be the technology enabling this innovation.
Madhra: Coming to our last question, post the market crash in 2018, many experts feel that the crypto market will fizzle out soon. What is your take on that?
Looking at the fundamentals, I feel that we are at a point where all the right ingredients are in place. Regulation is coming. It might be slow but every year the framework is developing, and this is a good sign for a longer-term investor. It’s clear that governments don’t wish to stop innovation and fall behind. The infrastructure for mainstream adoption/investment is being built with many of the largest financial institutions involved.
Besides, if you look at technical indicators, most of them suggest we are at a point when it makes sense to start entering the market again as the bear market is showing signs of exhaustion.
Madhra: Thank you. I just wanted to add on one more question: if any company wants to reach out to Eterna Capital, what is the easiest way to do so?
They can reach out by email at [email protected] Also, they can contact me via LinkedIn. If there are interesting projects, I would look at them.
Madhra: Thank you so much for taking out the time this morning. It was great catching up and gaining these insights into your area of work. That was all from our side.