1Mby1M Virtual Accelerator Investor Forum: With Jon Staenberg of Staenberg Venture Partners (Part 3)

Sramana Mitra: You said earlier that you’re interested in Bitcoin. Can you talk a bit more about how you’re analyzing the Bitcoin situation? Bitcoin is not a capital-efficient area to invest in. It’s going to be expensive more often than not. How are you parsing the Bitcoin opportunity?

Jon Staenberg: Let me step back for one second on that question. When we started doing this 30 years ago, technology was in a serial rollout. I remember the PC era. We talked about client-server. We talked about the network. Today, we have an absolute hurricane of new technologies being hurled at the world. So there’s no longer one thing to focus on. There are 10 things like Bitcoin.

I have to say I’m just at the beginning of my study of Bitcoin. I can’t sit here and tell you how I’m going to invest in it. I’m sticking a toe in the water. It’s now to the point where we cannot ignore it. The question I ask is, where am I going to focus. At the end of the day, I may just come to the same conclusion that you offered which is, “It’s not capital efficient. An angel investor can’t really make a difference and will just get clobbered by the preference.

Not everything is appropriate for an angel investor. I don’t know what that looks like yet, but there are a couple of areas that are very interesting to me and that I’m spending some real time on. If you have a Bitcoin opportunity, I’m more likely to listen to it, because I’m trying to learn right now. As investors are talking to people, we only have a limited amount of bandwidth and time. What are the areas of interest so that if you’re going to approach an angel investor, what are they interested in? That’s one of the ways I learn.

Sramana Mitra: I understand completely. After doing three startups, I was an EIR at NEA for some time. That was the point of doing an EIR; to learn what was going on. Part of what I love about my job is I get to learn from all these thousands and thousands of entrepreneurs.

Jon Staenberg: People ask me about venture. Money aside, it’s a chance to learn every single day.

Sramana Mitra: What I was going to say on your Bitcoin comment is, we are looking at Blockchain opportunities where some of these entrepreneurs want to create a cryptocurrency-based ecosystem of their own and they want to list on an IPO and raise $65 million. I’m sitting there thinking, “I’m not so sure about this.” This is a very high failure probability that you’re going after.

Jon Staenberg: That’s the thing when you’ve been around the block a few times. You can’t help but think that this is not going to end well.

Sramana Mitra: Exactly.

Jon Staenberg: I’m waiting for my taxicab driver to tell me to buy Bitcoin and then I’ll know.

Sramana Mitra: Obviously, you see a lot of different types of companies. What trends are you seeing in your deal flow that are interesting? Is there something you can call out?

Jon Staenberg: When I worked at Microsoft, we used to say we’re the first innings. What’s interesting to me is we’re not in the ninth innings today. I don’t know what it is. The most interesting trend is where can we apply technology. What are the startups that are applying technology in areas we call dinosaur industries? There is not an industry today that is not being touched by insertion of new technology.

I invested in a company that is changing the way that people are able to get status and work through the immigration process. It can be disrupted. I’m working with a company that’s doing term life insurance and it’s never seen technology like we’re presenting. My point is, we are thinking about way beyond the tech industry because everything is the tech industry.

Sramana Mitra: These different niche verticals where there is a lot of outdated workflows are one of my favorite kinds of businesses; revamp that workflow.

Jon Staenberg: Absolutely. You and I are thinking about that the same way. By the way, not sexy is very sexy.

Sramana Mitra: I agree. I’m going to ask you a few questions. I want to understand how you are processing these trends. How do you process the current investment climate where capital is moving further and further upstream? How does a seed investor or an entrepreneur mitigate the Series A gap? For the last few years, the number of seed investments is huge, but Series A remains constant. A lot of companies are falling into the Series A gap.

Jon Staenberg: They’re falling into it because they’re not being thoughtful about how they are differentiated. You say how do you navigate it. You create a company that has enough differentiation.

This segment is part 3 in the series : 1Mby1M Virtual Accelerator Investor Forum: With Jon Staenberg of Staenberg Venture Partners
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