Son of DFJ founder: Investors don’t want to hear the word Bitcoin

In his San Mateo office, Adam Draper, CEO of Boos VC and son of Skype-bound Tesla investor Tim Draper, was on a call, his usual high-energy self, his voice exuding the same optimism as the orange high-tops he was wearing.

Draper has just demoed a new batch of startups (Tribe 6) from the incubator he co-founded in 2012 with former Xpert Financial founder Brayton Williams. Boost VC found success in 2013 by backing emerging financial technology company Bitcoin, which is best known for its wild price volatility and association with cybercrime.

The investment was risky, but the decision was a testament to his ability and earned Boost VC a ton of media coverage and a 2014 pledge to invest in 100 “bitcoin companies” by 2017. So far, Boost is halfway there, having invested in 52 startups, including Align Commerce, Mirror and Reveal.

On his way to New York today, he shared some of his thoughts and insights about the phenomenon that financial institutions and investors "don't like Bitcoin" but are interested in Bitcoin's distributed ledger technology "blockchain". Blockchain and its derivatives using its logical principles have become synonymous with innovation.

Draper told CoinDesk:

“We use the word blockchain now. When I mentioned Bitcoin, they thought it was the worst thing in the past. It felt like they were wary. When I switched to blockchain, they were very focused and interested.”

Draper seemed reluctant to make the change, though he said he was initially against using the term, mostly because he thought it was just cosmetic. After all, businesses that use blockchain as a payment method still need to be integrated with blockchain’s electronic currency, which is the transaction mechanism of the Bitcoin blockchain.

“When we refer to blockchain, I mean Bitcoin,” Draper clarified. “Bitcoin and blockchain are coupled together. The incentive structure of blockchain is Bitcoin.”

Draper sees this as mostly a “jargon change” and the ecosystem has gone through multiple such shifts before, ticking off a list of terms that have precedent, including cryptocurrency, digital currency and altcoin.

“It makes sense to move from bitcoin to blockchain, it’s the underlying technology for all of this,” he added. “I think in many ways blockchain is fintech, so it’s going to be fintech.”

Impact on Boost

As for the startups Boost VC is embracing the changes, Draper said the change in colloquialisms will not affect companies that are applying or have already been admitted.

Boost VC’s recent incubation includes only five bitcoin startups – CoinUT, Epiphyte, Joystream, Unocoin and Wealthcoin – which is a significant drop from the 20 companies in Tribe 5.

“In some ways, they all use blockchain, but some of them still use the word bitcoin,” Draper explained. “A lot of them, they use bitcoin to move money.”

In terms of guidance the startup received, Draper said the move to blockchain would not result in any changes in strategy, not even in terms of branding and positioning.

“What really matters is what kind of problem you’re solving and using blockchain and Bitcoin, which is based on blockchain, to solve problems that we couldn’t solve before,” he said.

Regulatory pressure

As the least funded round by a bitcoin company in recent rounds, Draper attributed this to Boost’s interest in virtual reality and regulatory factors.

He said that in the future, he hopes that each batch of the incubator will be made up of companies focusing on new technologies, while also acknowledging that increased regulatory pressure in the United States is also a problem.

Draper has publicly criticized New York’s BitLicense, a business licensing system, and the approach lawmakers have taken to the technology. And it’s worth noting that Boost VC has invested in Sand Hill Exchange, which was shut down by the U.S. Securities and Exchange Commission (SEC) in 2015 for trading unregistered assets.

Draper said regulatory pressures have caused his team to consider compliance issues when looking for new candidates, and he said changing the wording used to describe the industry would also alleviate those issues.

“Currency needs regulation and it can be replaced with blockchain jargon. Blockchain does not need regulation and it can also be an asset,” he added.

“Everyone is moving to blockchain because you don’t have the burden of regulation.”

Blockchain Basics

When asked about the state of blockchain infrastructure and its ability to serve as a layer of application infrastructure, Draper said he believes that new companies have taken on enough regulatory pressure to thrive.

There are companies at Boost VC and in his personal portfolio that fit that definition, he said, citing BitPagos, Coinbase, Unocoin and Volabit, and others could build on those examples.

Draper was less enthusiastic about private blockchains, which use blockchain technology as a "private database." In his view, "Bitcoin's blockchain is the blockchain."

He noted the launch of Liquid, a new sidechain developed by startup Blockstream to demonstrate that the bitcoin blockchain is versatile enough to support the development of private blockchain networks while still gaining the security and network effects of the bitcoin blockchain.

“I am all for the bitcoin blockchain,” he said.

A changing era

The most beneficial change from the rebranding under the term “blockchain” is that financial institutions will be able to promote the technology to their many existing users.

“Financial institutions can create products that people trade all over, and they have the marketing dollars to do that,” he said. “To the extent that we’ve been unable to market it to the size of the market we had expected.”

However, he also said that working together in Silicon Valley (the center of fintech) and New York (the birthplace of old finance) might be a little uncomfortable in the short term.

Draper recalled a meeting with community bank representatives during his trip to New York, during which he made stylish sartorial choices that had nothing to do with his preference for orange shoes.

"I was standing among these bankers wearing orange shoes. Everything was so nice, the suit, the tie, everything, and everyone was making fun of me because I was the only one wearing a tie," he added.

“I just felt like, this is what’s happening in New York State?”

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Original article: http://www.coindesk.com/adam-draper-investors-bitcoin-blockchain/
By Pete Rizzo
Compilation: Next
Bitcoin address: 1Mwmes1CAwgvy5SEpjPAkbnp94BYtsRw66
Editor: Satuoxi
Source (translation): Babbitt Information