Bitcoin Industry Venture Capitalists Shift Focus to Non-Financial Applications and Ethereum Startups

Last year, Bitcoin and blockchain-related startups raised
over $1 billion in total investment, a massive increase from
the $347 million invested in the space in 2014, according to a
by Inside Bitcoins

. Companies such as 21 inc and Coinbase rasied $116 million and $75
million, respectively, dwarfing the relative investment into the
early days of the Internet.

Major companies such as American Express, Deloitte, Goldman
Sachs, MasterCard and the New York Stock Exchange have invested
millions into Bitcoin technology firms recently. Many banks are
also getting on board and investing into blockchain projects,
although few are investing in Bitcoin itself.

To keep up with the growing scope of the industry, many venture
capitalists are also changing their investment strategies.
Bitcoin Magazine

spoke with the Blockchain Capital team and Brayton Williams, a
co-founder of Boost VC, to get an idea of what the current Venture
Capital perspective is in the industry.

The Blockchain Capital team, which recently
raised a new fund totaling $13 million

, explained to
Bitcoin Magazine

that the fund is evaluating many different applications of Bitcoin
and blockchain technology. “When we were still Crypto Currency
Partners, we were much more focused on the financial applications
of bitcoin technology. However, the world of finance, with its
corresponding regulation, is incredibly slow moving,” the team said
in a statement.

In addition, they believe there are already a handful of
established players, which leads to fewer niches for new Bitcoin

For this reason, Blockchain Capital explained that “as the
blockchain ecosystem has evolved, and promising non-financial
applications of this tech have emerged, we have increasingly found
ourselves inclined towards these applications with a much lower
regulatory burden. We have made promising investments in companies
that use the blockchain in novel ways… [and] already have major
proof-of-concept trials underway.”

Their rationale is that if the industry a startup is competing
in does not risk being entirely disrupted, the company will have an
easier time scaling.

Specifically, after the addition of Jeremy Gardner from Augur to
their team, they have begun to get serious about Ethereum.

“Smart contracts are incredibly exciting, and have the potential
to disrupt countless industries,” Blockchain Capital said, adding
it “will deploy about half of the fund towards new, early-stage
investments. The second half will be geared towards follow-on
investments for top companies moving into later stage rounds.”

Boost VC also recently announced
announced in a Medium article

, written by Brayton, that it was beginning to expand the scope of
its portfolio to include Ethereum startups. The blog post explains
that the primary reason that Boost VC was beginning to invest into
Ethereum startups was because some of its portfolio companies had
begun to use the Ethereum blockchain “because of its ease of use
and robust toolkit.”

Williams said in a statement to
Bitcoin Magazine

that their fund will now look at Ethereum companies the same way as
Bitcoin companies and that they will “continue to invest in ~20
[companies] twice a year through our accelerator program.” He adds
that Ethereum is still a forward-thinking investment in the VC
ecosystem, as “VC’s are looking for traction and right now there
are no blockchain companies with significant traction/users.”