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Sam Rosenblum by no means imagined he would work at a crypto-focused funding agency. A Southern California native who spent a “giant portion of my life open air within the solar, taking part in sports activities and hanging out with pals,” crypto was not technically a factor till he was in school at UCLA. Stints on the DOJ and as an analyst for a enterprise consulting agency adopted, however it was a subsequent 12 months spent with Visa that opened his eyes to the burgeoning world of digital property — a lot in order that when Coinbase started a recruiting push to drag in Rosenblum and a few of his colleagues in 2014, two years after Coinbase was based, he jumped on the alternative.
It was a superb transfer. Coinbase, then a 30-person firm, grew quick within the 5 years that Rosenblum stayed till he determined to hitch another Coinbase alums on the crypto fund Polychain Capital. Certainly, armed with a community of contacts from Coinbase and Polychain, Rosenblum was getting ready to lift his personal fund final 12 months when former Andreessen Horowitz VC Katie Haun reached out to see if he may be part of her new agency as a substitute.
Now Rosenblum, together with Chris Ahn, who beforehand spent 4 years with Index Ventures, are serving to Haun make investments the $1.5 billion in capital commitments that her agency — just lately named Haun Ventures — garnered earlier this 12 months. To get a greater sense of how the younger agency works and the way it is considering investing right into a market proper now the place each shares and crypto are being dumped, we jumped on a Zoom with Rosenblum, who lives in Solar Valley, Idaho, late final week. Excerpts of that chat observe, edited for size and readability.
TC: Let’s begin by backing up a bit. Andreessen Horowitz is an investor in Polychain Capital, whose founder was the primary worker of Coinbase. Katie is on the board of Coinbase. She additionally spent a decade as a federal prosecutor on the DOJ, the place you spent your first 12 months out of school. With all of those potential intersections, when did you two first cross paths?
SR: Katie and I first met in 2017 when she joined the Coinbase board. We didn’t maintain in notably shut contact after I left Coinbase, however in November of final 12 months, I really got down to begin my very own enterprise fund, and so I used to be engaged on that and, course, Katie and I’ve fairly just a few pals in widespread, and so a few of these folks I had been type of simply prepping and brainstorming with by way of how you can pitch to fund earlier than going out to fundraise. And I believe Katie caught wind that I used to be in technique of that after which reached reached out to me, instructed me what she was eager about, and I ended up flying out to Menlo Park for a pair days and we jammed collectively and walked a bunch of laps across the Stanford dish and determined it was a superb time to staff up. The remaining is current historical past.
You have been the primary deal lead employed by Katie. What number of staff are there at this level?
We’re now 12 folks complete — the deal staff is at the moment three folks — and I believe we’ll in all probability maintain the entire agency fairly lean and nimble. We’ll add a few extra people to the deal staff over the course of this 12 months however actually not far more than that. I believe you possibly can think about Haun Ventures as a 15- to 20-person agency at regular state.
That is in all probability a dumb, however to be clear, this can be a conventional fund you might be deploying, in that that is precise {dollars} that will probably be known as down. None of those commitments have been in crypto or something like that.
The technique is clearly very crypto ahead however the construction is sort of vanilla. We’re a typical enterprise construction. We ended up deciding to shut on $1.5 billion complete throughout two funds. One car is our $500 million early-stage fund, and the opposite is our $1 billion acceleration fund for barely later-stage stuff.
It’s on the market that Marc Andreessen and Chris Dixon are restricted companions. Are there different people or corporations that you would be able to point out which have backed the agency?
Most of our LPs are establishments, from sovereign wealth funds to college endowments to pension plans to hospital techniques. And we even have some particular person LPs — largely simply pals of Katie or myself, pals of the agency, so to talk.
When it comes to backing later-stage outfits, I don’t see the standard nomenclature of “Collection A” or “B” or “C” assigned to plenty of these web3 offers and tasks. What constitutes later-stage, within the agency’s view?
The important thing distinction is simply actually staged within the type of: how far alongside the venture is in its improvement, what kind of utilization there’s. The concept of stage possibly seems just a little bit completely different than in conventional tech enterprise. Traditionally, for those who’re a tech enterprise play, you’re one thing the place an enormous consequence can be to have an organization you invested in [become a] billion- or multibillion-dollar firm, and that’s true of sure firms within the crypto house that increased up within the tech stack. However as you get decrease and decrease, you’re really speaking about these networks, together with Layer One protocols used for quite a lot of issues, and these networks, whenever you suppose of what’s a home-run consequence, slightly than pondering within the billions of {dollars}, you’re really pondering within the trillions of {dollars}. So once we consider how you can outline stage for one thing in that class, [we’re taking into account the question of] what’s the terminal measurement ought to this turn out to be an enormous winner? So these are among the issues that we take a look at.
What number of completely different tokens have you ever acquired or offers have you ever achieved thus far?
I’d say a dozen or so offers at this level that span quite a lot of completely different deal deal buildings or asset varieties.
Two firms you’ve funded have introduced their rounds just lately, together with Zora, a two-year-old, L.A.- based mostly Ethereum-based market for getting, promoting and curating NFTs that raised $50 million in new funding. Was that an acceleration deal or an early stage deal?
The staff at Zora has been round for a few years, and so they’ve had a few fairly vital pivots alongside the way in which. To your level, it’s one the place it’s type of humorous to outline what kind of spherical it’s. You may’t actually give it a typical classification of Collection A, Collection B, no matter. It finally ends up simply being just a little bit extra loosely outlined. They’ve acquired some fairly thrilling issues to announce within the close to future concerning the route that they’re headed in, so I gained’t spoil their information for them, however they’re off to the races in a very cool approach.
Had they raised funding beforehand?
Yeah, they’ve raised, and I don’t know off the highest of my head what they’ve publicly stated about who they’ve raised from, however it’s an excellent group on the cap desk or buyers that we work with rather a lot and know nicely.
Are these buyers the way you discovered the corporate?
I’ve really identified the Zora co-founders since 2018 or so. The entire co-founding staff got here from Coinbase.
What about Spotlight, a 14-month-old Bay Space-based outfit that claims it lets creators design and mint NFTs and create a group round them. What drew you to this specific firm?
The Spotlight staff is equally spectacular, coming from the web2 world — coming locations from Sq. (now Block) and DoorDash and different well-designed web2 services. Finally what they need us to do is got down to allow people who find themselves not already tremendous deep crypto engineers to allow communities with web3 instruments, so it’s a no-code platform for doing simply that.
Based mostly on this very restricted information pattern, it sounds such as you’re monitoring plenty of web2 operators and founders who’re shifting into this web3 world. Is that correct?
We’re equally open to backing founders who’ve labored in crypto for a decade, or possibly they’ve labored in crypto for a 12 months. What we actually care about is their dedication to what they’re constructing and their distinctive insights and intuitions round precisely why they need to construct it.
There’s a lot whitespace in web3 that I wonder if you concentrate on conflicts of curiosity in the identical approach that buyers have traditionally. I’m seeing plenty of NFT minting kind firms, for instance. Would you fund one other?
That’s a very vital query for crypto enterprise particularly. The final web2 panorama is one wherein a founder or a startup has a really clear set of premises by way of what they’re constructing on prime of, issues like TCP/IP, HTTP, SMTP — the dozen or so web protocols that all of us use on daily basis.
The distinctive factor that [founders are] getting down to do in crypto is the inverse of that, the place each single layer of the tech stack is evolving in parallel. Even essentially the most primary parts to the crypto tech stack — the concept of decentralized consensus — there’s this fixed evolution of kinds of decentralized consensus or consensus mechanisms.
So when you have got actually each constructing block evolving, that tends to lend itself to founders and startups that in all probability should, if not pivot, at the very least consider plenty of new data over the course of their startup group. . .
We do take the concept of conflicts critically and we do need to ensure that we’re being actually good companions to our portfolio founders, so we might not need to put that in jeopardy. However definitely, what we’ve already seen is founders possibly begin two completely different startups, beginning in the same neighborhood of an concept that find yourself, at instances, even constructing at completely different layers of the crypto tech stack. So there’s fairly a little bit of flexibility within the route issues have gone.
Speaking about NFTs, one of many final offers Katie did for Andreessen Horowitz earlier than leaving the agency was the NFT music rights startup Royal, which raised $55 million led by a16z again in November. Does Haun Ventures have a stake in that firm?
You’re precisely proper. That was a16z-led deal, the place Katie joined the board as a part of that deal. Katie continues to be on the board of Royal for that, however it isn’t a Haun Ventures portfolio firm for the time being.
Does that make it trickier so that you can spend money on one other NFT music rights startup or would you probably simply soar right into a later spherical for a similar firm?
It’s a superb query. I believe all choices are nonetheless open there. Digitally managed royalties and on-chain rights are tremendous fascinating and in addition a very difficult class. It’s very advanced house. So I’d presume that there’ll be fairly just a few actually proficient founders constructing in that normal class and doubtless experimenting with varied completely different approaches by way of the markets they’re attempting to serve and the way they serve them. So it’s definitely a market we’ll proceed to check out.
Talking of Katie’s board seats, she’s additionally on the board of OpenSea, which brings to thoughts a dialog I had just lately with Sarah Tavel of Benchmark, who stated web3 firms like OpenSea and Sorare — which Benchmark has backed — are actually centralized firms which might be constructed on a decentralized infrastructure and have been by no means actually meant to be utterly decentralized entities. Agree? Disagree?
On the core of the idea of web3 is that this considered decentralization, however I believe lots of people possibly have been much less considerate the place that finally ends up mattering and being vital. In my opinion, centralized platforms will and may exist for sure makes use of. The vital factor in terms of decentralization within the crypto tech stack is that platforms would not have the power to to “lock in” their customers.
To not decide on anybody web2 firm, however you consider a few of these social networks the place each motion you’ve taken — each each photograph you’ve uploaded, your literal social graph, your community of family and friends, is all preserved and managed by a central gatekeeper, and there’s no method to exit that data. The concept in crypto is, positive, you possibly can have a centralized platform the place you develop that content material, however for one thing like your social graph, you possibly can really depart the platform and take your social graph with you as a result of these items are all being constructed on an underlying open infrastructure.
The crypto collapse of the final week or two has worn out $400 billion in market worth from cryptocurrencies, together with Bitcoin and Ethereum. What are your ideas on what’s taking place on the market proper now? It looks as if a superb time to have $1.5 billion at your disposal with all the pieces on sale.
I’ve been working on this house since 2014. I joined Coinbase in the same second in time to the place we’re right now, this week, on this present market cycle, the place you in all probability have a three-years-or-so slog ahead of getting to be heads down and constructing and possibly not [seeing] the euphoria that we’ve felt over the past 12 months or so within the house.
Crypto bear markets might be actually onerous on folks for lots of causes, financially, psychologically, emotionally. However traditionally, the silver lining is that plenty of the perfect tasks in crypto are born in moments like this. Going again a few cycles, you had Bitcoin’s rise in late 2013, adopted very shortly thereafter by type of a crash in early 2014. I believe the Ethereum pre-sale was in June of 2014, and [that rise and fall] performed out once more within the 2017 and 2018 cycle, the place we had peak euphoria adopted by a crash. Then in 2018, some superb tasks like [the crypto exchange] Uniswap and [the decentralized margin trading platform] dYdX have been based proper in that interval. So I believe fairly actually in possibly the subsequent a number of weeks to months, you’re in all probability going to have some new startups and new tasks created in crypto that, three or 4 years from now, we’ll look again out and go ‘Wow, that was born out of out of this final crypto winter.’
Is Haun Ventures structured as a registered funding advisor?
We aren’t. We’re a vanilla, exempt enterprise fund.
I puzzled since you and Katie clearly know Coinbase very nicely. Some may argue that Coinbase is on sale proper now. Investor Cathie Wooden simply spent $3 million on shares. Given that you’ve got some huge cash at your disposal, I’m curious for those who would or have taken stakes in any publicly traded firms which have gotten hammered currently — Coinbase or different.
I’m personally a holder of COIN and I neglect who tweeted this yesterday or the day earlier than, however somebody wrote that it appeared like a generational shopping for alternative for regular individuals who don’t essentially have entry to superb early-stage offers to have the ability to spend money on Coinbase at lower than two instances its Collection C valuation in 2018. I are likely to agree with that personally. I’m a private holder of Coinbase inventory and positively can be bullish that this week is a reasonably particular shopping for alternative. However clearly folks ought to should do the analysis they should do to make unbiased monetary selections. And as a fund, we’re actually not centered on the general public fairness markets.
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