Oct. 15, 2021

159: Money Talks #43: Launchpool Web3 Techstars AMA | Stripe Goes Crypto Again | Stories from Token 2049

159: Money Talks #43: Launchpool Web3 Techstars AMA | Stripe Goes Crypto Again | Stories from Token 2049

Eoin Fitzgerald and Pete Townsend dive headfirst into insights from the first AMA session on the Launchpool Web3 Techstars Accelerator, then look at Stripe’s re-entry into crypto and what they’d miss if they stayed on the sidelines, Pete shares some stories from the Token 2049 conference last week in London, and Eoin tees up some unique insights on embedded finance through the lens of NerdWallet’s IPO filing and Productfy’s $16mn Series A.


MAIN STORIES COVERED:

Highlights from 1st AMA (ask-me-anything) on the Launchpool Web3 Techstars Accelerator in Dublin

AMA Replay - Launchpool Web3 Techstars Accelerator (YouTube, 13-Oct-21)

Pete’s view on the parallel themes of the accelerator:

“One part of this is about bridging the old school to the new school.  There's so much of traditional financial services that needs to be digitalized and crypto and DeFi are racing ahead – can the traditional space keep up with that? The other theme is about the new school of Web3 just schooling everyone.”

“The building blocks of Web3 are crypto, DeFi, NFTs, tokenization and blockchain protocols.  This space is moving so fast that six weeks can go by and, it could be an incredible project with a token launch and you'll miss it. You'll see it three days after launch and it's already too late. You have to leverage your network and go deep into this space to find the best companies and encourage them to apply.”

Pete on some of the questions posed by the AMA audience:

“People asked, what are we looking for in terms of the businesses themselves? The way that Techstars look at it is this - priority one is team, priority two is team, priority three is team.  That’s pretty clear.  Then, it’s market, growth and idea. The A-team with a B product is better than the B-team with an A product.”

“We also look for founders who are open to mentorship.  Getting that right match between rockstar founders that are also humble enough to be mentored, and also have killer blockchain projects at a very early stage is quite unique.”

“People also asked about blockchain itself, and tokenization needs to be central to the whole value proposition of the business. If someone just says, ‘Hey, I'm going to throw a loyalty token on top of my platform just because I want it to be in the blockchain space’ that won't fly.”

“Also, someone asked if pre-revenue projects were OK, and we gave a thumbs up there.  What we need to see are some leading indicators of traction though – what kind of community have you built with users, how engaged are they, and what B2B partnerships have you agreed so far?”

Stripe re-enters crypto market

Stripe goes back to the crypto future (Charlie Taylor @ Irish Times, 13-Oct-21)

Pete’s high-level view: 

“Stripe have come to this conclusion that they want to build the future of payments in the Web3 world of decentralized apps and protocols. I think that stablecoins are central to their strategy with the growth and adoption of stablecoins in the last year, with Mastercard and Visa both involved in stablecoin projects.”

Eoin’s counterpoint:

“The cynical side of me would say that with payment companies like Stripe, it’s not just that they have no choice [to embrace crypto] to keep up, but they’re seeing the potential market size as a massive opportunity. We talked about Axie Infinity coming out of nowhere with multiple billions of revenue.”

“John Collison (Stripe co-founder) retweeted the announcement and said that Stripe grew up around the same time as Bitcoin. But it feels like companies are trying to play catch up, as in ‘I want to be the main payment provider in the metaverse.’”

Stories from Token 2049 in London last week (Business Insider, 11-Oct-21):

Pete recounting his walk on stage for the ‘Decade Ahead in Crypto’ panel:

“I'm thinking, uh-oh, for one of the three topics I’m covering, I’m not sure exactly what I'm going to talk about. For some reason, Stripe and Square came into my head. When we got to that point of the talk, I started talking about how I’ve brought into crypto the baggage of a career in traditional financial services.”

“Now that I know how it all works in crypto, I see all of these operating models and value chains as archaic in traditional finance. There’s such a long journey ahead for these traditional players to digitalize their businesses.”

“So, I was trying to think of the other side of the coin, which is all of the crypto natives.  Axie Infinity is just one example of the wealth that crypto natives are driving into and creating in crypto.  In all of these online ecosystems where money meets the metaverse, the traditional financial services players are going to miss the wave.”

“Crypto is going into hyperdrive with Web3, and this will push society to the tipping point of more humans on earth using crypto than not using crypto.  Max Cordek from Lisk was sitting next to me talking about how the kids are defining the path, playing these games online and setting the pace.”

“I was trying to say that we also have to think about the institutional wealth that's out there, and its impact on crypto volumes when this wealth converts into digital assets and becomes part of the wealth that crypto natives have built.”

“I said that right now, the access to this institutional wealth is controlled by the likes of Stripe, Square, Visa and Mastercard. I then said to the crowd, ‘Square have been on the front foot in crypto, and they're probably moving the quickest of the traditional players. But I can’t wait for Stripe to move on this.’ Five days later, what do they do?”

“With all of that being said, Max from Lisk seemed to suggest that the traditional players wouldn’t matter, and that society can reach the tipping point of crypto with or without the traditional players being part of Web3.”

NerdWallet’s IPO and embedded finance

NerdWallet’s IPO filing reveals high-margin content business, accelerating marketing spend (Techcrunch, 11-Oct-21)

Eoin on how NerdWallet’s IPO got him thinking about embedded finance:

“NerdWallet is all about personalization.  They’re not paying for 75% of their traffic, and it’s become a trusted brand.  How did they grow?  Well, with more and more new players in financial services year on year, NerdWallet just continues to sign them up because NerdWallet own their customers’ (financial players) audience.”

“We spend a lot of our time looking at really advanced technology and solutions. Ultimately, NerdWallet is just a content funnel which draws in 20 million people a month and diverts them to financial players depending on certain criteria. It's a very straightforward business approaching $360mn in annual revenues.   In a way, NerdWallet as a content funnel have managed to embed finance - as sales referral fees - into their business model.”

OTHER STORIES/REFERENCES:

‘Shopify of embedded finance’ startup Productfy grabs $16 million in funding (ITMunch, 10-Oct-21)

Proposed Bank Jewel Wants to Become a Global Stablecoin Issuer, With Bermuda’s OK (Coindesk, 13-Oct-21)

Plaid Report:  The Fintech Effect - Fintech’s Mass Adoption Moment (Plaid Blog, 12-Oct-21)

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Pete Townsend

Co-Host

Husband, father, son, brother, founder of Norio Ventures, advisor, non-executive director, podcaster and self-proclaimed rockstar of financial services.

Eoin Fitzgerald

Co-Host

Fintech investor, writer, podcaster, father of 5, wannabe VC, black sheep