Money Talks #9: David Chreng - Blockchain & Sustainability
David Chreng from LeadBlock Partners joins the show to talk about how his time as an energy equity analyst influenced his view of the world, investing in blockchain and distributed ledger technologies for sustainability-themed ventures, the development of blockchain and DLT in general over the past 5 years....and using quantum mechanics to model DNA!
This week we’re catching up with David Chreng, a partner with LeadBlock Partners, a London-based venture capital fund investing in early stage B2B blockchain startups. David and Pete Townsend connected at the Securities Token Realised Summit conference last month in London. After hearing about Connecting Food, David’s first investment with LeadBlock, Pete was interested in learning more, especially given that LeadBlock venture outside of financial services with their blockchain-themed investments. Given we've spent so much time talking about blockchain-inspired propositions in financial services on this podcast, we wanted to provide a fresh perspective. As Pete wrote last week in our first MoneyNeverSleeps blogpost on Medium, "We’ll know that blockchain has gone mainstream when we stop talking about blockchain". David and Pete touched on this point, as well as a number of others on this episode:
- The origins of David's interest in blockchain/DLT stemming from an investment in a company making sensors for the food industry, and using DLT as a means to collect, secure and create value from that data.
- Pairing DLT with other technologies such as artificial intelligence, machine learning and IoT to automate processes and create efficiencies as a response to pressure on corporate margins.
- Climate change and emissions as drivers of big energy companies' transitions from being fossil fuel explorers and producers to electricity producers as well.
- How DLT can help consumers make better purchasing decisions and reward sustainable practices for brands that understand that environmental impact and high quality ingredients are important factors for the buying decisions of 70-80% of consumers.
- "We should think about the challenges that consumers and corporates are currently facing, and make sure we understand them and then think about ways to solve those issues - technology is just one part of the toolkit that we can use to solve those problems."
- "But your experience from the industry is also critical because some of those industries are really complex. Talking about the healthcare sector, for instance, or aerospace and defense: without that understanding of the industry, the language, how it works, the operational processes, it becomes very difficult for a techie to come in and say, 'I have a groundbreaking solution to solve your problem' without properly understanding what's happening beneath.
- On there being no silver bullet - "DLT for the industries outside of financial services is only a piece of the equation for corporates trying to automate and optimize some of their processes - DLT by itself is just a sophisticated database."
- On the differences between financial services and other industries - "DLT in financial services is about reshaping how the financial services industry is run. But when we're looking at enterprise DLT solutions across other industries, they're not going to reshape how the industry is run, they're about optimizing and improving processes to make them more efficient, allow them to reduce costs, bring more security, trust and audit-ability."
- On B2B vs. B2C founders - "This is for me, a new class of entrepreneurs which are not coming out of school with a great idea, which is fine on the B2C side. But on the B2B side, it's always more powerful to have somebody that's lived through the experience of working in large corporates on the operational side, has experienced a lot of difficulties there and then comes up with a great idea".
- On what makes a difference in founders with corporate operating experience - "If you have this baseline of knowledge and relationships, a network that you've built and something that you're deeply passionate about, this is quite important, because it means you don't just do this for work. You do it because you enjoy it. You want to make a change, but also you do it outside of work because it's something that is embedded in who you are."
- How less than 5% of food production volumes are actually audited today - Connecting Food are digitally auditing food products in real time with DLT, and then donating 5% of their turnover to farmers to incentivize sustainable practices.
- "Sustainable practices are incurring additional costs and putting more pressure on farmers. So, we have to make it more profitable and more equitable to actually incentivize these kind of practices."