Meltem Demirors, director of community at New York-based Digital Currency Group (DCG) sits down with Startupbootcamp FinTech MD Jesse Podell to discuss the impact of blockchain, the changing nature of venture capital and the reasons she comes to work every morning.
Jesse: Where do you see DCG’s fit in the bitcoin and blockchain ecosystem? Are you the 800 pound gorilla?
Meltem: We talked about this a lot when I first joined DCG – Why do we come to work in the morning? What inspires us? What motivates us?
I think all of us fundamentally see bitcoin blockchain technology changing the financial system and the broader technology landscape.
It doesn’t matter if we’re the 800 pound gorilla or the small upstart. I think for us we want to have an outsize impact and be an advocate, an evangelist, and the connector that helps make this industry more successful.
Jesse: Do you see accelerators as a good idea for bitcoin and blockchain startups?
Meltem: Yes, absolutely.
One thing I have noticed is that people who have gone through an accelerator program were much better at pitching, were much better at selling the value proposition, and were much better at creating a narrative. That skill set cannot be underestimated. You’re going through this rigorous program that’s designed to teach you all of these fantastic skills and competencies, and you’re learning from some of the best corporate VCs, the best corporate strategists, the best VCs, the best startup mentors that you normally wouldn’t have access to in your network. It’s a great way to compress that learning in a really short timeline and to really grow your network and also get great PR. No brainer for me.
Obviously, we’re super excited to have Startupbootcamp FinTech here and really excited about the startups that will go through your program.
Jesse: What’s your general advice for startups who might be applying for an accelerator?
Meltem: I think people are always a little hesitant about applying. They think: “Oh, it’s three months away from product development. That’s difficult. I want to focus on the tech.” No, no, no, no! Spend three months really getting good at sales, at communicating, at branding, at messaging, building relationships. That is going to do so much more for you than building a great product because growth takes two things. It takes a great product, but it also takes a great sales strategy. Remember that there’s more to the equation than just the technology and really focus on this opportunity to develop relationships and competencies that are going to help you grow beyond the seed stage.
Jesse: Where do you see the venture capital model heading in five years?
Meltem: I think a lot more people are excited about venture capital. A lot of people want to be investors. It’s like a sexy thing to do right now, which is great. I love it. The more money that goes into the ecosystem, the more ideas start getting thrown around.
What I think you’re seeing, though, is a decoupling of the size of the check that an investor’s able to write and the value that they’re able to add to an early stage company. We at DCG invest at the seed stage. We aim for 2% to 5% ownership, but we write smaller checks.
What you’re going to start to see are two different types of investors. You’re going to see one investor who’s really focused on network effects, on connectivity, who’s really focused on value-added services, and another investor that’s really focused on late stage growth. They’re going to play two very different roles within the life cycle of a startup.
Jesse: What advice would you have for companies who want to pitch DCG?
Meltem: For us, we’re seed stage investors. What our investing team looks at are three things. Number one, the team. Who are you? What’s your track record and what’s your story? Why are you starting this company? We need to see that you have grit and that you have determination and that you really care.
The second is product. Technically, what have you built? Open source software is notoriously competitive, so having teams that are technically competent is very important.
Then the last one is market. How do you think about monetization, and what’s the timeline on that? We’re different from most VCs in that we’re not a fund. We don’t have a certain timeline. If it’s going to take you 10 years to reach profitability, I think we’re okay with that, but you need to have a plan and then you need to have a backup plan and a backup plan to the backup plan.
Jesse: What about the role of Community Manager, how do you see it evolving?
Meltem: When I started my role was pretty specific. It was focused on developing better connective tissue between our companies. Now that we have a number of strategic investors on board we started to realize the value of having a broad network. For me, it’s about building the DCG brand, building relationships, and also creating new opportunities and new ways of thinking around how to internalize innovation within a large organization. It’s about taking the community role, untangling into the various components that really move the needle and making it more of a discipline.
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The Digital Currency Group manages a large early stage investment portfolio in the digital currency and blockchain space. Recently they announced venture round with a number of leading financial institutions and venture capital firms including MasterCard, Bain Capital Ventures, New York Life and RRE Ventures. The firm had already established itself as a predominant investor of early stage bitcoin startups, with over 50 holdings currently in its portfolio.