(Latin music) >> Announcer: Live from San Juan, Puerto Rico. It's the Cube, covering Blockchain Unbound, brought to you by Blockchain Industries. >> Hello, everyone and welcome back to our special, exclusive coverage in Puerto Rico for Blockchain Unbound. I'm John Furrier, your host of the Cube. We're here getting all the action, extracting the signal from the noise. Our next guest is Sunil Verma, who's the partner of Team in Residence venture capital firm doing traditional VC as well as investing in token economics, blockchain, and decentralized applications. Sunil, welcome to the Cube. >> Thank you. >> So I got to get your perspective because you guys have done a lot of high profile deals on the venture side, Slack, Instacart and a slew of others, great portfolio. But you guys also got your eye on the prize on token economics. So explain the strategy of the investment thesis. Is it still venture, all in on token, mix, what's the makeup of the firm, what are you guys doing? >> Yeah, for sure. It's definitely a combination of both. We really feel there's opportunity in the decentralized world and we're really looking at sort of the white spaces there. So what is the LinkedIn of Blockchain look like? What does the Amazon of Blockchain look like? So those are the things we're trying to solve for. But at the same time we're really looking at companies that have the governance and the accountability, and transparency that Blockchain really locks in. That's really what we're investing in. So if there's a token or tokenomic that we really appreciate and we really understand, we'll be participating. >> That's good stuff, I want to ask you kind of the question and it's the classic Silicon Valley metaphor, but I want to put it in context of the venture architecture. How do you architect a venture in this new world? So the minimum viable product, or MVP, minimum viable, MVV, minimum viable venture architecture. What do you look for? Because you mentioned government, governance, we hear consensus, we hear transparency, we hear open source. We're seeing a new venture architecture emerging, it's not your grandfather's classic VC deal, which is team, team, team, patented technology, things are running much faster, running hotter, it's a moving train of technology, the plumbing level, but the business models as you mention are pretty clear, on some of them. What is the minimum viable architecture of a venture look like? >> Yeah, that's a really good question. I think when we were, what we're looking at is not your traditional venture companies, I think team, technology, the financials, product/market fit, all those things still apply in a big way here, and really what we're banking, what we're kind of looking at is how responsible is the team itself? I think over the last sort of 12 months, we've seen folks go out raise really big amounts of capital with no product road map, no business road map, no real way to get from zero to X, and now really what we're focusing on is is there a product that's already been built, do they really understand tokenomics, are they trying to shoehorn a regular business onto the blockchain and just assume that by adding Crypto at the end of toilet paper, they're going to get something? I think that's stuff that we have our red flags up on. >> I want to get your reaction to a comment I made earlier on the Cube, but also on this event. There's three types of profile types that we see, I want to get your reaction to this. One, the startup, we have an idea, it's going to be blockchain enabled, good vision, white paper, check. Maybe some VC might want them, but it's more token. And then the other end of the spectrum, I call the oh, shit, we're going out of business. I call that a pivot. They throw the hail Mary. Then the middle one is the growth company that's growing with token economics, all the elements are in place for a real go to market. What's your reaction to that? Do you see that's something similar and how do you identify each one and the role that you might play as an investor in that? >> No, for sure, I think that when we come at it, we're looking at it from a full stack experience so does the company need resources on blockchain developers, does the company need product and marketing support, do they need PD support? And once you've actually gone live, one of the things we're starting to realize now is you have to really approach this from both a PR standpoint as well as a hire standpoint. And you will have to sort of divorce what the company and what the employees are thinking about and what the investors really want. It's really about, and for a lot of the protocols out there, it's really about the next sort of 15 to 24 months and really getting the exposure that they need. From the early stages it is about the white paper, it is about the technology, it is about making sure you're thinking about it in the right way. >> So you just got to be cognizant what you're saying, if it's early stage, they got to have self-awareness to know that they got some work to do to build it out. >> Sunil: Yup, exactly. >> And then where's the growth elements? >> Sunil: Yeah, exactly. >> All right so I want to get your reaction to the ulity token versus the security token. Obviously a lot of people say, hey, I've got a utility token, and then basically raise money without a product, that's essentially, there's no utility yet, there's no product and people are trying to shortcut that, which is really not an optimized experience, because you've rushed the product to market, in some cases it takes a year to get there, so essentially that CC is kind of signaled against that. So, as an investor, how do you decide what's the best avenue, security token, or utility token, and why in each case would you go for either one? >> Yeah, that's a great question. I think it comes down to where they actually domiciled, where they being, and where are the customer base, right. In all honesty, the center of gravity for blockchain has shifted away from Silicon Valley. It's not Silicon Valley, itself. It definitely is around the Asian marketplace. When we look at the SEC and some of the stuff that they're kind of saying, that's great, no problem, I think we definitely need those checks and balances in place, we're investing in security tokens, that's not a problem for us, that's something that we do all day long. >> John: It's a process you know. >> Yeah, it's a process we understand, exactly. >> Credit investor, reg D, form D. >> We do KYC all day long. The thing is on the utility side, it's like, is there a utility that's broad enough that really is going to affect a billion plus people that we're actually interested in? And to your earlier point, they do have to have a product ready to go. So we're working with folks like Orchid, who have been working on their product for over a year plus. They've actually waited to do the token offering and what not, so those kinds of things, which is decentralized, those kinds of things are the ones that are really exciting to us. >> So what about the dynamic where a company might want to do a security token, raise some cash, and also have a utility token for either consensus or other things and can a company coexist with two ice deals at the same time. Have you seen that? >> You know that's a really good question. I would point you to a lot of the smaller public companies that are on the Nasdaq that are just adding Crypto to their product offering and you know seeing huge spikes. They have to manage both the public investors, and they also have to manage the token offerings, and token investors that they're doing now. I think it's, there are definitely ways to do it but at the end of the day is the team structured correctly to manage it and are we going to see a convergence of the pricing. You're not really going to get the same premium you will in the token markets as you will as on the public markets. >> Quick question on security token, what are you looking for for pledged against the security? Are you okay with future revenues, is it equity, what's your preferred, do you care, is there a preference? >> No, it definitely it's some equity in the company, I think, you know depending on the stage of the company, and the security token type that they're doing, it's equity, might be future revenue sometimes it's dividends or the opportunity to get dividends, so it's a combination of a lot of things. >> Do you have a preference, you care? >> At the end of the day, equity is always preferable. >> Okay, what are you looking at here, what deals have you seen here? Did you do any deals here? >> Yeah, we do, we have a couple, one is called, Creator.AI, they are a decentralized contact creation platform. One is iCash, which is one of the security tokens that's actually kind of out there. Another is Renovo Financial, they're actually doing a JCO, Jobs from the Jobs Act, a token offering based on that, they're actually going to be announcing some really big stuff that is coming up in the next week or so. >> I'm interest to talk about, let's talk about the Jobs Act and how instrumental that was, how that's changed the game on NGO's and mission-driven investing, which we've been covering a lot in DC. Sunil, we'd love to have you come down to our studio in Palo Alto, and talk more. Great to have you, thanks for spending the time. >> Thank you. >> Team in Residence, doing a lot of hot deals on the front end of investing. You get nervous at all, you worried about things these days, what's your mindset like, I mean, it's like white water rafting, you're in the middle of the action, what's it like? >> Oh, for sure, it's exciting, it's fast-paced. I think with the hair cut over the last few days, everyone's sort of rubbing their heads right now, but at the end of the day you have to have the stomach for it, and I think you have to be as educated as you can. >> And look for new liquidity ways. This is the key thing, new liquidities out there. >> I think we're seeing a lot of new liquidity. I think Telegram is a really good example of that. I think folks that didn't want to participate in round one are now getting sort of slugs of time tokens that are out there and they're buying it at a premium and it's all happening in the secondary market. >> That's awesome, with new infrastructure, new dynamics, new reimagining wealth, creation value caps, restore, harnessing that value is changing liquidity, changing the structure of entrepreneurship. Thanks so much, Sunil Verma, thanks for coming on the Cube, appreciate it. I'm John Furrier, more live action coming here in Puerto Rico, the Cube, be right back with more after this short break. (techno music)