One of the founders of blockchain unicorn Aeternity formed a new venture firm focused on the sector in emerging markets and launched its debut vehicle.
In June, London-based Meta Change Capital announced the launch of a €100 million fund devoted to investing in blockchain start-ups in such emerging markets as Africa, Central and Eastern Europe, Asia and the Middle East.
Meta Change founders Nikola Stojanow and Luka Sučić met while growing Lichtenstein-based Aeternity, an infrastructure platform for blockchain companies. After successfully scaling the company to unicorn status and fostering a robust accelerator program in the process, Stojanow, a co-founder of Aeternity, felt it was time to launch a new venture.
“At some point of time, we realized that the early-stage seed investments are not going to drive us there,” Stojanow said about developing the blockchain market. “For over a year now we have been preparing Meta Change. We did a lot of alterations and finally we found the perfect mixture.”
The fund will focus on making up to 40 blockchain infrastructure investments. The firm is targeting Series A rounds and beyond and plans on investing €1 million to €3 million on average, but will dip lower for really attractive opportunities, Sučić said.
“Crypto and blockchain are still very early, there are amazing opportunities there,” Sučić said. “We will see amazing dealflow.”
Sučić said the firm decided to focus its efforts on emerging markets for a variety of reasons including lower valuations, lower cost of living, the high quality of opportunities coming out of these regions and the ability for their capital to have a larger impact than it would investing in Western Europe or the US.
“The majority of innovation in the blockchain space is coming from outside the US,” Sučić said. “One of the things we started seeing is amazing teams, amazing projects, coming worldwide, from Africa, from the places that are completely neglected.”
Within blockchain, the firm is interested in areas like gaming, decentralized funds, crypto as collateral or credit and crowdfunding.
“One of the things that is evident is that more and more people are using blockchain as a technology to overcome challenges a traditional company aren’t solving,” Sučić said.
Sučić gave the example of a company that would allow its users to use crypto as collateral when getting a loan or a mortgage, which companies like SALT Lending and Blockfi allow. He also added companies that allow you to convert your currencies from games into crypto and then cash them in a different video game.
The firm expects to raise the fund within three years but be able to hold a significant close and start investing by the end of 2020.
Stojanow said that they have received overwhelmingly positive feedback on the vehicle from investors so far. He added that they purposefully set the vehicle up as a “vanilla” fund strategy instead of a crypto-based structure to allow for more investors to feel comfortable investing.
Both Stojanow and Sučić said that due to the coronavirus they have seen their thesis around adoption of the sector and generational shifts accelerate in a few months instead of the originally predicted years.
“Part of our thesis is that blockchain and crypto breaks the mold that’s existed for the last 20 to 30 years,” Sučić said. “Things have been happening for an exact way. We are trying to break a barrier. We believe that the meta-game is changing.”