ConsenSys, an Ethereum production studio based in Brooklyn, NY, is launching a $50 million venture arm, and it has picked Kavita Gupta to run it. Gupta’s job will be to oversee the new venture and help structure deals with the startups.
It is not uncommon for companies with investment capital to form their own investment arm. For the most part, the goal is to fund startups that could drive value for the parent company down the line. And, as a strategic investor, ConsenSys Ventures will be actively involved in developing startups from an early stage.
Bitcoin Magazine spoke with Gupta on the phone earlier this week. She was in New York getting ready to dash off to San Francisco. ConsenSys has offices in Brooklyn and in San Francisco, and Gupta will be splitting her time between both of those offices.
She explained she will be working closely with Joseph Lubin, the founder of ConsenSys and one of the early founders of Ethereum. And, she added, naturally, ConsenSys Ventures will be looking to invest in Ethereum-based startups.
“We are looking at companies already, and we are going to deploy this as soon as we get green signals from a lawyer on the structure. Everything else is place,” said Gupta, who will be talking more about the fund at Women in STEM in San Francisco on Monday.
When asked about the overall goals of the venture, she responded, “I think, to Joe, being one of the co-founders of Ethereum, what really matters is how to basically accelerate this revolution. He wants the smartest entrepreneurs to create applications on it, to use it and start ingraining that work into our ecosystem to create companies.”
To that end, ConsenSys Ventures will be looking to invest in pre-seed, seed, and equity stage companies, she explained, adding that the fund will also be investing in pre-token sales, if the entrepreneurs decide to go the initial coin offering (ICOs) route.
Gupta described her role as overseeing the entire process while also being deeply involved with structuring deals. “Like any managing partner, I will be basically doing due diligence, looking at the companies, and structuring the deal. And, at the same time, making sure all the fiduciary duties are done,” she said. “With respect to making the decisions, it is going to be me and Joe working very closely.”
She indicated, finding good startups to invest in would not be an issue. “Once you are in ConsenSys, which is pretty much the center of the blockchain space, you don’t really have to go out looking for great companies,” she said, adding that the team was currently “looking deeply” at four to five startups, but nothing had been finalized yet.
She said she will leave the decision as to whether or not a startup should launch an ICO, up to the entrepreneurs themselves. “We help them create a business. We help them create an idea. I don’t think we are really pushing or saying that every company has to go for token sales. It makes sense for some companies, and for others, it doesn’t make sense. We want to support the entrepreneurs in whatever they do.”
Strategic funding is different than straight venture capital funding, she emphasized. “We want to believe that it is different than the traditional investment because it is sort of like a VC hedge fund. All of the companies are coming to you at a very early stage, and we want to be involved in shaping the company, with respect to business, operations, hiring, and how they are going to make money.”
As part of that, the ConsenSys Ventures will offer a range of support. “We also work as a strategic investor, helping you out both with respect to the technology solutions, because we have access to the ConsenSys ecosystem, and also to deliver the company, because a lot of people forget they have to deliver the company after that.”
She also pointed out that ConsenSys Ventures was part of a natural evolution. Two years ago, ConsenSys launched as a way to build out ideas on top of the Ethereum network. Earlier this year, ConsenSys launched ConsenSys Academy to start training engineers in how to do that work on their own. Now, ConsenSys Ventures is sort of a middle ground, offering support, but still letting entrepreneurs do their own thing.
“Now across the world, entrepreneurs are capable of building and designing — coding their own systems on Ethereum. They don’t necessarily need ConsenSys 100 percent, so how do we collaborate with them? I think Consensys Ventures is the best way to do it.”
A native of India, Gupta is a 2015 recipient of the U.N. Social Finance Innovator Award. In addition to working at the World Bank, where she headed the organization's youth innovation fund, she has more than 10 years of experience in impact investment across a variety of companies, including McKinsey, HSBC and International Finance Corp.
She has worked in the U.S., the Middle East, South Asia and Africa. She most recently led mission investing for the family foundation of Alphabet Inc. executive Eric Schmidt.