How cryptocurrency can help start-ups get investment capital

We're living in a golden era of innovation, says entrepreneur Ashwini Anburajan -- but venture capital hasn't evolved to keep up, and start-ups aren't getting the funding they need to grow. In this quick talk, she shares the story of how her company became part of an entirely new way to raise capital, using the powers of cooperation and cryptocurrency.

When I was raising investment
for my startup,

a venture capitalist said to me,

"Ashwini, I think you're going to raise
a few million dollars.

And your company --
it's going to sell for 50 to 70 million.

You're going to be really excited.

Your early investors
are going to be really excited.

And I'm going to be really upset.

So I'm not going to invest in this deal."

I remember just being dumbstruck.

Who would be unhappy

with putting four or five
million dollars into a company

and having it sell for 50 to 70 million?

I was a first-time founder.

I didn't have a wealthy network
of individuals to turn to for investment,

so I went to venture capitalists

the most common form of investor
in a technology company.

But I'd never taken the time to understand

what was motivating that VC to invest.

I believe we're living
in a golden era of entrepreneurship.

There is more opportunity
to build companies than ever before.

But the financial systems
designed to fund that innovation,

venture capital,

they haven't evolved
in the past 20 to 30 years.

Venture capital was designed
to pour large sums of money

into a small number of companies
that can sell for over a billion dollars.

It was not designed to sprinkle capital
across many companies

that have the potential to succeed
but for less, like my own.

That limits the number
of ideas that get funded,

the number of companies that are created

and who can actually receive
that funding to grow.

And I think it inspires a tough question:

What's our goal with entrepreneurship?

If our goal is to create a tiny number
of billion-dollar companies,

let's stick with venture
capital, it's working.

But if our goal is to inspire innovation

and empower more people
to build companies of all sizes,

we need a new way to fund those ideas.

We need a more flexible system

that doesn't squeeze
entrepreneurs and investors

into one rigid financial outcome.

We need to democratize access to capital.

In the summer of 2017,
I went out to San Francisco,

to join a tech accelerator
with 30 other companies.

The accelerator was supposed to teach us
how to raise venture capital.

But when I got out there,

the startup community was buzzing
about ICOs, or Initial Coin Offerings.

For the first time, ICOs had raised
more money for young startups

than venture capital had.

It was the first week of the program.

Tequila Friday.

And the founders couldn't stop talking.

"I'm going to raise an ICO."

"I'm going to raise an ICO."

Until one guy goes,

"How cool if we did this all together?

We should do an ICO that combines
the value of all of our companies

and raise money as a group."

At that point, I had to ask
the obvious question,

"Guys, what's an ICO?"

ICOs were a way for young
companies to raise money

by issuing a digital currency

tied to the value and services
that the company provides.

The currency acts similar
to shares in a company,

like on the public stock market,

increasing in value as it's traded online.

Most important,
ICOs expanded the investor pool,

from a few hundred venture capital firms

to millions of everyday people,
excited to invest.

This market represented more money.

It represented more investors.

Which meant a greater
likelihood to get funded.

I was sold.

The idea, though, of doing it together
still seemed a little crazy.

Startups compete
with each other for investment,

it takes hundreds of meetings
to get a check.

That I would spend my precious 15 minutes
in front of an investor

talking not just about my own company,
but all the companies in the batch,

was unprecedented.

But the idea caught on.

And we decided to cooperate,
rather than compete.

Every company put 10 percent
of their equity into a communal pool

that we then split
into tradable cryptocurrency

that investors could buy and sell.

Six months and four law firms later --

(Laughter)

in January 2018,
we launched the very first ICO

that represented the value
of nearly 30 companies

and an entirely new way to raise capital.

We got a lot of press.

My favorite headline about us read,

"VCs, read this and weep."

(Laughter)

Our fund was naturally more diverse.

Twenty percent of the founders were women.

Fifty percent were international.

The investors were more excited, too.

They had a chance to get better returns,

because we took out
the middleman fees of venture capital.

And they could take their money
and reinvest it,

potentially funding more new ideas faster.

I believe this creates
a virtuous cycle of capital

that allows many more
entrepreneurs to succeed.

Because access to capital
is access to opportunity.

And we have only just begun to imagine

what democratizing
access to capital will do.

I would have never thought
that my own search for funding

would lead me to this stage,

having helped nearly
30 companies get investment.

Imagine if other entrepreneurs tried
to invent new ways to access capital

rather than following
the traditional route.

It would change
what gets built, who builds it

and the long-term impact on the economy.

And I believe that's way more exciting

than just trying to invest
in the next billion-dollar startup.

Thank you.

(Applause)