Interview With Olaf Hannemann, Co-Founder & CIO of CV VC
In November 2020, CV VC’s venture capital portfolio became an investable asset. CV VC invests in early-stage startups that build applications based on blockchain technology. The focus is on markets that are expected to grow over-proportionally in the future, CV VC calls this “Technologies for Tomorrow” (T4T). The launch of the AMC was successful and CV VC and its asset management partner MRB Vermögensverwaltungs AG have decided to place a new AMC allocation window.
The AMC is a Swiss-compliant security with a Swiss ISIN code, fully bankable and transferable. With the certificate, MRB and CV VC offer qualified investors, including institutional investors like asset managers, banks, corporates, and family offices, the opportunity to participate in its continuously growing startup portfolio.
Olaf, you launched the AMC in December 2020. Why did you decide to approach additional investors now?
It has always been our strategy to have a few opportunities for investors to come into the AMC. When we first launched the investment product late last year, we predominantly reached out to close relationships and our existing network. We had good initial interest from that group. Over the previous six months, we continued to grow our network. Other interested parties approached and wanted to know how they could invest in our strategy. And we wanted to allow them to invest with us.
What is the specialty of the T4T certificate, and why should investors invest in it?
We are focusing exclusively on early-stage startups that build applications based on blockchain technology. At present, all our investments are through equity or mandatory convertibles / SAFE (Simple Agreement for Future Equity) into the startups; to date, we have not invested in tokens. We invest in two different ways, either directly into startups one by one or through our yearly incubation program. Our very young startups benefit from participating in said program, where the standard offering is USD 125k for 10% of equity and a 3-month incubation program at CVLabs in Zug, Switzerland.
For blockchain-savvy investors, we provide a clear alternative to Bitcoin, Ethereum & Co. Our approach is a more traditional long-term tech-VC mindset. For investors interested in blockchain tech exposure but without the volatility of liquid crypto, our approach is an equally attractive alternative. And last but not least, we also want to appeal to investors interested in investing in future exponential technologies more broadly and are looking for a pure-play blockchain investment portfolio as part of their alternative asset strategy.
What can investors expect from the AMC in the following months and years?
We are currently moving a proportion of all of our exiting startup investments into the certificate. From now on, we will conduct our VC investments that the AMC and CV VC act as co-investors into the startups,
In terms of our current deal flow, we are currently closing two very promising new investments, one in Israel and Germany, in both situations alongside very prominent and strong co-investors. Announcements will be published in the coming weeks. In addition, we have just closed a follow-on investment in Proof-of-Impact, one of our most exciting existing startups, which was the very first direct investment we did outside of our incubation program.
Our investment pipeline is attractive. We are currently closely evaluating another three to four investment candidates and looking at some further follow-on opportunities from the existing portfolio. In addition, we have a long list of attractive targets to evaluate once their next fundraising round is underway, and we keep speaking to startups and our venture capital investor network to stay on top of new emerging opportunities.
How many startups will CV VC add this year?
I would not want to “promise” a specific number of investments. We have the intention and capacity to continue to diversify the portfolio further and add new and existing projects. However, I do not want to be driven by a number but rather by the quality of our investments.
In the fall of this year, we will also run our third incubation program and add a group of very early-stage projects to the portfolio. Applications are open, we have received around 100 so far from across the globe, and more applications are coming in week by week.
How has the portfolio of CV VC developed since the outbreak of Covid-19? Are there any success stories?
We are delighted with how most, if not all, of our startups, have managed through Covid. For some, it was an opportunity to scale up quicker than expected. For example, a startup that provides solutions for the “gig-economy”, like Sprinter in the US or provides more efficient solutions for digital advertising, such as AdHash from Bulgaria. Others were in a more challenging environment to win pilot projects with larger corporates than those pre-occupied with Covid related issues, used to work on their product offering or technology stack, thereby putting themselves in a more favorable position once their partners are ready to move. Asvin from Germany was voted the top cybersecurity startup in Germany and has received EUR 750,000 of grant money. It is exciting and promising to see that some of our early investments are now getting ready to raise funds at a significant multiple. If executed successfully, that should result in an attractive development of the portfolio. But of course, venture capital investments are long-term oriented, and ultimately the performance will be driven by successful portfolio exits down the road.
Does the certificate profit from the investors’ run on cryptocurrencies?
Bitcoin, Crypto and blockchain technology are on the agenda of more investors, institutional and private, than ever before. Goldman Sachs now considers Cryptoassets (Bitcoin) a new separate asset class, while JPMorgan’s weekly private banking newsletter last week was solely focused on the sudden market drop of liquid crypto. Compare this to two or three years ago, when major banks and asset managers did not want any exposure to the sector whatsoever. So the awareness for, and acceptance of the sector overall has undoubtedly risen, which is good for everyone involved. Of course, the recent drop-off in liquid crypto and what potentially drove it will scare some investors off again, but others will consider it an opportunity to buy in, and the long-term trend remains positive.
However, our investment approach is fundamentally different and already outlined before. We appeal to investors interested in a long-term venture capital approach investing in startups that build real-world solutions. And we speak to investors invested in Bitcoin & Co early and are now looking for ways to diversify their exposure in the sector.