Mansoor Madhavji on why backing strong founders, trust, and market alignment are the keys to navigating the evolving blockchain and Web3 landscape.
See Video Interview: https://youtu.be/siveALbfI7M
In an interview with Henzie Healley, founder of VA Consultants, Mansoor Madhavji, partner at Blockchain Founders Fund, shared insights into the journey of his venture capital firm. The Blockchain Founders Fund has become a prominent player, investing in over 200 companies since its inception in 2017. In the conversation, Mansoor provided a behind-the-scenes look at their investment strategy, the critical role of founders, and the evolving dynamics of the Web3 landscape.
A Founder’s Approach to Venture Capital
Mansoor Madhavji’s path to venture capital wasn’t a typical one. As a seasoned entrepreneur, his foray into investing came from a desire to scale entrepreneurial impact. “What’s better than building one company? Let’s build 10 companies and put our money where our mouth is,” Mansoor explained, referring to the thought process he and his brother had when they first started Blockchain Founders Fund.
The idea of backing fellow entrepreneurs was not just about providing capital but also about giving hands-on support. Mansoor highlighted that the team is highly involved in the initial months of an investment, engaging in “every other day calls or ad hoc coordination” to help founders achieve key business objectives. He emphasized the importance of maintaining a steady communication cadence, especially in the early stages, to ensure startups are on the right track.
Focus on Early-Stage Investments
The Blockchain Founders Fund specializes in early-stage investments, typically coming in with a $200,000 check at the pre-seed or seed stage. According to Mansoor, about 65% of their fund is reserved for follow-on investments. This allows them to assess a startup’s progress over time before committing additional capital. “In our opinion, it’s one of the best ways to diligence a founder—by giving them time to prove themselves,” he noted.
Mansoor elaborated on the deals they are comfortable with, stating that the fund is open to equity, tokens, or a combination of both. However, the structure of the deal must align the incentives of both the investors and the founders. “If the founders are keeping all the equity and selling tokens, there’s a conflict. We want our interests to be aligned with theirs,” he explained.
Betting on the Founder, Not Just the Business
When asked about how they assess early-stage startups, Mansoor emphasized the critical importance of the founding team. “At that early stage, it’s less about the business and more about the founders themselves,” he stated. Mansoor explained that they evaluate a founder’s previous experience, education, and networks, but above all, they look for a track record of success. “We’re essentially betting on the person and their ability to execute a grand vision.”
Trust, according to Mansoor, is another key factor. Since many early-stage startups don’t have a product or proven business model yet, trust between the founder and investor is paramount. “You’re giving money to someone to build something that doesn’t exist yet, and you’re trusting that they’ll deliver,” he said.
The Challenges of the Current Market
Mansoor also touched on some of the challenges that Web3 and blockchain startups face in the current market. While Bitcoin has been performing well, token markets have lagged. “Token markets are a little bit dead,” he remarked, pointing out that companies that raised large private rounds are sometimes launching their tokens at lower valuations than expected, creating hesitancy among investors.
“There’s a big hesitation among investors when valuations are getting past $60 or $80 million,” Mansoor noted. He stressed the importance of carefully modeling token economics and being cautious with valuations, as the market has cooled compared to the bull markets of 2017 and 2021.
Navigating a Rapidly Evolving Industry
Blockchain Founders Fund’s portfolio spans a wide range of sectors within the Web3 space, from decentralized finance (DeFi) to infrastructure projects. One standout investment is a company called NodeOps, which has developed a one-click solution for node infrastructure. “NodeOps has grown tremendously, launching some of the largest node sales,” Mansoor said, highlighting the company’s role in simplifying complex processes for the blockchain community.
In addition to investing in cutting-edge technology, the fund also focuses on impactful ventures. Mansoor shared an example of a startup in Africa called Credit, which has made significant strides in digitizing loan books for banks, reducing non-performing loan ratios and increasing access to capital in underserved regions. “It’s always exciting to back businesses that not only generate returns but also create a positive social impact,” he commented.
Advice for Aspiring Entrepreneurs
For entrepreneurs looking to pitch to Blockchain Founders Fund, Mansoor’s advice is straightforward: “Have a clear idea, a relatively polished pitch, and a solid understanding of your key success factors.” He added that while the firm is open to hearing ideas before they are fully investment-ready, founders should have a well-thought-out hypothesis and some customer feedback to support their business idea.
Ultimately, the relationship between investor and founder is a partnership. Mansoor emphasized that Blockchain Founders Fund takes a collaborative approach, working closely with founders to address challenges and help them succeed. “We want to have an open dialogue with our founders. We’re here to help them workshop ideas and figure out solutions,” he concluded.
Mansoor’s insights reveal that while the world of Web3 investing can be complex and unpredictable, a strong foundation of trust, a focus on the right team, and careful attention to market dynamics are the keys to long-term success.
