Tal Elyashiv is the Founder & CEO of SPiCE VC, the first fully tokenized VC fund that invests in the digital security and blockchain ecosystem. In an exclusive interview with TechBullion, Tal Elyashiv tells us more about SPiCE VC and the vision for the future. Further reading: The first tokenized medtech VC fund ever: Interview with Emmanuel de Watteville, Founder & General Partner, BlueOcean Ventures II.
1) Please tell us your name and about yourself?
I’m Tal Elyashiv, a serial entrepreneur and founder and managing partner of SPiCE VC, the first fully tokenized venture capital fund. For more than a decade, I’ve been investing in early-stage startups – most recently focusing on the pioneers shaping the blockchain & tokenization industry.
Prior to leading SPiCE VC, I was a CIO at Capital One, CIO at Bank of America, COO at BondDesk and CTO & Head of New Business at 888, in addition to being the founder of Yallo, Exactor, Navion and Securitize.
2) What is SPiCE VC and what unique value proposition do you provide for Startups?
As the blockchain/tokenization ecosystem continues to gain relevance and growth, SPiCE VC, the leading venture capital fund focusing on this industry sector, has played a pivotal role in its evolution and maturation. As the very first fully tokenized fund, SPICE VC is recognized as one of the founding fathers of the Digital Securities Ecosystem – creating and/or investing in businesses which are developing the world’s tokenization standards, protocols and processes.
Revolutionizing the VC asset class using blockchain technology, SPiCE invests globally in platforms and ecosystem providers enabling access to capital markets, banking, real estate, and other industries enhanced through Blockchain technologies. Our fund focuses on companies that stand to benefit the most from the massive growth of the industry.
We understand the blockchain ecosystem and the digital securities industry specifically well – we come from the industry, and all of our portfolio companies are part of the Blockchain/tokenization ecosystem. That means that we have a true understanding of all facets of the ecosystem, share the vision of the entrepreneurs we invest in, and can help them leverage the cumulative knowledge in our portfolio. We enable greater access in the industry, and leverage synergies with our strategic partners and other portfolio companies.
3) SPiCE VC invests in leading Blockchain and tokenization companies, how does this really work?
SPiCE’s objective is to provide its investors exposure to the massive growth of the Blockchain/tokenization industry. We focus on the relevant verticals of this industry, with specific focus on leaders in the industry that are building key ecosystem components & services.
Rather than investing in the “gold mines”, we invest in the “picks and shovels providers” of the blockchain and tokenization ecosystems. We are also very proactive in identifying strategic partners and relevant ecosystem players to create future portfolio synergies.
SPICE typically invests in Pre-Series A, and Series A rounds with investment amounts of $2m-$5m for the initial investments and adequate reserves for follow-ons. Our target fund size is $150m, with around 12-15 new and follow-on investments a year.
As an active VC, we understand and know the industry we invest in well. We continually scan and map the fast-changing ecosystem and mark targets – parts of the ecosystem and type of players that we would like to invest in. We do that based on our vision for the industry, the evolution of the market, our understanding of what is really happening vs. the hype – directly and through our involvement with our portfolio companies. We then look for the companies and deals that fit our targeted areas and our investment criteria. We roll back our sleeves and are actively screening the market rather than just passively waiting for a good investment opportunity to show up in our deal pipeline.
4) What are the benefits of the tokenization of the financial industry especially during financial crises or a pandemic like COVID-19?
Tokenization opens up more investment opportunities that were less relevant to many investors before due to illiquidity, the long-term horizon of the investment, as well as the required minimal size to participate. For example, through liquidity and fractional ownership, real estate investment becomes more viable for many investors. The same holds true for VC, PE funds and others.
This allows investors to diversify their investment portfolio with asset classes that were not accessible to them before. Tokenization also expands the investor pool available to ventures and projects for fundraising.
With a decrease in IPOs due to the economic uncertainty brought on by the global pandemic, many startups will opt for smaller rounds from a variety of investors. This current cycle will help the rapid adoption of digital securities in the VC ecosystem, as startups have never had more paths for funding, and tokenization is one of the most unique around.
Statistically, every $1m invested in qualified venture capital opportunities creates 30 new jobs. The social impact of this is especially meaningful in the current environment.
5) What role is SPiCE VC playing in the evolution of financial markets?
Revolutionizing the VC asset class using blockchain technology, SPiCE invests globally in platforms and ecosystem providers enabling access to capital markets, banking, real estate, and other industries enhanced through Blockchain technologies. The fund focuses on companies who stand to benefit the most from the massive growth of the industry.
Pioneering, funding and enabling the tokenization revolution, specifically in the VC industry drives liquidity into an ecosystem that lacked liquidity historically, as well as expansion of the investor cycle to include many investors that to date were not able to participate in the exclusive VC industry.
What excites us the most is our ability to generate remarkable return for our investors by investing in an industry that is experiencing one of the most explosive growth patterns in history. Plus, we have the ability to fund, impact and influence the formation of that massively growing sector.
6) What is the market forecast for the digital security market in 2021 and beyond?
Since SPiCE is at the epicenter of the tokenization revolution, we have the unique ability to see many of the exciting trends coming in 2021, including the following:
- Increased Institutional investment in DLT/Blockchain related companies and capabilities. Many large corporations and institutions are utilizing DLT/tokenization technology in some capacity, and throughout 2019 and 2020 we have already seen major institutional investments in DLT based companies, ecosystems capabilities and products. The list already includes names like JP Morgan, HSBC, UBS, Santander, Societe Generale, MUFG, Nomura Securities, Goldman Sachs, SIX, Facebook, Barclays, Fidelity, MasterCard, Nasdaq, and ICE. We’ll see this trend accelerating in 2021.
- Increased VC investment focus on DLT/Blockchain related companies. Due to the increased corporate and institutional investment in these technologies and the fact that this domain is maturing fast it is beginning to be attractive for many VCs to start focus investments on.
- Increase in VC fund tokenization. Due to the benefits of tokenization both to VCs and to LPs, I expect more VC funds to go the tokenization route. For example, today SPiCE VC has over 350 LPs, many of which would have not been able to invest in VC funds before. SPiCE LPs can benefit from increased liquidity potential in comparison to traditional LP positions, as the SPiCE digital security, representing the LP interests in SPiCE VC, are listed on three fully regulated marketplaces.
- Increased secondary trading options and liquidity: During 2020, multiple marketplaces/exchanges for digital securities got licensed, went live or got acquired. Examples include: Fusang exchange going live in HK, Archax being approved by the FCA in the UK, the SEC’s approval of the acquisition of Distributed Technology Markets, LLC, (“DTM”) by Securitize (renamed ‘Securitize Markets’), and INX’s pending acquisition of Open Finance Network (also in the US). Since liquidity is one of the key value drivers of digital securities (especially for private securities) 2021 will be an interesting year to watch in terms of how secondary trading of digital securities continue evolving given these new venues for listing and trading.
- Expansion of potential funding sources for VC funds. Due to tokenization and the resulting increased liquidity of LP interests in VC funds, allocations will be able to be made from investors that were previously excluded or more liquid investments and therefore inappropriate for a traditional VC fund. For startups, there have never been more paths for funding and tokenization is one of the most unique around.
- Increased transparency and accountability. Longer-term, as more funds become tokenized and liquid through trading, investors will not be locked to their holding, and will ‘vote with their feet’ when they are not satisfied with the performance of the fund. I believe that it will force fund managers to create more transparency and will help separate better performing funds from the rest.
- Access to global investment opportunities. Although the U.S. VC market continues to dominate, promising VC opportunities are popping up in new markets like Greece, India and Brazil. Blockchain and tokenization efforts are making these global opportunities more accessible to investors.
7) What are the major milestones for SPiCE VC this year?
We have a monumental track record, experiencing over 65 percent unrealized gains in the first two years of operation. Since the beginning of the year, SPiCE VC has achieved several key milestones, including becoming the first digital security listed on the Fusang Exchange, Asia’s first fully regulated digital securities exchange. It has also entered into an agreement with Coinbase to serve as custodian for SPiCE VC’s digital security.
We are poised to achieve several other significant milestones early next year, including additional strategic partnerships, completing the current fundraising, investment announcements and more.
8) According to a recent announcement, SPiCE VC planning to raise $100M in funding, could you tell us more about it?
Yes. We are very excited about this next stage in our growth journey. We recently announced the opening of its second round of fundraising. We’re well on our way to achieving our target H1 2021, with major institutional players already committing.
9) Tell us more about your team of professional investment experts?
Combining institutional know-how, hands-on management, entrepreneurial innovation and professional investment experience SPiCE’s management team has been involved in hundreds of tech funding rounds totaling billions of dollars; as entrepreneurs, investors, and executives. The team is spread internationally, in the US, Singapore, Switzerland, and Israel.
10) Do you have more information for our readers?
Blockchain/tokenization is “democratizing” the asset class by enabling participation in opportunities that have previously been only accessible to large institutional investors, but now is becoming a key mainstream enabling technology in verticals like Capital Markets, Banking, Payments & Money, fundraising, etc. All of the aforementioned verticals are huge, with hundreds of trillions of dollars at stake globally.
We are at the forefront of this movement and continue to do our part to move the industry forward through innovation and enable others to do the same.
For more information, visit: https://spicevc.com/