038 - Allen Farrington, Axiom

Allen Farrington discusses his journey from traditional finance to Bitcoin Venture Capital, emphasizing the ethical implications of Bitcoin and its potential to revolutionize capital markets. He distinguishes Bitcoin from the broader crypto space, highlighting its unique properties and investment opportunities. Allen also shares insights on the future of Bitcoin technology and its integration into various industries.

The speakers explore the dynamics of institutional interest, deal flow, and the future of exits in Bitcoin ventures, while also leveling expectations for 2025.

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Chapters
00:00 Introduction to Allen
07:08 Transition from Traditional Finance to Bitcoin Venture Capital
13:09 The Ethical Implications of Bitcoin and Capital Markets
20:00 Distinguishing Bitcoin from Crypto
26:01 Investment Focus and Opportunities in the Bitcoin Ecosystem
37:49 Exploring Miniscript and Taproot Assets
40:10 The Evolution of Bitcoin Technology
42:04 Shifts in Fundraising and Market Sentiment
49:05 The Dynamics of Deal Flow in Bitcoin Investments
54:23 The Future of Exits in Bitcoin Ventures
01:07:54 Looking Ahead

Reference
https://www.axiombtc.capital/
https://x.com/axiombtc
https://www.linkedin.com/company/axiombtc/
https://www.uncerto.com/

https://www.buildwithbitcoin.xyz/
https://x.com/BuildwBitcoin
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❗ DISCLAIMER: This show is for entertainment purposes only. Before making any decisions consult a professional.

Transcript

Israel: 0:00

Welcome to build with Bitcoin. In today's episode, we speak with Alan Farrington. Alan is a notable figure in the Bitcoin community, known for his contributions as a writer, investor and thinker on the subject of Bitcoin and its broader implications. Alan is a general partner at axiom. Axiom is a venture firm that invests in Bitcoin related technologies and applications, we hope you enjoy. And as a reminder, this podcast is for educational purposes only. Welcome to build with Bitcoin. I'm co host irael Munoz joined with co host Lynne Bairstow, and today we have the great pleasure of welcoming Alan Farrington, Alan, welcome. Thanks so much. We're so excited to have you on we consider you one of the deepest thinkers about Bitcoin and also capital markets. And so we'd love to start off by just having a little bit of background on how you move from capital markets to setting up your VC fund and and just in general, what is it about Bitcoin that you feel is so important that we need to be investing in it for the future? Sure. Yeah. So my background is pretty straightforward. I really only had one kind of serious adult job prior to prior to accident, by which I mean, you know, I'm saying that in order to distinguish it from the things I did in college, like minimum wage stuff, flipping burgers and parking cars and that kind of thing. Straight out of finishing my undergrad, I joined a asset management firm called Bailey Gifford. And if people I don't want this turn it too much of like an advertisement for them, but they are very interesting. You know, I left on very good terms. So encourage people who are interested, I guess, in traditional finance more broadly, to go and to go and look them up. But they're pretty large in the sense of, I don't know where it is now, but at the time I left, they had about $300 billion under management. They're based in Edinburgh in the UK, so that's where, where I live.

Allen: 1:57

And they invest. This is interesting connection to my story, actually, that they invest almost entirely in public equities, which just means, like companies as stocks, people aren't that familiar with the jargon, almost entirely, because they do have a little bit of later stage private investing, which is actually crucial to my story. So I'll come back to that in maybe just a minute or two. But predominantly, the bulk of the assets are in in public equities. So in, you know, companies that are listed on the stock market, a lot of which, I'm sure people, people know they're actually, if I'm not sure where your audience is, is predominantly based, but in, in the US at least, and probably also in the UK, and that, that kind of is the bulk of the the assets that they manage, they're best known for roughly in order when the investments were made, like when they were when they were that important Amazon. First of all, they were one of the biggest investors in Amazon for a long time, and kind of the position dwindled over time. Tesla is probably the one that they're most attached to in terms of their the size of their position and their importance in the history of the company, and then, more recently, Nvidia. And basically, what's happened in all of these is that they were early, they were right, and then they just did so phenomenally well that the positions had to come down a bit too. well, I was gonna say traditional finance, but asset management, more specifically, there's a lot of these kinds of categories that are somewhat arbitrary, that are mainly just used for marketing purposes, like to distinguish one firm from another. Growth is usually contrasted with value. The idea being that, you know, growth companies, unsurprisingly, are likely to grow, and value companies, maybe by implication, won't grow, but are just miss value to the current price. So, you know, you invest on the basis of expecting a price correction. And I think, and certainly they, they being Billy Gifford, think as well, these aren't all that helpful, like, they're fine if you just need to split styles into literally two, but there's a lot more interesting nuance that that you can have. And the main reason that they quibble with it, I think, is that they're, they're often characterized, as, you know, singularly, like ultra not just growth, but Ultra growth, whereas I think, and they think that probably what's more important for their investment philosophy is having a very long is having a very long term outlook. So there's, there's ways that you can quantify this, rather than just, you know, it being something you aspire to, I guess, or it being kind of more qualitative. You know, how often you tend to hold an investment for before you sell it, for example, that's kind of an obvious one. How often you you churn through your entire portfolio, like how often it turns over, and you think things like that, which far better capture what their style is as distinguished from from everybody else. So the reason I'm going into all this context, by the way, is to paint this picture that I was there for. criticism and skepticism of how most of tradfi differs from this. That in particular, I think was actually really important for my own intellectual journey within Bitcoin. I think this is something that I very much got from Billy Gifford, from working in that setting that was then helpful in understanding Bitcoin, rather than, you know, rather than the other way around. It wasn't something I picked up from from the Bitcoin space. It's something I kind of brought to the Bitcoin space, and has, has, has motivated a lot of my thinking, hopefully positively as well, right? Rather than just being kind of intensely skeptical of tradfi and, you know, various shit posting on Twitter and whatever else, but that, that experience as a whole was, was all critical to to begin with, I say my my original journey in coming to Bitcoin, but then in my final few years, there the transition to then why I wanted to start axiom in the first place. I'll give a very short version of this. I'm not sure how much detail you want to go into. Obviously we can, if you have follow up questions, we can dive a bit deeper. But around 20, I say late 2020, early 21 so by that point, I'd been at Bailey Gifford for five years, but I'd really never had an opportunity to make Bitcoin relevant to my job. You know, I'd been personally involved in Bitcoin for seven or eight years. Before that, I started to have more of a public sort of Persona, in a sense, for maybe two years at that point, but it was just never relevant to my job, basically because Billy Gifford only invests in companies, mostly public companies, as I mentioned, there weren't any opportunities, at least that fit the fairly strict investment philosophy. There just wasn't an opportunity, and we couldn't, maybe more to the point we couldn't buy bitcoin, right? There was no there was no point in writing a note saying, like, buy bitcoin, just wait 10 years or whatever. So, so that was actually really crucial, though, because across my time there, that forced me to, instead of just thinking about, basically, number go off, you know, instead thing, well, okay, how, when, if, will this affect companies that we can invest in? And for a long time, it just didn't by 2020 it finally did in terms of there being later stage still. So hence me mentioning this before and wanting to slip it in still, not public companies, but later stage private companies. And so we invested in, across 21 we invested in block stream and lightning labs. And what was this is kind of the key moment. This is, like the real answer to your question, because that finally, you know, by that point, is it five, going on, six years working, not just at that company, but just in the industry at all, having this completely separate life, you know, being interested in Bitcoin and building this personality and following and doing all the writings and whatever else. That was the first time that I had an opportunity, an opportunity, sorry, to look at the space professionally. So a lot of the companies that we were looking at, probably all of them, actually, I knew who they were. I'd heard of them independently, but more almost as a fan, if that makes sense. Like I was familiar with them because of Twitter, really, but then I finally had this opportunity to look at them as an Investment Analyst and just find it really fascinating. I always, when I'm telling this story, I always make point of saying I really liked my previous job. It's not like I was looking for an excuse to quit it or anything. But once I had the chance to do it in this realm, it was just so much more interesting. I think probably for you know, maybe there's the obvious reason of, I'm very interested in Bitcoin. You would expect that anyway, there's maybe even a more cynical one, though, that that does lead also nicely to axiom. And probably some of the things you want to ask me about, which is that not only do I find the space more interesting, but I have far more of an edge there, in terms of, you know, who basically, globally, like, actually understands this and is working in this space. And so once I had, you know, we only made those two investments, which are, were tiny by Baillie Gifford standards, huge by the spaces. So. as like a light bulb moment, but mulling it over for a couple of months while I had that opportunity, that doing what then became axiom was probably not only a good idea, but I'd say possible, because I think the timing was quite important too, that I'm not sure we could have done it much earlier. You could have maybe done it a year or two earlier, but not much earlier than that, if you wanted to ensure first probably the biggest one is that you're sticking to Bitcoin only, right, that you're not kind of spreading into broader crypto, but also that, you know, if you just want to have a if you want to have a high bar for what you're investing in, rather than just everything that has anything to do with with Bitcoin, and it at that moment. So that would have then been late 21 by that point, it felt like there was that opportunity. And so there's a co founder of Axiom as well, a guy called Anders Larson, who's actually, I don't know if you're this probably will mean something to your audience. He's best known as the co author of Only the strong survive. So we were in touch because we were writing that also at that exact time. But he did that pseudonymously. So he because of the job he was in at the time. He wanted to be known as Big Al. So I think he's still better known as Big Al than by his actual name. But we were, we were because of that writing process. We were sharing notes on all this. He was in a very similar, I won't give his entire background, but he was in a similar position. We were seeing the same things. We're kind of realizing the same things. And yeah, and we're excited to get going. So then axiom proper started in, you know, we left our old jobs and got it up and running. April, I think, yeah, I left in March, so April 22, one, and then we're now moving on to raising for fund two.

Israel: 11:58

And we, before we get into the funds there. I don't think, I mean, thanks for sharing that, that background. I mean, there's a, there's a few threads to pull there, probably, but, you know, I do think it's, it's interesting. You mentioned the, you know, the timing, as far as getting into, you know, deploying capital into private companies in the Bitcoin space. We had, we had a conversation last year of an angel investor, kind of speaking to that, that he didn't see that opportunity there maybe 567, years ago. But now, because it was just so hard to, you know, risk reward bases actually beat Bitcoin, the asset itself, right? And we can get into maybe, you know, Bitcoin the opportunity cost as well, from from the VC lens little later on, but, but, yeah, you know, to your point, you are now at the stage where this technology is kind of maturing to to that point where you are going to see some tremendous use cases and and successful companies come from, from this technology stack. But you know, one thing I'd like to get a little into Alan is some of your writing, because you have, I mean, you're well known for Bitcoin as Venice capital in the 21st Century. And can you give us your point of view of maybe a very, very brief lens into what you get into there, as far as the this kind of ethical capital markets component that you touch on. Why? Just maybe a little more philosophically, apart from just the investment opportunity, why do you think Bitcoin would just like hit you so hard from that more philosophical, ethical lens of that's really interesting question. I'm not sure I've ever been asked that my answer, maybe even more rambly than than usual, as I as I think this out loud,

Allen: 13:48

I think probably the most important thing to say on the ethics of it all this I have thought before. I maybe just haven't ever given it in an answer sort of explicitly addressing the ethics is that, I think it's, it's important, not just in terms of, like, you know, my career decisions, or investing or whatever, probably any, any sense in which you want to talk about the ethics of Bitcoin to, I almost it's almost to me, it feels more important that the the ethical considerations are kind of inextricably linked to how the technology works in the first place, rather than being, I'm not even sure how I how to articulate what the alternative is, but you know, something like a module, it's like we've got the the ethics. not sure if this is making sense. I'm sort of kind of stumbling around the point I think I'm trying to make that it's, it's not ethical, purely because, you know, that's a decision to to make it ethical, which could have been decided some other way. It's kind of bound up in the technology itself. And maybe one kind of this is a little bit cynical, but one way of addressing this is that, actually, sorry, this is perfect. I know. I know where I was eventually going with this, is that working on it at all and advancing it at all is ethical because of the ethical implications of it, and so that that's an that that sounds cynical, but it's actually an enormous positive, because it means you don't need to convince people to take this seriously purely on the basis of charity, right? That you don't, you don't need to convince people to let go. You know, their opportunity cost isn't going to be something that could potentially benefit them. Far better if you're not able to convince them of the ethics of this. I think that's actually really, really key, such that at the end of the day, you actually don't need to think about the ethics all that much, you know you you can to the extent it's important to you, but actually just working on it at all and advancing it at all, I would argue, just is is ethical, or the very least, has positive ethical implications.

Lynne Bairstow: 17:03

I want to kind of expand on that, because something that I think is really important that we try and distinguish is the difference between investing in Bitcoin companies or Bitcoin VC versus crypto and all the other more centralized blockchains and technologies. So when you're talking about the ethics being tied to the technology. I think you, you were introduced to Bitcoin, very similar to Israel, and I where we looked at it as a technology foundation, a protocol that many different opportunities could be built on, versus strictly a digital asset or a currency. And so when you're looking at that technology and the ethical aspects of it that are inherent in its decentralization and equal opportunities for all. How is that? Can you, can you just kind of draw on how that's so different than the crypto space overall?

Allen: 17:57

Yeah, I think, I think the answer there should be relatively straightforward, that maybe to pin it down a bit more and force a discussion to be a bit more tangible than I suggested in my previous answer, that the reason it is ethical, in my view, other people may have other ways they they might want to address this is essentially that, first of all, it's sound money, so There's no There's no inflation. And in particular, there's no politically motivated inflation. It's, you know, perfectly neutral how, the how, the how the money supply is, how new money is created, and what the schedule is, and so on. And you can't have any political preference there. And then also it's what would be the best way of putting this? I guess it's open. This is, I think, is more often communicated in terms of it being kind of censorship resistant. You hear that phrase a lot, for what it's worth. I don't mean to be too pedantic about this, but I don't really like that framing, because it almost seems kind of inherently negative in a way. I prefer thinking about it as you know, what are the actual what are the benefits of this, rather than what are the flaws of everything else, I suppose, which is that you don't need permissionless. That's actually a better way of putting it. I think that essentially means the same thing as censorship resistant. And that is, that's also an it's guaranteed by the technical properties. It's not, in and of itself, ethical, but it's easy to see why you might have a positive, ethical reading of that. So with those two established no other crypto comes even remotely close, even with the best of intentions. I think, I think it's important not to this may be something we can get into a lot more detail just that, you know, the contrast between Bitcoin and wider crypto. It's maybe not important, but useful to avoid straw Manning. I was gonna say shit coins, but that kind of is strong to avoid straw Manning. I. There other crypto projects, because even if you steel man them, they're still, they're still terrible. So you're like, why not make the best possible case, basically, and so, you know, even if they have, I don't think, for example, that every I really do like saying shit quick, but every, every crypto project is deliberately a scam, for example, which is would be, I think, fairly common thing to hear on Bitcoin Twitter. But I think that they are functionally scams, whether their creators intend them to be or not, because they fail on exactly these considerations. They're clearly, maybe not completely permission but they function in such a way that they're nowhere near as permissionless as Bitcoin will will ever hope to be. And I think that's actually in almost every case, dramatically secondary to the first point that this often is deliberate. They're, they're essentially vehicles for inflation. They're there. Again, I'm kind of, I don't, I don't want to exclusively categorize them as sort of pump and dump schemes or anything like that. But again, Functionally, they're, they're not. The difference is only in degree, not, not in kind,

Lynne Bairstow: 21:15

well, and probably the difference is also in how they they raise their initial funds to begin with, like, tokenization is very popular in the crypto space, and so, yeah, I think I've heard you talk about tokenization in the past, but you know, and why your fund would not invest in tokens, and what your perspective is on token versus traditional VC model and being a long term,

Allen: 21:38

oh, sure, yeah. I mean, there's, there's a whole bunch of different ways you can, you can come at that. I don't want the answer to purely be circular, though. I mean, what we would usually say in the VC context, rather than, you know, we were having more of like an ethical discussion a second ago, but in the VC context, basically all we need to say is that we're investing in, well, there's two things, right? So we're, we're investing in the Bitcoin ecosystem, not the crypto ecosystem. We can then go into why? But that's usually assumed. It depends how exactly we've arrived at that point in the discussion. But I think more importantly, though, we see what the purpose of what we're doing as being investing in companies, right? We're helping companies grow. The Bitcoin component is really just thematic. We I find myself saying exactly this kind of line, this rhetoric, quite a lot, that the the theme could be biotech, or SAS, or, you know, whatever other theme that you could decide to have a venture capital fund around. In our case, it just so happens that the theme is, is Bitcoin. We think there's, you know, there's very good reason for us to want to do that, that this touches on a few things I've said already, that, on the one hand, we think we have an edge in analyzing these companies. We have an edge in accessing the companies. We think there is enormous information asymmetry to the point of there basically being an arbitrage opportunity around understanding what they're doing, and that as that gap closes, that's where we'll get our returns from over time. But actually, even this touches on something Israel, you said you wanted to come back to much, much later. But to round out, this point, we don't even hold Bitcoin, right? It's not just that we don't hold other tokens. We're, you know, I can say forbidden, but forbidden by ourselves, by the way, we've written the fund docs in holding Bitcoin in the fund, because LPS can just do that themselves. They don't need to pay us a management fee to do something that not only they can do, but that they arguably should do. And even that is kind of back to the ethical part. I wouldn't usually communicate it this way. It's in a conversation with a potential LP, but in this setting, I'm happy teasing it out in this way that I think ethically they should, or they should be holding their at the very least, buying their own Bitcoin, not paying somebody else to buy it for them. But then, as certainly, everybody on this call knows and understands they should over what I'll caveat, as you know, I'll be as gentle as possible over whatever period of time is necessary for their sufficient education. Should also be holding it themselves as well. And so paying us to do it is like getting everything possible wrong. So just to round off the point of we are investors in companies. That's what we think of our skillset as being that's what we think it's fair to pay us to do to the extent we do it. Well, just about everything about tokens violates that in some or other way. There's like three or four different ways in which it's inappropriate, but just one would suffice. But there's actually quite a few filled

Israel: 24:39

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Lynne Bairstow: 24:49

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Israel: 25:30

River also just launched a very interesting feature, which is a yield paid out in Bitcoin on your US dollar cash that you deposit at River so you can hold that US dollar cash earn that yield in Bitcoin in your account, in river. And important to note, this is all through a regulated banking partner of theirs at at a FDIC, insured institution. So I think it the river is a great partner for for Bitcoin and cash deposited, yeah,

Lynne Bairstow: 25:56

because as much as we'd love to live on a Bitcoin standard, at least you and I, you, we need cash to operate in the world, and so this allows you to be able to earn a very competitive yield on your excess cash and have it paid in Bitcoin, if you choose, and just continue to build your Bitcoin stash. So for anyone looking to start their journey, we invite you to join us at River by visiting partner.river.com/ partner.river.com/build, with Bitcoin.

Israel: 26:24

Well, I mean, I have seen that you, you kind of explicitly mentioned that Bitcoin is your theoretical, the asset, right? Yeah, yeah, cost of capital, which gets to to what you're you're mentioning, and why you focus purely on the companies, right? So maybe getting into, you know, a bit of the scope of what you've invested in today down, I mean, what can you share with us, as far as the the verticals within the Bitcoin technology stack that you, you at axiom, have invested in? Are there certain areas that you steer away from, I don't know, or maybe hardware, or what's within the Bitcoin VC space? What's your focus there? Sure, yeah,

Allen: 27:05

there's. There's a couple of different ways to answer this question. Probably the most obvious thing to say is that our portfolio is on our website. If people want to point it out, I'm not going to list every single thing that we've invested in, but probably a lot of the names people recognize. So I'm sure you put this in the show notes or whatever, anyway, but it's axiom, BTC, dot, capital. So A, X, i, o, M, B, T, C, dot, c, a, p, i, t, a, l, I think it's just called, it's either called investments or portfolio. I forget it's pretty like clean site, so you can find that straightforwardly and just just have a look at everything you invest in. It is all the companies are linked to as well. So that's one relatively straightforward thing to mention, almost just to get it out of the way, as much as anything else, is that we probably the only thing that we explicitly say that we don't invest in, not so much publicly, but more just like this will come up in conversations with LPs. Well, I guess, other than the crypto and the crypto and the token stuff, but we covered that already, there's more kind of within, within bitcoin is miners. So that the reason there, it's not that we have anything against it. We actually have a lot of, I think, super interesting investments that are kind of around mining, where mining is more the theme, but it's just not appropriate for for a venture fund, in our view, it's you can, kind of, I don't want to go too much into, like, our entire thesis on mining. Maybe do this in a follow up question, if you like. But it seems pretty obvious at this point that pure play miners, like the equity in a miner, is only you can have a competitive advantage, so that, I mean that, in and of itself, arguably rules out as a credible venture investment. Even more detrimental to what we might try to do, though, is that there's massive returns to scale. The only way you can really have any kind of advantage, but which almost definitely isn't sustainable, is access to cheap power. And so all of these things just play against us, like if the the mining businesses that are successful race to go public as quickly as possible, so that they can lower their cost of capital, so that financing can become another transient, you know, I suppose the sustainable competitive advantage, because they need to be spending billions and millions of dollars in capex. So that's, that's one thing that we, I mean, we barely even see opportunities to do this anymore, because everybody's kind of realized this. But yeah, we don't. We don't invest in the equity of miners, and beyond that, we don't. We don't really have a focus in the way that you suggested in the question. I think there's maybe, there's maybe two interesting ways of viewing this, right? So the the first one is what our thesis on Bitcoin is, development even is, and what we think the investable opportunities will be as a result of that. And I say it's something like the following, and I don't mean for this to be too almost grandiose, and the part two will kind of rein it in a little bit, but we basically. Basically see Bitcoin as being such a fundamental technology that or fundamentally important technology, that eventually it will be part of almost every business, and even aside from its use as money, which I don't think is really even necessary to obviously, on a long enough time horizon, I do think that'll be the case, but I think that is likely to be the case even prior to, if you want to call it hyper bitcoinization, or, you know, Bitcoin being the what the people involved think of as being the money even prior to that. I think this is likely to be true because of its importance as technology. And one, one interesting way of thinking about this, it's, it's such a cliche at this point, I think, unfortunately, for good reason, like it's one of these cliches that you can't help but use, which is comparing to the internet in the 90s, right? And typically, the way people go about this is wondering, like, where we are, right? Are we, like, are we at 92 now, or 95 or 98 or whatever, just in terms of overall adoption, I'm not so worried about that. I don't think the answer to that really matters. It's more making the comparison on a far longer time horizon. So in the 90s, whenever it was very useful. It was it communicated useful information to describe yourself as either an internet company or an internet investor. Today, nobody describes themselves as either of those. And I don't think it really matters when that changed, but obviously at some point that had changed, and the reason is, the internet is so fundamentally important that it has seeped its way into basically every company, even if they don't think of themselves as having anything to do with the internet, you just can't help but use it. And so we basically think something similar. I don't think exactly the same, but something similar enough is likely to happen with Bitcoin that we the practical implication of this is that we, we look forward to there not really even being such a thing as a Bitcoin company. And we also are. We're relatively careful about being too prescriptive in terms of what sort of verticals, if you like, we're looking for companies in because we just don't know, like it could if, if that thesis is correct, arguably, there could be a company in literally any space that is using Bitcoin as technology in an interesting way. So that's point number one that our, our overall thesis, I think, quite deliberately prohibits us from from being too specific about this. I did say, I then rein that in a little bit, which is, which is to say that we, we're wary that that sounds, or could sound almost a bit too hand wavy and like so abstract as to be kind of meaningless in terms of how you implement it. That transition we think will. You know, it won't all it won't happen all at once. It's not like we're just going to hyper Bitcoin eyes next year. So there are areas that it's more natural to, I wouldn't say, to look for opportunities and because, again, we're not, we're not trying to look by vertical. It's more just recognizing that this is where the opportunities are right, like, we find the companies independently of not because we're looking for a company that fits a certain profile, but, you know, you just can't help but recognize that they are, they are kind of naturally grouped. And I think the most obvious groupings are as follows. So I fintech. I don't really like calling it FinTech, but this is almost more, you know, Normie tradfi Speak to explain, like, what kind of things these companies are doing, and usually that just means lightning. Really, there's interesting kind of corner cases there. Arc Labs is one of the recent investments we made. Is one of the first investments out of fund two, which is, you know, obviously not lightning, and it's kind of pushing the boundary. It's more, it's more, you know, R D centric. It may take many, many years to come to fruition, even as technology, but for the most part, what we are translating into tradfi, speak as FinTech, is basically just various implementations of lightning. Capital Markets is another one. It's a bit more kind of loosely defined. I wouldn't say it's as as monolithic, in the sense that it's not focusing on, you know, that particular protocol. It's more focusing on bitcoins native properties as as programmable and that that has nice implications for how you can integrate it with capital markets. And then energy is the final one. And so that's where the the mining piece comes in. But again, not miners, more like the picks and shovels of mining. That's something that we get quite excited about seeing, worth saying as well. Just to round that off, that this is in that's not exhausted, that's, you know, there's companies that I don't think really fit any of those. I mean, even maybe art labs, I suppose, kind of fintech. It's kind of just, you know, if we're being. For being really cringe. Depending on who we're talking to, we sometimes say layer twos as well. But just just to then make the point that there are actual, like, non bullshit layer twos in of which lightning is the most important one. But yeah, that's, that's a, I think, a decent categorization. I perfectly happy to give examples in all these two by the way. But just to see, just to give you an idea of, like, how we see the investable universe, that's, I think, a good starting point,

Lynne Bairstow: 35:26

Alan. I love how you, you know, talk about the fact that you do have these unanticipated opportunities because of, you know, Bitcoin and similar. I think for our audience that may be more traditional investors, it's like AI is so popular right now, and I think to your point, AI, companies will be every company in the future, and same with Bitcoin companies. But there's also some evolutions in the technology, included in Bitcoin protocol that have increased the opportunities in recent years, like taproot assets and SegWit and zk rollups. Can you, can you just talk about how you view that the because, I think, in the not to, not to beat a dead horse of the crypto conversation. But, you know, early on, I think many people just said, well, Bitcoin can't facilitate companies in this space. And that was, I believe, inaccurate. And how do you view that? The fact, I mean, I

Allen: 36:23

just think it's silly, like, I've kind of always thought it was silly, and when we wrote only a strong survive one of the sections, I think has held up really, really well. It was the one I was then the most nervous about, because basically the only one that has any kind of prediction, which is basically saying, like, anything that is useful in crypto, and just back point of, like, you want to steal in it, right? Like, there is a lot of stuff in crypto that is, is clearly useful because it's being used it like, It annoys me, but people still use it. That's, you know, these are separate things. It's like an is all distinction. Regardless, anything that is useful in crypto will probably end up on Bitcoin. And I'm not sure at the time we really had any good examples of that, but I do feel like it's basically, I wouldn't say it's coming true exactly, but the signs are there that it probably will come true. I'm a lot more confident about that now than when we wrote it. I can go through a handful of examples very quickly. I mean, you mentioned ZK rollups. We're investors in both Alpen labs and citria, which I think are by far, probably the only really credible ZK rollup teams working on Bitcoin. You mentioned things about various portfolio upgrades. This actually isn't even I like giving this example because it's so kind of subtle on the one hand, but kind of bare bones technical in the other I don't know how much you guys know about miniscript. One of our companies, anchor watch, is what they do is completely reliant on miniscript. But also the founder and CEO, Rob Hamilton, is probably one of the foremost advocates of miniscript. He's, you know, at least, out there, shouting about how great it is. The most type of assets is an interesting one. I actually, I have a whole thesis about, I don't want to derail the conversation too much. I have a whole thesis around top rated assets, but which the important disclaimer is that we don't have any exposure to that within accident. We haven't made any investments that are dependent on it. I guess. I mean, probably a lot of our investments will end up using it in some or other way. But there's none which I would kind of categorize that way, trying to think what I mean, I mentioned art before, right? Well, I mentioned art labs. Obviously depends on art. There's other ones too. I mean, there's, I'm actually, I'm just realizing there's one I thought of, but which we haven't announced yet. So I can, I can't say that one, but it's, it's, it's doing something very cool. I actually, I like using it as an example in private conversations, rather than on on podcasts, as being back to the previous category categorization that I gave. You could argue it is all of FinTech, capital markets and energy, depending on exactly how you're viewing their product. But maybe to push that even a bit further on, why I like them, sorry that this is such a tease given. I'm not saying who they are, but it's helpful to describe what they're doing as kind of a novel approach to smart contracting. You'll be careful exactly what you mean by that, but smart contracts ish on Bitcoin. So yeah, I mean, there's plenty of examples, not even just in theory, but that actually we've already invested in from axiom that I think are healthfully disproving this and continuing to do so as as time goes on.

Israel: 39:43

Yeah, you know, it's funny you mentioned that because we just did a wrap up of the year. And actually, just in our most recent highlights, we'll do kind of a summary of the recent five episodes, right? And in the most recent highlight that Lynne and I did, we had two companies that that are who. Practically working on exactly what you're kind of touching on, right? One was the taproot essence assets, issuance of stable coins on bitcoins Lightning Network. So you already have early signs of some of these, you know, some of these popular use cases in other networks. Moving to the Bitcoin technology stack, you mentioned mini script, and that's a form of smart contracting, which is also, you know, kind of a buzzword in the other blockchain use cases. So

Allen: 40:23

you're very careful when I say it,

Israel: 40:26

yeah, but you know, you to your point, you do see the, the early, real signs of this movement that, you know, I think a few of us probably kind of saw coming and and and evolving, of everything that that actually has a proven use case, actually kind of migrating to the, the most secure technology, right? Which, which is, of course, Bitcoin in this case. So, yeah, I mean, it's, it's super interesting, and, and, you know, you were, you were mentioning the technology, or, sorry, the internet, internet company and investors, timeline, how that all played out. And, you know, I think all the three of us, at least, here can can clearly see that happening as well. And I mean, to me, it's still, it's still a bit surprising that it's not people aren't as aware of this massive change in technology and capital formation like earlier. You know, I guess a little a little more like urgently. Let's say I was just looking up a few days ago, settled value in US dollars for the Bitcoin network since its origins. And it looks like this year, in 2025 from, from the kind of round numbers, what I could see is we're going to surpass 200 trillion US dollars, in in settled value on the Bitcoin network, which I mean to and I just kind of mentioned that because, to me, it's just so obvious that it's no longer a niche, right? I mean, this is the early signs of an entire new economy being formed on this open, permissionless network. The what the question I wanted to get to, Alan, is, from your conversations with fundraising, you know, LP, capital, in your last fund, to your now current conversations, are you seeing this shift that that people are starting to kind of click and wake up to the fact that this is here to stay? Are you seeing that in the conversation yes and no,

Allen: 42:23

yes in that clearly there is progress. One thing I skirted around mentioning this before, because I didn't want the introduction to be too long, but some of your listeners may have picked up on this when we started fund one we couldn't have known this at the time, but in hindsight, we did it at basically the worst possible time, because we started in April 22 and then Terra Luna, block five, Voyager Celsius, blah, blah, blah, happened in May of 22 and so fundraising was miserable. It was, it was basically we ended up. We were told this by people who much more senior than us, kind of mentor figures in the industry, but who didn't even necessarily have anything to do with Bitcoin that, like, even for them, it would not, obviously not because of Terra Luna, but, you know, general macro trends that were impacting anybody or everybody, sorry, and then, but specifically, were also paying us because of the, I mean, obviously FTX, but That was a little bit late. That was even worse. But it, you know, it kind of dragged on for a little before it finally died. And so that fundraising environment was just horrible, and actually, in a way that was sort of grimly ironic for us, specifically so us being, you know, me and Anders who were setting out to do this, the co authors of only strong survive, because the I can laugh about this now, but at the time, it was really painful. A lot of the feedback we'd be getting was in light of the FTX collapse, and was basically saying things that were predicted by only strong survive. But these people didn't know that, like we I kind of explained that to them, because to them, it's just all crypto. And so for me, being like, well, actually, we're the only ones who, which even, I mean, even that isn't really true. But you know what? I mean, that it's just It was, yeah, it was, it was a pretty miserable, I mean, we got there at the end, like, we we raised considerably less than I think we wanted to. We raised a decent amount, and we were able to deploy. And I think the flip side of that is that, you know, it was horrible, it was a horrible environment for the entire industry because of this. And so I think we were able to make some amazing investments. And, you know, I think fund one will will do very, very well in terms of its performance in the long run. That, I think the reason I mentioned all that is that that's unavoidable background to talk about the experience that we're now having of raising fund two that obviously none of that is is recent anymore. People have kind of forgotten. A lot of people have kind of forgotten. And in the meantime, you've had ETFs all of the news around Trump. Now, not that I particularly care about, you know, strategic Bitcoin reserve or whatever, but it's. News, right? It's like a real thing that the Wall Street Journal is talking about. It's not just a joke anymore. That's all, that's just enormous, like it's, it's, it's all. I don't want to, I don't want to sound too almost contrarian, I guess I don't know. I don't want to make this seem negative, just for the sake of it, but it is an interesting kind of dichotomy. Because, on the one hand, I think ETFs are bad. They're kind of inevitable, but they're also, like, they're not a good thing. In my view. I've never really cared about price action that much. I mean, on a very long term, you know, in like, four year horizons or something, it's nice, but day to day, I just don't really care basically all of this stuff, I kind of, I either don't care about, or I think is like mildly net negative, but I won't say all, but most of the people that we speak to, who are invariably coming from tradfi background, like this is really, really important to them, and it's more important in terms of sentiment, though. So this is where it then flips into the No, right? So I started off answering the question with, well yes and no. So yes, very much. In terms of the sentiment, it's dramatically improved, no, however, in terms of, I think it's far too early still for the kind of things that we were just talking about in this conversation to really be that widely appreciated. So most of the kind of conversations we have are really more along the lines of seeing the value of an investment in the fund as being, was I Bitcoin exposure, which is true, right? It's, it's just, I think it's a very to me. It's the most simplistic way that you could describe it is nowhere near as interesting as the things that we were getting into. And the hope is basically that, you know, the conversations go well enough. The people are, you know, they're they're interested. They're obviously, for the most part, very intelligent. Anyway, it's just, they only have so much time, and they're not experts in the space, but that they they get hooked, and they find it interesting, and we can move the conversation in these more interesting directions. But I think I just kind of want to temper any any expectations of like, Oh yeah, tradfi is going to get it any day now, like they're going to learn about lightning and arc and zk rollups, and they're not really they're just gonna buy the ETF.

Lynne Bairstow: 47:24

I think you know, it's a really valid point, if you you know, if the narrative is shifted and people understand that Bitcoin is really a force to stay, and then are starting to see some of the attributes of it, it just makes sense that, why wouldn't you invest in companies that are building the infrastructure for it. Just similar to, going back to your analogy about the internet, it's like the internet, you know, you couldn't invest in, quote, unquote, the internet, so you had to invest in the companies that were building the infrastructure for it. But, you know, here you, I mean, you have the hurdle rate of Bitcoin, but you also have the opportunity of being on the ground floor of this incredible emerging system for value to value transfer so

Allen: 48:06

well, that's exactly where we want to move the conversation to which, I don't mean to be too bearish, by the way, on like, how these, you know, how the conversation typically goes. The point I'm making is more just it usually takes a bit of work to get to that point. Of course, we never start off. You know, have, like, the very first conversation we've ever had with family office, say, and they're asking about zero knowledge roll ups and mini scripts and that kind of thing. It's more, it's a it's a process that we need to, we need to guide them through. And if anything, I think that's why it's like I'm very used to coming up with these comparisons, like making the internet analogy and all that kind of things

Lynne Bairstow: 48:50

in the in the universe of potential LPs. Are you finding it easier to deal with family offices or individuals that have invested in Bitcoin previously and just understand it better, or institutional. I mean, I'm assuming institutional would be a little bit of a harder, you know, educational path to get them up to speed, but where are you saying? LP interest? Well, we,

Allen: 49:13

we don't what's best way for this. We don't have much of a choice, given the targets we've set ourselves. So I'll be kind of dance around the actual numbers, because we don't make this all that public. I mean, well, we've said that we're aiming for 50 to $75 million for for fund two. So that's already out there. That's fine in, in fund one. I think it launched partially because of that backdrop I just mentioned with, like the FTX blow up and everything. Most of the LP base ended up being just high net worths, as you typically wear Bitcoiners as well, because there was just a lot less bullshit to cut through. Basically everything that we were just joking about like they actually understood, like they already knew that before. They probably also already knew who we were on the basis of only the strong survive so that. Didn't, you know, either surprise them or scare them that much, but it was relatively a much smaller fund. So for for fun too, just because of the amount that we want to raise, which is, you know, we're deliberately being quite ambitious with this, but we think if we were able to get there, we could deploy that. We could deploy it well, and it would obviously be a good thing for the for the space as a whole, if, if we can, it really doesn't necessarily, necessitates that we aim higher. There's not that many high net worths who can really afford I mean, it sounds like I'm being almost patronizing, in a way, but like, I can't afford it. I don't fit that category, right? So it really like family offices are kind of the sweet spot. And it's interesting, you mentioned that, yeah, maybe for institutions, is bit of a hard sell. There's, I completely agree with that institutions are like, there's a lot of different kinds of entities that can fit that. And you can have public pension plans, fund of funds, even more esoteric things like endowments and charities, and things that we've spoken to, a lot of those potential LPs, even for fun, what we we had conversations with some of them who were more intellectually interested. I do agree, though, that it seems like it's still a bit too much of a lift. I mean, if we get them, frankly, if any you know Bitcoin native VC manages to get these people, then that's that's great. That's amazing for this space as a whole. It seems very much though, like for fun too, family offices are going to be the sweet spot. So individuals are too small. Institutions are it's not that they're too large. It's the larger the better, frankly. But they're not quite there yet in terms of the thesis, yeah,

Lynne Bairstow: 51:40

also fun size. I mean, I, you know, I think you're raising a fund that's appropriate for the Bitcoin startup space. I mean, you don't want to have too much money come in too early, because most of the Bitcoin companies are at the very early pre seed, seed stage, some Series A, but there's not a, you know, there are very few companies that are like block stream or lightning labs are at a more mature space. So you don't want to, I mean, your fund is appropriate. And a lot of the institutions, you know, they'll need $100 million fund to put a to make it make sense for them, so for their their balance sheets. So, yeah, that that makes a lot of sense. I'm sorry, Israel, you're about

Israel: 52:19

to know those, those are great points in that line of thinking. I think also for institutions, they probably carry a little more of the reputational or career risk component for some of the decision makers, which I think at some point will that switch will will flip right? I certainly hope

Allen: 52:36

so. That's a really interesting point to make, actually, because just, I'm obviously not going to, you know dogs anyone, or throw them under the bus, but just reflecting on some reflecting on some of the conversations we've had, probably some of the more frustrating ones in terms of the overall conversation are exactly the more institutional types because we've i It may be that the sample is too small to generalize this too much, but from the conversations I've had, at least they can often be the most interesting in terms of, or amongst the most interesting, let's say, in terms of what they're interested in probing. It would almost like, make for a good podcast, in some sense, like they, I think in large part, because they aren't Bitcoiners, like they have really astute lines of questioning that that we haven't heard before, right? Like, we don't think about these things because we're so immersed in the space, we have answers, like, you know, we we've never answered them before, so we have to kind of come up with it on the spot. But that's exactly like that makes for a good conversation. So I tend to enjoy those in the moment, but then they can end up being more frustrating in the long run, because you you want there to be a kind of a mapping from like, oh, he was really interested, therefore they'll invest, right? Versus like, oh, they didn't really care, therefore they probably won't invest. But then you often get exactly this clash where that kind of has nothing to do with what the actual decision making process is, because it's not just that person you were speaking to. It's five other committees that they that that person you were speaking to is like, has a 10 year project to get over the line on this. So, yeah, that is kind of an interesting dynamic, reflecting,

Lynne Bairstow: 54:11

well, it sets you up for fun, three, four or five. Hopefully, yes, that's what we told ourselves at fund one,

Israel: 54:19

yeah, well, maybe moving on to the company side, Alan, your your deal flow. Where are you sourcing? I mean, is it mostly inbound? Are there certain geographies that you're seeing a lot of this, you know, interesting startup activity coming from, or, you know, the geography

Allen: 54:33

section was really interesting one. We find ourselves talking about this with with prospects a lot, because of how differently it works in this space to basically all, I don't want to describe, you know, X, Bitcoin, VC, as if it's a single thing, but how the dynamic in almost every other vertical works, which is that Bitcoin, I think, partly, is a function of just what it is, right, like how the technology works, but also timing in that, in so. Far as there even is such a thing as the Bitcoin ecosystem. It's a very, very recent phenomenon. Both of these contribute to that ecosystem being basically natively online, like there's, I'd say it's maybe a little over represented in the US, but, but then even that depends on kind of how you're wanting to quantify that, because probably relative to, you know, overall wealth, overall company formation, and may even be underrepresented. It just seems like there's a lot more there, but there's a lot more of everything there. So that's maybe not all that surprising. So, I mean, we try to, this is a bit glib, I suppose, but you know, we do try to travel as much as we can. We try to go to Bitcoin events in as many different places, and try to meet people that we we maybe wouldn't have had the opportunity to otherwise, but to then go back to the first question. It almost all is inbound, which is remarkably easy, given everyone is, or almost, I shouldn't say every single person, but almost everybody. I mean, especially actually now I think about it, companies that are looking to raise are gonna have some kind of natively online presence, and the the Eco, again, the ecosystem. I'm doing air quotes if you're only listening to it, because I'm not sure that that's an entirely well defined thing, but to the extent it is, it's small enough, still, this is actually kind of the key part of our pitch, that it's an interesting balance, right? It's, it's big enough to be worth investing in. But the the nature of the, you know, information asymmetry, and the kind of understanding I like describing this way as, like, an arbitrage and understanding that is the price gap is going to close at some point when everybody gets it, but they don't get it yet, and therefore it's small enough that you don't necessarily, I don't want to say, like, Oh, I know everybody, but everybody knows somebody, who knows somebody else, right? Like, there's very, very few degrees of separation between people who are trying to connect around this. So it's almost entirely inbound, and that's to date, at least, I think, has been relatively easy. It's an interesting question around if and when that will change, because I think it has to at some point. I think, if anything, it's baked into what I described as our outrageously bullish thesis that is gonna have to change at some point, like basically that changing is us being proven. Right? I mean, I think, I don't think we, we haven't really given that much explicit it's not like we have a plan for this. We haven't given that much explicit thought to it. But off the top of my head, probably the way we deal with that is just ensuring that we, whether it's us, like me doing this, for example, like us as individuals, but also the firm as a brand, is just as out there as we can possibly be. I'm not sure there's really much else you can you can hope for than that.

Lynne Bairstow: 57:59

Yeah, and I don't think we mentioned that axiom is based in UK.

Allen: 58:04

Well, no, not even really. It's you are. Well, yeah, exactly. I'm not sure that there even has a good answer that probably it's gonna sound slightly jokey, but it is basically true that we're based on the internet. It's a way, exactly as I just described. But like the ecosystem as a whole, we're based on the internet. So the other two GBS on fund two both live in the US, the the fund, all of the like, the legal domicile is in the US. But this, just because it's easier, there's not really a particular reason to do that, other than basically, network effects of capital markets there. There's like, legal systems well understood. Everybody likes it. Like, basically nobody. No matter where an LP is based in the world, they won't be surprised or object to the fund being based in the US. But it kind of doesn't matter, because, yeah, I live in the UK, they live in the US. We travel all over the place all the time with so much on the internet, really.

Lynne Bairstow: 58:56

Yeah, no, we understand that. I mean, we've had conversations with quite a few founders from Europe, and a lot in LATAM too, where we see opportunities. We're kind of missing Africa, which we really want to focus on in 2025 so because we see so much innovation happening there. So as you see companies that we should be talking to, please let us know.

Allen: 59:17

Yeah, I can think of I'll tell you some afterwards. Yeah, yeah. And

Lynne Bairstow: 59:20

so for a company that's looking to raise what would the process be? Do you have a contact form on the website? Or what's the

Allen: 59:27

they can we've a few reach out on the website. That's that's obviously useful if you know if that's like the only way, if they're not connected to us more personally. But for the most part, the connection usually does come around more personally, whether it's an introduction from another EC, another company that maybe we've already invested in and their founders know each other, sometimes people just reach out to me or the other GPS directly on Twitter, but yeah, there's a there's a forum in the site. I think that's probably the least common way that people reach out. But they.

Israel: 1:00:00

To your point. I mean, it is a particularly opportune moment in that way, because anyone who's working in this space in one way or another, whether you're investing, building, educating, whatever it may be, I mean, it you do get that sense of, still, how small the community is. So I guess to anyone listening my point there would be, just don't be shy, because you'd be surprised how, yeah, you can get, you know, relatively easily, well connected in this community. Still, yeah, and

Lynne Bairstow: 1:00:28

was something I wanted to bring up, too, because it is so small the VC community, and we believe it's really important for founders that are working in the Bitcoin space to be working with investors that are true partners, that understand the VC space. So you you have close relationships with the other VCs that are working in

Allen: 1:00:49

this. Everybody knows,

Lynne Bairstow: 1:00:51

yeah, yeah. So there's a lot of interplay between that too, where you a lot

Allen: 1:00:56

of interplay, a lot of lot of CO investing. I think that's probably to be expected. It's there's also an interesting question of at what point that that also has to change, because, again, it it'll maybe feel a bit sad that it's like, oh, we're not the only ones anymore, but it's also our thesis coming true. I'm sure, you know, I'm sure ego F would say this still more 10th everyone. I'm sure they all have some version of this thesis. I don't know exactly how they'd articulate it, but you know, the opportunity for all of us is that we do understand this. We are well connected enough to invest, you know, hopefully, well, reasonably well. But to the extent those investments bear fruit, it will require others catching up. It will require the the investor pool becoming a lot more diluted. And actually, I think this was about something I mentioned in a slightly different context before that the most interesting part of if and when that happens will be that we simply won't be Bitcoin investors anymore. That's, that's kind of the interesting thing that we've always anticipated will happen. We don't have a good sense of when that is. It's kind of similar with the internet thing. It's like the exact point at which it stops being true doesn't really matter. It's just that at some point it won't be true any longer, and it'd be great for us. The sooner it happens is better. I guess it'll just it's, it's hard to imagine, because it'll everything will be different than whatever that is.

Lynne Bairstow: 1:02:25

Yeah, Alan, you write, you've written a lot about capital markets, and obviously given this a lot of thought, as a as a VC investor, typically exits come from IPOs or sales or things like this. Do you see this changing at all under kind of a Bitcoin standard or a Bitcoin protocol, that I do

Allen: 1:02:46

most of the time this, I know this isn't what you're asking, just to kind of round it out a little bit. Most of the time that we address this, it's in contrast to crypto, because obviously the asset there is essentially a pump and dump. Most of the time it's like, Oh, we'll get liquidity. They all, they all say liquidity as if it's without really understanding what they're saying and what the implications are. Basically, for the most part, just being dumping on retail. They weren't going to get our exit by dumping this on retail. So obviously, I know that that's not what you mean, but it's a kind of round out, you know, where, where exits in the space can come from, and what, what people typically expect. Um, usually, once I've addressed that, if I'm, if I'm saying it to a prospect in that context, I'll, I'll then say something to the effect that I don't really see being that different from just kind of generalist tech investing. I mean, this is going. I mentioned this many, many answers ago that it was also the point was about tokens, then that, you know, we see ourselves as we see our skill set and our value add being specifically investing in companies where Bitcoin just happens to be the theme right, almost at a portfolio level, where would you expect the exes to come from? I think it would look pretty similar to, I guess, just any kind of SaaS software, whatever, early stage high growth tech investor, probably most will be either acquisitions or IPOs. Would be, my guess, the one maybe interesting exception to this, it would be as follows. And I to be clear, I have no idea. I'm not sure I even believe this. It's just like, I can see there being I can see this coming true. It wouldn't be that surprising. Maybe the big question mark is like, how often, like, what proportion of, not just our portfolio, but all of these kinds of companies, the incentives in working in the Bitcoin space are interestingly different in a way that I actually find kind of annoying to have to spell out. Because I don't even think it's so much that it's like it's good or new or whatever. Here it's more. You know, Fiat has corrupted the. Traditional, if you want to call it that, like Silicon Valley, essentially, US centric VC has been corrupted in such a way by Fiat that it's gone further and further in kind of a more insane direction. And all that's really happening in the Bitcoin space is that we're the focal point for returning to normal scheme, basically, but with with that in mind, the dynamic is very different in the sense of the focus being high returns and profitability, and ultimately, the point of both of those in the individual company context being acquiring as much Bitcoin as possible. And this links back to something you mentioned before. We didn't quite go in this. Quite go in this direction with it, but the opportunity cost being Bitcoin and or the if you want to think of it as like, their cost of capital being Bitcoin, which is basically the key reason that our cost at our as investors cost capital has to be Bitcoin, because we have to reflect this attitude coming from the underlying investment opportunities. And that just creates quite a different dynamic in terms of, you know, we may, in hindsight, look back on a lot of the you know, call it the 10s, the 2010s, of of traditional VC, the the race to either IPO or acquisition actually being its own kind of crypto ish, although, I mean, the crypto stuff is downstream of Fiat, rather than the other way around. But kind of crypto ish race to liquidity for entities that aren't actually sustainable in the first place, like I could see that being something that becomes more obvious. So the implication here may be that actually what we think of as being a kind of like a base rate of, okay, well, who gets acquired, who goes public? Maybe that's actually off. And a lot of the companies that we've invested in just become sustainable, right? They actually don't need to be acquired or to IPO in the way that traditional tech companies do. And so the ratio is just end up skewed. So I can totally see that happening. I have no idea what the you know the shift in ratios are. I think we'll probably be non zero. But beyond that, I don't know, at least not yet. We'll see you ask me again on my my fifth appearance in five years, and I'll tell you I was progressing with all the fun one companies.

Israel: 1:07:23

Yeah, well, we'll see. We'll see how it develops. But I mean, to your point, I do think that we're, we're actually just kind of Bitcoin is grounding us and moving us to just maybe the more what should be normal and logical path, right of company building and and returning capital. So, um, you know, we'll have to see how it all plays out. But there's certainly interesting and different dynamics just based on the pure incentives and and bitcoins natural appreciation. And then, I guess, as we begin to wrap up here, Alan, you know, for you, so you're our first guest for 2025 you know, price action aside, because there's lots of people you know, very excited on that and but you're looking at the technology and the companies building on this technology, any particular, I guess, expectations or things that are getting you excited about that lens of the space for this year. I don't

Allen: 1:08:17

want this answer to be too much of a downer, but I I do want to be honest as well, like, I don't want to be sort of, I don't want to come across as disingenuously excited that we we basically try quite hard to not get too excited by things that risk being fads. Basically, because even for even the investments that we make that are, you know, absolute cutting edge like, really the there's lots of different ways you can interpret it, like the the interest and the fun of doing the research in the first place is even understanding how they work. Like, that's maybe one perspective thinking about the economics of the investment. You're forcing yourself to think over a very long time horizon, which is, you know, very in and of itself, is kind of a very long time preference Bitcoin thing to do, even in those cases, I'd say, actually, especially in those cases, you you're not going to find out if you were right for a very, very long time. So you, can't afford to make the decision on the basis of hype. And I think even there, I know you weren't asking this, but I almost can't resist that. There's a there's a comparison to be made to crypto, where the incentives are exactly flipped, right? It's like, the the more short term the hype around something, the the more you, I guess maybe should care. You're looking at it from a from, like, a financial perspective, and that that is your window to cash out, which is just that incentive is just completely absent for us. So, so it's kind of important for us to not get caught up in whatever the latest fad or, I mean, I don't maybe calling a fad is a bit harsh. I. I don't even have anything in particular in mind, but the kind of things that we could very reasonably, a lot of people are reasonably excited about. You know, they don't need to be stupid. Is just that we, we nonetheless need to try to remain as grounded and calm about them as possible. I mean, I mentioned a few on on this, on this recording already, right, like, arc labs, the most, I think, is most recent investment we have actually made from fund two, yeah, we speak to those guys all the time, and it's like, we're not gonna know if this even works for like, never mind whether the business works. Like, we're not gonna know if the tech works for years. So, you know, we did. We didn't, for example, make that investment on the basis of, like, getting all jazzed about arc, and like, oh, arc is the coolest thing ever. Let's do it. Let's get in right now. Like, it was a lot more methodical than that. I hope, I think,

Lynne Bairstow: 1:10:51

Alan, you mentioned that you often meet people when you're out at conferences or events and things like this. Do you have anything coming up on the horizon where you'll be speaking, or

Allen: 1:11:02

this is, this is a weirdly quiet period. I think it's just maybe how the conference schedule works. I mean, I was there was loads very recently, like I was at Bitcoin Mena and Abu Dhabi. It was in lagano not too long before that. I'm actually not sure where the next one is. It might, it might even be, you know, the Bitcoin one, the Vegas one. But no, there's nothing. There's nothing in the immediately, near future, which is kind of nice. It means I just get to rest. All

Lynne Bairstow: 1:11:31

right. Well, we'll be linking your website. And I also do want to just focus on the book bitcoin is Venice and yeah. And one thing that I love about this is the profits of this book go to the Human Rights Foundation, which you're very connected with. So just appreciation for that, because I think they also do fantastic work and and any final comments that you close out with Alan,

Allen: 1:11:57

I mean, we covered a whole lot. We obviously focus mainly on the fun. So I guess I we were joking about this before for recording, right? I have to be careful in terms of, like regulatory concern around around marketing it, but would would gently encourage people to have a look at our site if this is of interest to them. And probably not able to say much beyond that.

Lynne Bairstow: 1:12:20

Certainly, I think the list of portfolio companies on your site speaks for itself. I mean, you've got just the who's

Allen: 1:12:27

who covered that very briefly, right? That even if you're not considering investing

Lynne Bairstow: 1:12:32

in addition of your writing your blog, I

Allen: 1:12:33

mean, if you work in a family office, then it's, then it gets more interesting. But, yeah, please, please, do have a look at the all the all the, all the companies that we have invested in, because we're, you know, we're, we put that on the site because we're proud of it. So hopefully people will will find that interesting too.

Israel: 1:12:47

That all being said, you know, thank you for the time, Alan, happy. Thank you guys, yeah, and we'll be in touch. Yeah. Thank you, Alan. You

Lynne Bairstow: 1:13:03

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