052 - Bitcoin's Big Bet: Revolutionizing Finance with Oleg from Fulgur Ventures

In this episode, we explore the evolving landscape of Bitcoin investment and infrastructure with Oleg Mikhalsky, co-managing partner at Fulgur Ventures. The conversation delves into Oleg's journey into Bitcoin, the challenges faced in venture capital, and the future of Bitcoin as an asset class.

We discuss the innovations in Bitcoin payments, the impact of Bitcoin on traditional finance, and the strategies employed by Fulgur Ventures to support early-stage founders.

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Chapters
00:00 Introduction
04:19 Oleg's Journey into Bitcoin
07:46 Founding Fulgur Ventures
09:36 Fundraising Challenges in 2018
12:05 Contrarian Approach to Bitcoin Investment
14:14 Learning from Other Blockchain Technologies
18:48 Evolution of Bitcoin Technology
21:08 Reflections on Bitcoin's Growth
24:17 The Future of Payments with Bitcoin
27:15 Bitcoin as an Asset Class
31:27 Institutional Adoption of Bitcoin
34:18 Remaking Financial Markets with Bitcoin
38:53 The Role of Liquidity in Bitcoin Adoption
41:37 Fulgur Ventures: Investing in Bitcoin Startups
44:24 Navigating Growth Stage Investments
48:45 Emerging Markets and Bitcoin Adoption
52:42 Asset Management in the Bitcoin Era
57:18 Exit Strategies for Bitcoin Companies

References
https://fulgur.ventures/

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

Oleg: 0:00

We're still committed to supporting the founders from, like, the very, very stage, basically, like also first time founders, technology entrepreneurs. That's where fugar strength comes, comes at its best to support the Bitcoin ecosystem.

Israel: 0:21

How do you think about investing in infrastructure for Bitcoin and related technologies? Hear from one of the world's leading venture firms focused on early stage Bitcoin startups. Fulgur. Join us as we have a fascinating conversation with Oleg, managing partner on this topic. As a reminder, this podcast is for educational purposes only. If you enjoy the content, please remember to like, follow or drop us a comment, as this all hopes us greatly. Lynne and Israel are partners at Bair advisors, where they employ their strong network of Venture Capital Partners and startups to connect investors with unique opportunities within the Bitcoin innovation space. Alongside this, they support founders with their strategic growth and fundraising goals. Visit our website's advisory section to learn more. Welcome to build with Bitcoin. I'm co host irael Munoz joined with co host Lynne Bairstow. Today we welcome Oleg, co managing partner at Fulgur ventures. Oleg, thank you so much for coming on today. We're really looking forward to the conversation.

Oleg: 1:17

Yeah, well, guys, thank you so much for having me, and like, the pleasure is all mine. Thank you for for taking the time to arrange this.

Lynne Bairstow: 1:25

Fulgur is one of the oldest, or one of the original venture capital funds that's purely focused on the Bitcoin space and really supporting you've got an incredible portfolio of companies that you've been supporting. And before we get into that, though, like we always love to start with a little bit about your background and how you personally became introduced to Bitcoin and why you feel it's so important that you wanted to devote a fund to investing in it. So can you share a little bit about your backstory? Yeah, well, thanks for your kind words.

Oleg: 1:57

We at Fulgur, we really strive to to support the legal system as much as we can. Since about 2020, 18 and I, I started to, it's interesting enough I start to learn about, not about Bitcoin, but about the liking network. So that's like, how I came into, into the Bitcoin space, not as like anything related to lightning or investing or trading, but just driven by curiosity in in Bitcoin scaling technology. I heard about Lynne network in 2017 from someone who was working at lightning labs, and we kind of like started to interact, and I started to learn what what the technology was was supposed to be able to do, and since I've been like a technology entrepreneur for like couple of decades, I kind of like developed this way of Looking into the next frontier of technology, like recognizing early technology trends, especially in in like software infrastructure, that's pretty much what I've been doing, like most of my life, in in the software space. And I was really captivated by by the potential of lightning as as a scaling way for for Bitcoin, and for Bitcoin to become this neutral platform and enabling settlement of monetary value. So I've been learning about lightning since since then, and it's like a never has been a never, never ending journey to to stop learning. But it was driven by by curiosity in in technology, and by my desire and urge to to figure out, what's the next big technology disruption wave. I wouldn't imagine that will become like so disruptive, touching, like regulatory, financial, like monetary aspects. I was first approaching it purely from, like infrastructure, technology point of view. But here you go. So now it's so many things to learn about, not only technology, but about finance and and everything attached.

Lynne Bairstow: 4:19

Yeah, that's super interesting, because I think so many people come into Bitcoin and look at it like store of value, monetary, but you really must have identified its its medium of exchange, and just being able to create a different financial rails system from a tech base. So that's that was your perspective going in, was more the tech side and monetary exchange than store value. Yeah. And to make things like even, even more complicated, here are, like, stable coins on lightning potentially coming. So you can, you can have, like, exactly as you were saying. You can have a technology and a platform to.

Oleg: 5:00

Uh, to facilitate exchange of monetary value, but not even like, potentially denominated in Bitcoin only, but also denominated in like, for example, like in in Fiat terms or or or in something else when you can have tokens enabled over like in network, or also tokens that already are possible to be issued on the liquid network for for example, which is like the other approach to to scaling Bitcoin as as lead to and and the side chain type of approach,

Lynne Bairstow: 5:35

and then taking it from how you were introduced to lightning to starting Fulgur ventures, What was that journey like? How did you decide to start a venture fund to invest in these companies, which isn't normally a path people take immediately into supporting the companies versus investing in the asset itself? Yeah. So again, I was, like, primarily driven by curiosity and in technology and like, from the entrepreneurship like the main so the person that that I met, he eventually

Oleg: 6:12

wanted to start his own startup, and I was already familiar with Helping founders to get early stage funding to kind of become, sort of like a member, like a mentor. I already did my own angel investing, to a certain degree, of doing it successfully and not successfully. So I had some patterns that I could recognize, what would make my use of time and work best for for any particular like idea or startup. So we eventually became an angel investor in in that startup, and started to like network with others in the space, and started to network with other VCs in the space. And we saw that there were just not so many venture capital firms looking at at Bitcoin as a technology platform, and that lightning in particular, there was just only, only a few. So we got really curious about that. And we started thinking that maybe to get the results that like would outperform like the others results, you probably need to focus on doing something that other people are not doing. And so we just decided to have to set up a fund with a very kind of contrarian venture capitalist type of bet. So instead of diversifying across scaling approaches, across blockchains or across a wider spectrum of technology domains. We we decided to be very concentrated on on Bitcoin adoption and Bitcoin scaling. And yeah, we've been like following that North Star, that thesis, pretty much all, all the time, with, like, very, very rare and few exceptions that we still believe could be adding value to the Bitcoin and Bitcoin scaling narrative. So, yeah, that was it like a contrarian approach to build something that not really a lot of people were like interested in building and to potentially become one of one of the pioneers, and in like with this approach, in in the venture capital space, all that, it sounds like you had very high conviction on that contrarian approach that you mentioned. And I think it'll bear fruit. It's already bearing fruits, right and and I think we'll start to see a lot more successful exits in the industry very soon. But, you know, I want to go back to 2018

Israel: 8:49

that you mentioned is when Folger Folgers origins were, I mean, we were in 2018 going through kind of the bubble burst. So I'm wondering how that LP fundraising experience was for you. I mean, there were, you know, counted on one hand, if any at all others. I mean, maybe 1031, I'm not sure exactly how many at the time were focused on Bitcoin venture capital, but certainly, very, very few. How were those conversations for raising LP capital for your first fund? I mean, what was that approach? And what were you hearing from investors then, and how has that evolved throughout the years you you're raising a good point. So we kind of almost like missed all the hype and craziness of 2017 and things were becoming a little bit more settled down. I mean, I've been always following a few people in my life that I met professionally, and I trusted their their opinions on the broader things in in the world, and

Oleg: 9:56

that that's how I actually learned more about. Bitcoin in a moral, substantial way, as I also approach things from basically fundamentals, like engineering fundamentals, and my previous angel investing experience taught me that it's just better to invest in what you really know how it works. So I had to spend some time on Andrea santonopoulos courses, on other courses, getting a Bitcoin certified, professional certification, just really understanding how Bitcoin works, how Bitcoin scaling works, and how mining works, and it all kind of made sense. Made sense to me from fundamental engineering principles, that with this type of engineer approach, you can build a system that can scale and that can enable, like, broader adoption. There is one of these, like engineering principles, remember by name who created it, but you can, you can Google it. So systems that are designed in a simple way, they're like much, they have much better chances to scale and outperform systems that are designed originally in a complex way. So having like this, say, like third, third opinion on, like, how you approach engineering systems and like scaling systems in general, and I've seen this, like work out, like in a few like, other places in life, so I think it was a good, well founded conviction on just focusing on Bitcoin, and we, we didn't, and we typically don't raise from from the public. So it's basically funds from people who believe in in the Bitcoin ecosystem, and who are entrepreneurs and who also understand what it means to to build on on Bitcoin. So we didn't have to go through through this kind of like exercise to to explain what we have been just like learning ourselves, and I think it made our life, our life very easy. Yeah, that's that's interesting. But I mean, around the same time too, even as a technologist, there are a lot of other blockchains, you know, web, three applications, tokens that were emerging in in that time frame, too, and a lot of VC money was, was kind of more attracted to that realm. You were very convicted on Bitcoin, lightning, this particular protocol. How did you approach or did you look at all at some of the other solutions? I know you said the simplicity of bitcoins technology protocol was very attractive to you, compared to like Ethereum, which has become more and more complex over time. But how did you take a look at those other protocols? Did you look at them at all? Or did you stay solely focused on Bitcoin, because you felt you found your north star between Bitcoin and lightning and just it, you know, kind of put to the side everything else. But really curious about how, as a VC, you segregated the Bitcoin only focus, compared to other blockchains and quote, unquote web, three crypto projects. So there's maybe a few things that we we always kept on the radar, and we were always very, very mindful about scaling better and having broader adoption. So learning from other blockchains is a really important part of of the exercise. But it just there's so many things going on there, even in the new kind of newish Bitcoin layer tools. So it's just impossible to follow everything that is that is happening. But there is, there is a lot of interesting things in, in how things evolve around the other blockchains that just give food, food for thought. It's it's so easy to find the person that you would kind of like trust, and you would quickly get a summary of, like, a gist of what does that thing, like ZK rollups do, or what does that other thing does, so that you can quickly learn from it. So it's all easy, but learning by comparison also gives very good ground for for learning. And you can learn a lot from Ethereum journey, from the journey between like the DAO hack and the bybit hack. And

Israel: 18:58

we really focus on on Bitcoin, lightning, liquid and and the space that is directly building on, on bitcoins culture. It's interesting. All like I, I was reminded with what you mentioned from the Silicon Valley learnings from a few years back around the same time period, 2018 I was, I was working at a at a big Silicon Valley accelerator and VC fund, traditional tech. And I remember thinking at the time a little bit of what you mentioned. I mean, I didn't like what I saw in the sense of what the industry had evolved into, this kind of blanket approach, a lot of malinvesting, and it seems like a lot of math gymnastics to just grow at all costs and get exits. And, you know, put the unicorn stars on your on your fund. It truly does feel like Bitcoin venture capital is bringing venture capital back to its its its origins and its true purpose, right? Of being low time preference, a long term view. And and Bitcoin, I think, is grounding us. There's just so so many layers to it. But as as far as the technologies, because we have seen Bitcoin evolve a lot since 2018 Alex, so you've been, you've been active in the Bitcoin venture capital space for around seven years now, and since then, we have we've had taproot lightning, other layer twos. We've seen Wall Street begin to merge into the space. We have a lot of things going on around financialization of Bitcoin, which I know Fulgur is also very involved with. Can you, can you share with us a little bit of how your thesis from 2018 has evolved to now regarding the technology behind the Bitcoin protocol? Yeah,

Oleg: 20:56

it's, it's a very deep, deep question for like, a lot of like self self reflection. We We usually like self reflect, like every year in the beginning of the year, and this year is just like, been totally crazy in the in the anticipation of, like, the bull run, and with all the regulatory changes all over the world, and especially driven by by the new administration in the United States, states. So we, we're the product market fit, of like an engineering technology and the problem that it can solve. And the problem is facilitation of faster and cheaper payments. I mean, it's, it's like, if you think of like Jeff Bezos, there's a saying that like how he built Amazon. So he built Amazon because, fundamentally, consumers want faster delivery and cheaper products. And that was like the core product offering of Amazon. So you just like, get, get what you want faster and faster and cheaper. And if you apply the same to to payments, it's like, completely universal and global, like payments drive, drive value across across the world, in all, all sectors of of economy, there are different types of payments. There was large payments, cross net payments, consumer, peer to peer, play payments, business to business payments, or there's a lot of payments, and maybe Lightning Network in particular can be better at solving very specific payments that, for example, like Visa and MasterCard are not really if you, if you see where, where the web payment experience has evolved, where you have so many different ways and so many different startups offering some kind of payment facilitation, they're just becoming over complicated. And when you, when you're being asked to pay $1 for, like, a newspaper subscription per month, and you're trying to do it from a phone. So you kind of get to a place where you start noticing that there is a huge potential in just payment innovation. And we are not even talking about machine to machine payments, like micro payments within like messengers, but in general, the payment narrative is such that easier in terms of like tax exposure going like, in and out of of an asset where there is a potential like taxable event. So we still believe like the like stable coin on lightning is kind of like one of the killer features that that can unlock massive potential in global commerce payments for digital content, like digital native payments, like, for example, in like 2017 2018 we did a lot of like brainstorming, where would this, like lightning, micro payments could go? And clearly, like gaming and digital content was on our radar. And what we're seeing now is one of the most interesting companies that are able to successfully monetize Lightning Network. They are actually for payments. They are actually in the gaming space, in the content avoidably more complicated, because there is a lot of legal mode around how content rights are centralized and distributed, which is not so ripe for technology disruption, but digital payments, digital native payments, in in games or like in social media. So we, we clearly see this, this happening. But as we, as we learned more, and as Bitcoin became more and more recognized as an asset class and entered the institutional investor space, especially some acceleration following ETF launches, and now there is even more acceleration with Bitcoin as a treasury being considered by private companies, public companies, governments, Even the US government is thinking about something like that. So we started to think more and more of like Bitcoin as as an asset class, and what kind of platforms and technologies can enable, not only payments, but also have like sophisticated smart contracts, which you may or may not need all the time, so liquid as a settlement for and in general, like the problem of settlement in in the institutional finance, where you need to, like, broker and settle

Unknown: 29:16

different money markets, products, Treasury, T bills private debt. So all, all that is

Oleg: 29:28

a financial instrument that has its own like settlement mechanism that may have certain like deficiencies. Some of these deficiencies in settlement of this financial securities led to collapses, like, like, the mortgage crisis and and other defaults, because, like, there was a lot of like, in transparency, in in how, how the assets are, are being settled, and who, who owes what to whom, etc, etc. So that's like, an interesting area that we, probably even more of an imperative for further adoption of Bitcoin, is actually unlocking value of Bitcoin as an asset itself, meaning, like a productive value, which, like the first example, could be a Bitcoin collateralized loans. So now that there's so many people who have exposure to Bitcoin, some of them may not want to like sell it, triggering, like a tax event, but might want to, and might want to like, borrow against it. And you can borrow against houses, you can borrow against, like other types of collateral, which are like less liquid, which have different like supplement mechanisms that are less efficient than then you can have if you settle natively on Bitcoin. So unlocking productive value in in Bitcoin as an asset by, for example, enabling Bitcoin collateralized loans by enabling loans against on a Bitcoin based settlement network. So there's, like a really interesting opportunities that that we see are emerging as Bitcoin and restored adoption, and especially in institutional finance, but also with businesses

Israel: 31:27

build with Bitcoin. Is a proud affiliate partner of river, a Bitcoin only financial services company that I've personally been using for years. I really enjoy the strong focus they have on security and reliability, which ultimately leads to peace of mind. I know you. You're a big fan as well. Lynne, I am, I am. I feel so confident referring people to River. In addition to what you mentioned, also they get us based phone support, which I think for somebody who's less familiar with the space or used to personal service, is really helpful. In addition, they have a private client services division. So if you're looking to invest 100,000 or more, they have a special suite of services designed for you, whether you're a high net worth individual, a family office or trust. I also really appreciate the continued improvements they make in the back end, so that that reliability and security continues to be really apparent. They They additionally also have US dollar cash deposits paid out in Bitcoin. They have a yield product for that, which is an interesting alternative way of accumulating Bitcoin. Overall, fantastic suite of services. If you're interested in onboarding and opening up an account at River use partner.river.com/build,

Oleg: 32:36

with Bitcoin for personalized onboarding. Like another area of the spectrum is just using Bitcoin as a treasury. I mean that that has to do with with technology. Though you can like, you still need technology such as like custody, potentially custody based on like multi SIG, or even like a multi party custody, to to be able to also ensure that the Bitcoin that that you keep in the treasury, which may be even more important, for example, for public companies or for governments. And there is also a problem with with how to ensure Bitcoin, and there are interesting companies working on that already, that that we were following, and we're looking into so as Bitcoin adoption broads and enters like both like mainstream in consumer finance and also makes its inroads into the institutional finance, plenitude of options, where where to look at around where Bitcoin can bring value, both as an asset class, as a productive asset, and as a settlement layer, or like as a combination of settlement layers. You can even think of like a combination of liquid plus lightning plus traditional finance to solve many types of problems that exists in in today's global settlement network that are just not, especially speaking about, like traditional financial settlement networks, that are just not up to the speed with which the economy is is moving forward. So there's typically, there's everything is accelerating, and the economy is also accelerating. And for accelerated economy, you you can benefit from

Lynne Bairstow: 34:26

faster, yeah, faster and more robust payment rails for several so much there to unpack. I mean, you just gave about a dozen incredible opportunities. But I think it comes down to, I mean, just tying it back to where you first started with, with in comparison to Amazon, faster, cheaper, and as you look at CAP remaking capital markets, which is a theme that we also have talked to a number of companies that are just fascinating more in the in the European domain, that I think, like Stoker and what block stream is doing, and the. liquids, ability to to make financial markets more open, more global, operate on 24/7 how, just like when you, when you do your annual review, and you think about this, I mean, we're believers in the fact that the Bitcoin protocol can help remake financial markets and make them more global and and decentralized, away from the concentration that's been on Wall Street for years. What timeframe Do you think that will occur in? Or how do you view that on a big picture, and what kind of resistance Do you anticipate coming from some of the larger banks that are now, you know, now becoming,

Oleg: 35:42

you know, aware of what's what bitcoins potential is, and I'm sure you've seen their efforts to try and and kind of tap into this, maybe through other blockchains or whatever. But what do you what do you look at, at that trajectory you see all the companies that are building and advancing this technology. So will this be kind of parallel systems for a while, or do you feel that it will move toward disruption rather quickly? Yeah, I'm probably not, not best positioned to to answer this question, because I have no background in in institutional finance, but you gave some hint, hint in your like question, which I'm going to take advantage of and try to expand from there. So you mentioned like this, this other blockchains, and we clearly see that launch some pilot projects and get get, like their mind share into into the traditional finance and and we clearly see that this, this may be impeding, like Bitcoin entering the space just because you can only do as much as as you have, like resources for budget and attention and like the like all this, like plethora of other blockchains. With EVMS, they created also that you can use to, like, integrate, uh, by doing, like, simple work. Well, simple, it only like sounds simple, because, like, as soon as you, like, write smart smart contracts, you need, like, security audits, etc, etc, and you're gonna, like, really need to understand what's happening underneath, which may not be as simple as it sounds, but it gives all these blockchains like a simple Head Start which, which they have been successfully using to capture the mind share in in the institutional space. And this is clearly one of the factors that that Bitcoin technology providers,

Israel: 38:21

can potentially contribute to, like, delay of this, like adoption of new like settlement technologies is actually a lack of liquidity in in products that are being like, tokenized, that are being put on, like, say, like blockchain obviously, like we've we've seen now, like attempts to put like the most liquid products, such as like treasuries, in tokenized form. And this is like, very, very interesting. But there still needs to be, like a market of counterparties who are who are willing and able to to transact with this, with this types of like new, new assets. So it's, it's a little bit like bootstrapping, like two sides of of the market, and it's probably gonna, gonna take time, depending both on how easy the switch from

Oleg: 39:34

So, yeah, I don't have a good answer for this. I think these are interesting patterns to watch. So where, where the liquidity is going, and what kind of use cases can be. Can be unlocked. Can be unlocked. First one of the interesting use cases is, of course, borrowing against Bitcoin. So you, you're gonna want, want it to be very secure and very reliable with. to be able to protect both the interests of the lender and the interests of of the borrower, the original holder, holder of Bitcoin. So maybe this is like, kind of like a low hanging fruit for for innovation that we already see happening, we were following closely a number of startups who were involved in Bitcoin lending, either on the technology side or on like the whole like, kind of like as a solution provider. So maybe, more like traction will will be here first, and then maybe you can, like, land against, like, other assets that are tokenized and secured in in like, a similar way. So there's definitely going to be a learning curve. Yeah, I'm just not, not a threat by person to to really give like, my best guess on this. Yeah, we've certainly seen an uptick in the collateralized lending using, you know, Bitcoins, hard, hard money properties, just recently, right? Lynne, we, we, we've had an episode with a with a custodian collateralized lending model, with a non custodian collateralized lending model. I, you know, I fully agree, Oleg, there, that's probably the lowest hanging fruit of the next wave of of innovation, as far as Fulgur, bringing it back to Fulgur ventures itself. Oleg, can you give us a snapshot of Fulgur? How many companies you've invested in, how many funds you have, you know, kind of just as a venture fund, what it looks like, any metrics you can share with us? Yeah, I think most of it was, was recently published by the team that did report on Bitcoin venture capital. They, they gave some shout out to fulbr as being like one of the largest by by the number of portfolio companies. So we, we've been investing, yeah, roughly like 1012, like a dozen portfolio companies a year. So we've accumulated a portfolio of like over, like, way over 5050, companies over this like we've as companies in our portfolio grow, we gradually started to pay more attention to like, follow on and growth stage financing. So having started as like, super early stage, and we're still committed to supporting the founders from like, the very early stage, basically like, also first time founders, technology entrepreneurs, that's kind of like, where focus, kind of strength comes, comes at its best, to support the Bitcoin ecosystem as being from, from the software like and from technology entrepreneurship space, but also understanding Bitcoin as a phenomenon, and understanding like the basic Bitcoin primitives how it works. So we strive to support like early stage founders, as always, by supporting like hackathons and conferences where they typically meet and incubate Bitcoin entrepreneurs, the most prominent one now like having recently opened in Lugano, Switzerland, which is an interesting space from, like, a regulatory perspective, one of the countries to recognize Bitcoin, and yes, crypto, but also Bitcoin, like early on, having, like, very clear regulations and very entrepreneurship friendly ecosystem. So we will see more of this hubs opening like in the next years, that hopefully will help new entrepreneurs enter the space and incubate their ideas. But we also are paying more attention to supporting growth stage companies, because there are still not enough capital providers of like Silicon Valley type that is, that is not typical for for traditional venture capital, because in traditional venture capital, there used to be, like a misallocation, like, everybody wanted to invest, like in a pre IPO, like growth stage, but not really so much in early stage. And that that's like, probably one of the factors contributing to Silicon Valley, missing out on, on, on Bitcoin. Entrepreneurship as a venture capital phenomenon, because they just were not focused on on like detecting the next big, next big thing, the next big idea in the technology domain. So growth stage and also broaden our focus to from Lightning Network to the liquid network, and liquid network ecosystem and technology supporting Bitcoin collateralized loans custody. So these are, like the recent, I would say, additions to our thesis, which has always been sort of like an evergreen thesis. So we we raise and deploy capital as as as we go, focused on Bitcoin adoption, Bitcoin scalability, and now like Bitcoin We are currently involved also with a new series of funds, which is called, like the plan B. Plan B is actually the brand name of the Lugano like Bitcoin initiative originally conceived in in Lugano, in Switzerland, and that's where the first like Bitcoin working space came, came out, out of and out of that also came a series of both like early stage and growth funds focused on Bitcoin companies, liking network and including tokens on Lightning Network, companies including liquid network, including emerging adoption, like adoption in Central America, which is an interesting new region that we're paying a lot of attention to, especially thanks to the government of El Salvador, who is paving like the way, the way, the way for governments to embrace Bitcoin, the traditional financial narratives such as IMF, traditional like geopolitical narratives such as building relationships with United States and also building relationships with with Bitcoin ecosystem and and supporting the Bitcoin ecosystem. So, uh, emerging markets, uh, El Salvador, Central America, South America, Southeast Asia. It's also interesting addition looking into into Japan as well, which is like a very interesting, very closed market that totally requires dedicated,

Unknown: 47:30

dedicated effort, both like culturally, language wise and and like being present in in the local ecosystem. But it's a very big market that there is potential, that has potential to follow developments in the United States, that that, that is how typically, like we, as far as we are aware of the Japanese like dynamics, goes, just like following the United States in in some of the key aspects of, say, innovation. So, yeah, that's, that's kind of like the summary of the broadening, broadening scope. It's growth stage, it's emerging markets. It's assets on, on lightning and and liquid network. And they're, they're like their surrounding ecosystems, and it's enabling productive use of Bitcoin as an asset, and after that, also productive use of other assets that can be represented in tokenized form and settled using using Bitcoin technology, such as real financial assets could be like debt securities, other other sorts of things. We'll, we'll see what counts.

Lynne Bairstow: 48:45

Look, I mean, when you look at the big picture of venture capital, I mean, first of all, I couldn't agree with you more, coming from a VC background myself, about the misallocation and the growing misallocation with tokenization models for VC exit liquidity and whatnot. But as Bitcoin VC matures, or becomes, at least on the radar of financial institutions. I mean, I think those of you who have started this identifying the opportunity and just seeing the promise of this technology and invested in it. But as companies grow, they might need larger pools of money for growth. In some cases, we also see that having a Bitcoin Treasury might preclude a company from requiring the same amounts of money that traditional tech did. If they've invested their treasury in Bitcoin, they might have less dependency on VC. But you know, how do you see the space evolving? Do you see those of you who have have gotten an early start just raising larger funds. Ego Death also raised a growth fund on top of the early seed stage fund, and and probably will see a continuation that do you ever see traditional VC funds or other money coming into the space? And do you think that's not. Healthy for the space in terms of the ethos of the Bitcoin company, or, I mean, it for all of these companies and infrastructure Bitcoin to grow for an adoption? Will there be a filter for having true Bitcoin oriented VC thought process or bringing in other pools of money?

Unknown: 50:19

We've we've always strive to work together with with other VCs, and we, we clearly saw that there is, like only a handful of of Bitcoin focused VCs both being able to raise continuously capital and and to also deploy this capital thoughtfully in the Bitcoin startups, and you name the few of them. So we, we always enjoy working with ego death, with 1031 with still mark and lightning ventures and other VCs in in the space. And they have like, sort of like, become a filter of capital, I guess, by also taking the taking on their shoulders, like the hard like, part of raising, raising capital into into, into the venture capital space. There is also time chain and a few others that we are always happy to to work with and like as as we, we started as as a venture capital firm focused on on, on Bitcoin as a technology, when, when you start thinking of asset management in in a broader sense, like, how would you manage assets when somebody is looking for for exposure in into Bitcoin? So I think over time, it just like becomes kind of like, like a merged asset management function and for, for, for for asset management, you need to be a professional in in what you're doing. So it may be that there will be, like an emerging class of asset managers who were focused on on providing Bitcoin exposure to two different types of investors with different risk and and reward appetite and different different horizons. Like, for example, venture capital is, is only like one way of allocating capital with exposure to Bitcoin, which is illiquid, which is which has all, all the plus and minuses of like venture capital. But there is also Bitcoin accumulation, and you can accumulate Bitcoin in in a multitude of ways. You you can buy bitcoin and like smart small chunks or large chunks. You can do dollar cost averaging. You can store Bitcoin with a centralized custodian, with an insurance or in self custody or in a combination. So even just giving exposure to Bitcoin as an asset, it's kind of like becoming an art, because there is, like more technology and more and more approaches you can also invest in a fund that is kind of creating yield on Bitcoin. I'm not speaking about, like a questionable yield, where it's hard to answer, like, where exactly is this Bitcoin going and where the yield is coming from? So there could be, like, properly structured financial products that that can potentially create yield on Bitcoin in in a thoughtful way, even just like think of of a of a treasury, of a startup that becomes a profitable company. So if there is Bitcoin in the treasury, and the startup is profitable, and they are converting part of their profits into Bitcoin, and they are distributing it to the shareholders, it's almost like you're creating yield on Bitcoin, but, but there is no, nor, no kind of, like, No, there's nothing that you don't understand about it. So it's very clear there is no kind of questionable yield generation technology involved into this and and just like to, to finish in this, like asset management space. So accumulation of Bitcoin exposure and venture capital, which are kind of like both working well together, because they're a little bit like decorrelated in cycles you typically invest in startups, like on the opposite part of of the Bitcoin growth growth cycle. But there is also investment in the structured products that can try to outperform Bitcoin, or can give exposure to Bitcoin with limited limited downside risk and. Potentially like limited, limited upside as well. Where, where, where the downside protection and upside are managed by by, like, professional asset manager and so there, there is actually many ways to to think about capital allocation to Bitcoin, and we've only, like touched maybe a few, but you probably need, like an A class of asset managers who who understand Bitcoin, who understand the technology, who have access to the infrastructure, both on like the custody side and on trading side, and who are regulated in in a specific market where they would like to serve, serve the investors. And also you can invest the last, not to forget the last part, you can invest in, tokenize the assets that are on, on the on the Bitcoin, like on the Bitcoin technology. And there's a totally, like, totally new type of investable asset class that can be like ETFs or like public stock companies, but just traded on, on liquid network or something like this. That's again, a new type of infrastructure, new type of regulations to to enable this. It will probably, we think there is a potential for for an app, for a class of asset managers to emerge, but there's always potential for capital allocators to to join, like existing asset managers you named, like many of them, and they're like, all known in in the space, and they're like, potentially could, could be, could be more. So Asset Management is going to be an interesting space to to to watch. You

Lynne Bairstow: 56:49

know, I want to pull out something that you mentioned, that is something that Israel and I have thought about and talked about with some of our guests. But you mentioned Bitcoin companies that become profitable, that might start paying out some of their investors in Bitcoin from the Treasury. I mean, we really look at that. I mean, I'd like to ask you, how you think about exits. What is a successful exit strategy for your portfolio companies? Because, I mean, is there a possibility in this new world of Bitcoin based companies that, rather than IPO or exit via sale to a larger entity, perhaps traditional finance, that they become, they pay out Bitcoin. If Bitcoin is a scarce asset, and everybody starts chasing it, including sovereign treasury, countries and more corporations. You know, those who hold Bitcoin on their treasury. I mean, having a Bitcoin dividend or a payment could be a better form of an exit. I mean, I don't know if you've thought about that, or how you look at from fulgurs perspective, what would be a successful exit for your companies.

Unknown: 57:56

It's a very deep, deep question as well, but probably IPO is like a very, very easy kind of like to to try and expand from so, as we've touched with like Israel, there has been sort of like a capital misallocation and erosion of Like venture capital thesis in traditional Silicon Valley Way. And we've seen IPOs that are not like very successful. We've also seen crypto IPOs that are like, basically detrimental to do to the value of most of the shareholders. We've also like seen other like IPOs in the making. I don't want to mention any, but there's an interesting source that I read. It's called, like, the information. It's like one of this kind of, like Silicon Valley venture capital publication platforms that recently wrote up about a startup where, like, the founders, just like, cashed out, like, enormously on, on the pre, pre IPO race. So there was, like, so much demand to IPO for a particular thing that that that the founders were able to to to cash out, like an outrageous amount of amount of money. So there is, there's a lot of like strange narratives around the IPO. So I think where IPO would make sense for for Bitcoin is because it's, it's a stamp of approval. So there is, there is a rigorous diligence process, and there is regulators involved, and all the financials need to be audited, and there needs to be a recognized auditor, and the governance of the company needs to be up to a certain level. So just making a company like go go public is a tremendous amount of effort that would probably first pay off for for the Bitcoin space as as another stamp of approval. So now you can have like public company. Companies. There is a lot of transparency. There is also a broader access to capital. So we were speaking about venture capital, which, which, which may need to, kind of like grow and to raise more money to support companies in the growth stage. But you can raise different types of money. I'm not talking about MicroStrategy raising, which is also very interesting, but a very special type of, type of exercise, which, which also opens an interesting opportunities to raise, to raise money for well, they're not raising what I'm saying like, it's a great idea, but it's not raising money for, for expanding the company the business for, for growing the Bitcoin ecosystem. But you could do that also and use it for, for growing the company's business and and expanding the ecosystem, especially if you're doing it for a company that is that core business is actually building in the Bitcoin space and providing Bitcoin services. It's a tremendous learning exercise for everybody who is working on Bitcoin the strategy, or like the former MicroStrategy exercise, which teaches us a lot of work. What can be done when you're a public company. What are the limitations of raising and how you can couple it with Bitcoin to unlock a tremendous opportunity to raise capital. So imagine what it could look like if all this capital is productively used to develop the ecosystem, to hire safe sales people, to enter into institutional finance with a with a stamp of approval, like being a public company, it could be very interesting. And I think the exits like like, like this, that give a stamp of approval is is really, really interesting. Or the exits where, where a certain technology would become, like a backbone technology of over certain type of, like institutional, institutional business or, or it enter, it will enter into mainstream gaming, like with, with a triple A publishers, or, like the biggest brands in in The gaming space. So this, this kind of like, yeah, I would still say it like, it's more like, the value that's being created is, is stamp of approval and further, like ability to further scale, rather than, like, cashing out for for investors and founders. But obviously, like, there is, there's some sort of, like cash out, I guess, like at an exit, and that's just part of part of the game. But I think in in the short to mid term, this kind of, like stamp of approval type of exits is what is was really going to be interesting to watch, watch out for, and especially for sweet compares to, you know, like other blockchains, we'll see how it all kind of performs. Can be very, very interesting to watch.

Israel: 1:03:08

Yeah, and we are seeing the early signs of these stamps of approval. We had the first IPO for a Bitcoin only company this year fold, which is actually a portfolio company of fog. But, you know, this, this this conversation Oleg just is a reminder of how we're just only scratching the surface. I mean, you touched on so many different business models. You know, so so much potential for the reach of this technology. And earlier, your mention of Amazon reminds me of the quote from Jeff Bezos, where they were asking him about consumer behavior going into the future. And he and he mentions, well, I think it's easier to tell you what won't have changed 10 years from now, and that people will look for still cheaper products and faster delivery. And it, you know, kind of, it reminds me plugging that into Bitcoin, if, if you kind of juxtapose that and think what, what's pretty much a guarantee going into the future is people will be looking for more accessible and cheap financial services, good savings tools. And when, when you look at the addressable market of that, I mean, it's just so massive, right? And in I think this conversation goes to show how much innovation is still to come in the space. So we want to be respectful of your time, or like all that, to say that this, this conversation has been one of the, I think, the deepest that we've had. So, you know, really appreciate you coming on. Lynne. I don't know if there's any last questions or anything from your end. Well,

Lynne Bairstow: 1:04:56

I'll just make a comment. You know, we've been wanting to have oligon for quite a while. Aisle and, and I'm so happy that we're able to finally get you on the podcast. And I'm just going to warn you, we're going to try and book you again for like, six or eight months from now, because, because there's a, there's a very small universe of very quality investors that are supporting the Bitcoin infrastructure space and, and I think that we need to, you know, to really pay attention to the way that you think about things and, and the the other VCs that you mentioned that you working with, but, you know, this is really the driver of the future. I mean, you guys are seeing all of the companies that are evolving. You're supporting the ones where you see have the most potential that you know, really can, can help support the adoption and usage of Bitcoin and drive it in the correct way and and we really applaud you for the efforts that you're making. I mean, the conversation, you know, my mind is spinning, because I think you brought so many things to the table and things to think about in terms of, what are the opportunities for innovation to Israel's point where you can see that we're just scratching the very beginning. But I would like to just leave it to you, Oleg, just for some final comments in terms of you know where people can follow you if there are any opportunities, I know you mentioned that you don't generally raise from the public, but if there, you know how somebody might want to approach investing in the startup ecosystem, and then also if you'll be, if you'll be at any of the upcoming conferences, or speaking you and I were together speaking at plan B in El Salvador in a panel discussion. But where else might people find you and be able to follow what you and Fulgur are doing and thinking about,

Unknown: 1:06:41

yeah, I once again, like, really appreciate you making this. This happen was a real pleasure. And we, as you might have noticed, like, we're very bad on putting time into social media. So we do have, like, the website from 20, 2019 and you can still find it, and it will still be there in eight months, and like, I hope, in the next years, as well, as well as a Twitter and the LinkedIn. So we, we probably should, should do more to to keep them up to up to speed with everything, everything going on. But we are on all the basic, all the basic social media. And one I was thinking a little bit of like what Israel was just saying about about Amazon. Consumer behavior, he kind of, like managed to to frame it like, more accurately than than I did. Thank you, Israel. And yeah, I was thinking about this, like other thing that one of your colleagues from from the UK, it's one, one of the Bitcoin thought leaders, and I think a book writer mentioned in in their podcast, is bitcoin is about like freedom of expression and and money is also about freedom of expression, like you can express yourself with communication. And there is like certain like protection rights acts that that, that guarantee the rights for for communication, but expression with with money. It's also like another way of of expression that people naturally, naturally have. And on the consumer side, there is probably a lot that's going to depend on how, how people care about their their freedom of of expression, using both speech and also, also like monetary, monetary instrument and Bitcoin clearly has a lot to offer here. But again, it depends on what consumers like fundamentally, fundamentally demand. So that's, that's that's going to be like an interesting chapter about Bitcoin adoption and and consumers that we were probably going to see unfolding like in in in the coming years, when more and more people get get exposure to Bitcoin, what they're gonna be wanting to actually do with it. And, yeah, we, we remain at your disposal. And thank you again very much for for arranging this was a real pleasure.

Lynne Bairstow: 1:09:37

Pleasure was ours. Thank you. Yeah, absolutely. Thanks a lot. Oleg, thanks for listening to the build with Bitcoin podcast. If you found benefit in what you heard in this episode, we'd truly appreciate it. If you would like share or leave a comment on whichever platform you're listening. As this helps others find us, which is especially important for a new podcast, and as a reminder, our content is intended for educational and entertainment purposes only, and is not to be considered investment advice or recommendation to invest in any company or asset mentioned in the podcast. Build with Bitcoin is a proud affiliate partner of river, a full service 100% reserve custody, Bitcoin only financial services company for your next Bitcoin purchase, use our exclusive link partner.river.com/build, with Bitcoin. Thank you sincerely for being a part of the build with Bitcoin community.