073 - The Big Picture: Why Top VCs Are All-In on the Future of Sound Money

In this episode, we dive deep into the world of Bitcoin investing through exclusive insights from six leading venture capital fund partners. Discover why they're laser-focused on Bitcoin-only strategies, how the ecosystem is still in its infancy, and what a paradigm shift in VC thinking means for the future of finance. Packed with thought-provoking quotes and big-picture themes, this 22-minute episode explores the strategic advantages, long-term mindset, and infrastructure building that are positioning Bitcoin as the leader. Whether you're a seasoned Bitcoiner or new to the space, get ready for a fresh perspective on why it's still extraordinarily early—and incredibly exciting.

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Show Notes

Guests Featured

Alex Mann (Timechain/Concentric)
Allen Farrington (Axiom)
Jeff Booth (Ego Death Capital)
Grant Gilliam (Ten31)
David Foley (Bitcoin Opportunity Fund)
James Lavish (Bitcoin Opportunity Fund)
Oleg Mikhalsky (Fulgur Ventures)

Key Themes and Timestamps
We've structured this episode around six major themes emerging from our conversations, with natural transitions and expert quotes for an engaging listen. Total runtime: ~22 minutes.

00:00 - 06:25 Intro & Bitcoin-Only Focus as Strategic Advantage (
06:26 - 09:35 Early Stage of Ecosystem Development
09:36 - 12:07 Low Time Preference and Long-Term Partnership Approach
12:08 - 14:22 Bitcoin as Opportunity Cost Changes Investment Calculus
14:23 - 17:12 Infrastructure Building and Network Effects
17:13 - 20:09 Institutional Adoption and Financialization Wave
20:10 - 22:32 Conclusion: A Paradigm Shift in Venture Capital

Additional Resources

Check out the full conversations and funds mentioned in prior episodes of Build With Bitcoin with Time Chain/Concentric, Axiom, Ego Death Capital, Ten31, Bitcoin Opportunity Fund, and Fulgur Ventures.

Dive deeper into Bitcoin concepts like "sound money" and "low time preference" with recommended reads: The Bitcoin Standard by Saifedean Ammous and The Price of Tomorrow by Jeff Booth.

Subscribe for more episodes on Bitcoin's effects on emerging tech and finance. What topic should we cover next? Let us know in the comments!


References
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

I welcome to another episode of build with Bitcoin. We're co host Irene Munoz and Lynne Bairstow, and today we're doing a big picture episode based on 70 plus conversations we've had with both a combination of investors and startups to date, and today, we'd like to focus on some some common themes that Lynne and I have identified in this first year. So we have pulled together a compilation of the different conversations with six prominent Bitcoin venture capital fund partners, so we'll be getting right into it. Yes,

Lynne Bairstow: 0:42

and I think it's important to note that, you know, each of the conversations on its own is really interesting and enlightening, but as you and I started pulling these together, we've noticed that so many of the themes that our Bitcoin focus VCs were mentioning were commonalities, and so we thought it'd be helpful to kind of pull some of these together and take a look at what we've identifying, and what we're seeing is a continuing trend of how venture capital is really changing under a Bitcoin standard. So the first, the first thing that we identified was, and again, these are our VCs that are Bitcoin only focus. So they have made the decision that they wanted to spend their time and energy investing in companies that were building the infrastructure for Bitcoin to increase its use and adoption. There that's a very niche field. And you know, along with the challenges of raising capital, they really are feeling now that they're a little bit into it that having a Bitcoin only focus is a strategic advantage. Multiple fund partners emphasize their exclusive focus on Bitcoin over broader crypto certainly viewing this as a competitive advantage rather than a limitation. And it's not just a preference, it's a fundamental strategy based on the technical and philosophical differences, tries

Unknown: 2:00

to say Bitcoin is a neutral monetary protocol that cannot be manipulated or controlled by third parties, and that dramatically expands the addressable market, because now institutions and even nation states as well as individuals, can opt into that neutral monetary protocol Have confidence that a third party can't interfere with operations of that business, nation, state or individual. And that's, that's why it's so important, the fact that it's neutral. Ethereum just replaces the central bankers with the nerds. It's, it's, it's no different. You're just swapping out one elite for another. Rather than Bitcoin, there is no elite. And that gets to your point around these protocols being mutable. While Fiat is mutable, the monetary protocol can change. And they can create new units. They do that. They do they do that in Fiat. Bitcoin sort of solve all those issues, which is why much more interesting and exciting. And the other point I'd make, which, uh, gets into the weeds of investing in early stage companies a little bit, but I think is really important, and is not made clear by venture capitalists at all, because there's an incentive distortion issue with crypto versus Bitcoin, but it's the idea of the tokens. So when you invest in early stage companies, and when we would build early stage companies and invest in them. Now, through concentric what we're always looking for is some evidence of product market fit. And Product Market Fit means that the market values your products, and the most obvious way to tell that is, well, are they paying for it? Are people paying for it? Do they pay more for it over time as you launch more features? Do they tell their friends about it? Do they stay with the product over a reasonable amount time? What are the usage stats? All those sorts of things. So when you decide to invest money in an early stage company, you want to know that there's product market fit, because that's your signal that the product's ready to scale. So that if you pour sales and marketing dollars into the business. You're not just throwing them into a black hole right now, crypto completely obscures that signal from the market, which has already heard hard discern through the launch of tokens. So what they do is that they launch a product, then they'll save the community well, if you use this product or give you this token. So we've completely broken the feedback process between the product and the market, because you don't know if your users are using a product to get a token which they can then dump on some unsuspecting people later on, or could they actually like the thing in the first place. And that's why, in part, I think a lot of these crypto protocols end up going nowhere is because they have no idea if they're building a useful product or not, because a feedback loop between the market and the management team got

Allen: 4:53

I prefer thinking about it as you know, what are the actual what are the benefits of this, rather than what are the what. Laws 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 intention, we basically see Bitcoin as being such a fundamental technology that or fundamentally important technology that eventually it will be part of almost every business. 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 it. 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, all

Jeff: 6:01

of those other ones are going to zero. And this is not it might take some time, but they are all going to zero. So if your trade on Bitcoin is to make more money, so I understand why people do this, because they're either getting punished in an existing fiat system and they're trying to make more money quickly, and they're gambling because they're not deep enough on this.

Israel: 6:31

The second theme that we'll be exploring is the extremely early stage of the ecosystems development, despite what we may think with recent price action. So we Bitcoin has had a 15 year history of significant price appreciation. However, as you'll note in in the following clips, all of these investors consistently emphasize how early the ecosystem remains from a business development perspective and their lens. As an investor in early stage companies. We we

Grant: 7:01

probably have one of the most unique lenses into industry activity than anyone, because we're backing 36 companies. So we see, we see the data on the number of users each company has. And I think it would actually surprise people that it's probably not quite as large as people expect. And so, you know, what does that tell me? That tells me we're still really early, but that also gives me a lot of optimism that there is going to be a much larger impact and very explosive growth that's going to come out of out of these cohort of companies. It's

David: 7:43

1995 and it's AOL, and dial up modems are the winners right now. And the newspaper companies like the New York Times are making money on this thing called the internet selling advertisements. And you haven't really heard of amazon.com quite yet, or it's kind of emerging, I guess, at that point, as a book distributor, and you haven't really heard of Google yet, I'll never forget starting business school, and I'm like using Yahoo as a search engine, and the librarian says to me, you should look at this thing called Google. Over the

Alex: 8:12

last two years, I think the ecosystem has moved forward in an exponential fashion, but we're still extraordinarily early, so the maturity of the tech stack has come on leaps and bounds. Even over that two year period, there are multiple implementations and lightning wallets. You can have non custodial and well as custodial lightning. Lightning works pretty well. The payment success rate is, you know, the high 90s. But there are various places that accept lining, and that's already Bitcoin Max is basically

Oleg: 8:47

investing, yeah, roughly like 1012, like a dozen portfolio companies a year. So we've accommodated a portfolio of over, way over 5050, companies over this six plus almost seven years, and with 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, also first time founders, technology entrepreneurs. That's kind of like where focus strength comes, comes at its best to support the Bitcoin ecosystem.

Lynne Bairstow: 9:40

The third theme we identified was low time preference and long term partnership approach for our Bitcoin focus venture capital, Bitcoin investing represents a fundamental shift toward longer term thinking and a deeper founder relationships, contrasting sharply with the traditional VC short term focus.

Grant: 9:57

Everything that we've done and how we've. Are designed 1031, every little detail, what we named it, what our approach is, how we how we try to go about our business, is about alignment with Bitcoin. You know, I've what I said before. You know, a different, a different time when we were at the Bitcoin takeover was that we didn't name ourselves Andreessen Horowitz like it wasn't about any of us individually. That's usually what you see with most investment firms, is they, you know, they name it after themselves. Everything that we've done has been okay, well, how do we align with Bitcoin? How can we help push Bitcoin forward? Because we generally believe if we do that, then, you know, goodwill will accrue to us, good performance, good outcomes,

Jeff: 10:50

trying to think through what it would look like in a venture fund that had the exact opposite dynamic. How, how every single node in this network made every other node in this network stronger. And how would you how would you treat it entrepreneurs? If you knew it was going to be a lot longer path, and they would some of the first technology that they might build that would have a lot of value, would then go to zero in value. In Bitcoin terms, they would have to build more value for customers. And so that would have to take an entirely different approach. And thinking about the entrepreneur, you would have to care about them deeply, because you would be setting up a long term partnership to try to try to help them. So you have to So in every facet of the venture capital company, and what that looks like needs to be re engineered to be able to support to support that. So you can't block people out by by fiat money instruments. You can't put in this system. You have to be a good actor, so And on a sector, and it's hard to create some monopolies in this because you constantly under threat of providing more value.

Israel: 12:11

Another common theme is Bitcoin as an opportunity cost changes the investment calculus completely. So the appreciation of Bitcoin fundamentally changes how these investors think about capital allocation and company building, and this is creating a completely new framework for measuring success.

Grant: 12:29

Bitcoin is the opportunity cost. I mean, at the margin, the more you understand it, the more you realize that it's the opportunity cost. It's the opportunity cost for individuals, it's well, do I want to make this purchase, or do I want to, like, get a little bit more Bitcoin in it? The same line of thinking ultimately applies to companies who are billing in the space. It comes to investors who are looking to like, perhaps consider investing in a fund versus like, should they just buy some more Bitcoin? I think Bitcoin will ultimately shift the thinking in a very significant way of all of these groups. I've written about it. I wrote about it even a couple of years ago, when I started really thinking about and talking about this concept of SATs flows, which is sort of like the catchy thing that's sort of like the the analog to cash flows, if you assume that the

Jeff: 13:33

Bitcoin IRR for the last 14 years, 15 years, has been 45% IRR, and you know that it's repricing the existing system, instead of the other way around, instead of, if you invert the unit and you say, Bitcoin is repricing the world, my house is falling in Bitcoin terms, energy prices are falling in Bitcoin terms, all prices are falling in Bitcoin terms, essentially matching my thesis, rather than it's going up against Fiat dollars being de paced. Then you realize Bitcoins, IRR, for the next 15 years, is going to also be 45% as long as his decentralized and secure. So how could you beat that IRR? You just should hold Bitcoin. The only way to beat that IRR is to buy investing in Bitcoin companies that then then they're building profitability in Bitcoin terms.

Lynne Bairstow: 14:26

The fifth topic that we identified is infrastructure building and network effects. So the focus of these investors is on building the fundamental infrastructure that benefits the entire Bitcoin network, creating unique synergies between their portfolio companies.

Alex: 14:42

This is a platform that has the most economic potential because it's neutral, which means everybody can use it, and as an incentive to use it, everything else doesn't. And then you can you can see that in two ways from the market. One, there's a reason El Salvador adopted Bitcoin standard, not the Ethereum Standard. And so to my estimation is because it's neutral. And two, if you look at the Bitcoin market cap and then add up the market cap of the next 20 or 30 coins combine probably 50, and they're all heavily manipulated, you'll still get less than the market cap of Bitcoin. And Bitcoin has no foundation that CEO their marketing

Oleg: 15:21

department in terms of 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 Petters, there's a saying that 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. It's

Grant: 16:10

open, it's interoperable. It's basically like, you know, a lot of people, a lot of people in the venture world talk about investing in marketplace businesses. That's sort of like a big common theme that people got really excited about over the last 1020 years. And I think people aren't yet keyed into like, we're sort of investing in a marketplace industry where there's serious network effects that can come to the early leaders across all different kinds of categories, and that the companies in this industry, whether or not they are in similar or different sub verticals of the Bitcoin industry, compared to others, They can actually benefit and contribute to each other's success in a way that I don't think you've I have struggled to come up with any example that outside of Bitcoin that is similar.

Israel: 17:17

The sixth theme that we are highlighting in this series is institutional adoption and financialization. There has been a wave of financialization coming into the Bitcoin industry, and all of these funds acknowledge the significant shift towards institutional adoption while maintaining focus on the infrastructure building rather than just following the money.

James: 17:36

A sea change this year with the ETFs being approved. What the ETFs are so important is that these ETFs that are approved are no longer futures, you know, betting based just just cash settled these, these ETFs actually own the underlying Bitcoin. And so we're seeing institutions that are getting more and more interested in Bitcoin, and they're buying it. They're putting in their on their balance sheets. They're putting in their portfolios and so and that, to David and me, is wonderful, because it opens this, this reality that as more investors understand this, and as they allocate it to it as a separate allocation, because they understand that it will soon it has been highly correlated to the NASDAQ in times of stress, it's a risk on asset it has been. But as it matures and it and it and that, that correlation breaks, and it becomes uncorrelated to everything else in the market, including gold, then it becomes a separate asset class, and this is we're still early. We're so early. But as that happens, investors are looking for, okay, well, how do I take advantage of that next move?

Oleg: 18:48

And 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 Bitcoin as as an asset class, and what kind of platforms and technologies can enable, not only payments, but also institutional settlement and also creation of instruments and and platforms and solutions that would unlock value in Bitcoin as as an asset class. So we're kind of started to broaden the scopes from just payments.

Alex: 19:49

If you believe the case of Bitcoin is money, money is the largest market on the planet, you're attacking the biggest market there is in existence. And two, the amount of venture. Money flowing into crypto means that Bitcoin deals are unpriced. There's a there's a capital allocation issue that we could solve and make a really compelling business case out of

Lynne Bairstow: 20:14

In conclusion, what Israel and I are discovering is that we're we're witnessing a paradigm shift in venture capital. What these conversations are showing and revealing is a sophisticated understanding that Bitcoin is not just an asset, but a fundamental technology platform that will reshape how business and finance operates. The investors that we've identified today and taking clips from emphasize the patience, the technical depth and alignment with bitcoins core principles, while positioning for what they see in an inevitable mainstream adoption. I

Jeff: 20:46

realized that one day I woke up and I realized how much of a hypocrite I was, and I was on these boards. I was actually on some environmental tech boards, the all sorts of technology boards, and you knew I talked about it all the time, every T single advantage you created there had to be consumed with more money printing to keep and to keep the inflationary kind of Treadmill going. So you couldn't solve the problem from there. And so that was my impetus to want to move my time into spending my my best time, my most valuable time, helping other entrepreneurs create value within the ecosystem that I wanted to see

Unknown: 21:31

move forward

Israel: 21:35

their big picture view centers on building the infrastructure for a new financial system, rather than extracting short term gains for speculation, representing what may be the most significant shift in venture capital philosophy since the advent of the Internet. Lynne, this is an extremely exciting topic for the both of

Lynne Bairstow: 21:54

us. Yes, and stay tuned for the second part of this series on what we've identified in investor trends, where we'll get into a little bit more the tactical shifts in investment that we're seeing in the specific categories that are attractive to our Bitcoin investors.

Israel: 22:09

We hope you enjoyed the conversations with the spectacular guests, and as a reminder, this podcast is for educational purposes only. If you enjoy the content, please remember to also subscribe, share, leave us a comment. Our DMS are open. We welcome the feedback. You.