Taking a bet on Bitcoin
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We are Point Nine Capital, one of the first VCs to be headquartered in Berlin. We make investments in early-stage startups and are particularly passionate about SaaS companies and digital marketplaces. At the moment, we have over 40 companies from across Europe and North America in our portfolio, including Delivery Hero, CouchSurfing, Mention, DaWanda and DocPlanner, to name a few. Our investment team is made up of two partners, Pawel Chudzinski and Christoph Janz, and three associates. Together, we will be writing a regular column on startups and venture capital for WebMagazin.

We recently made our first foray into the sphere of bitcoin by investing in Berlin-based startup Bitbond, a marketplace for bitcoin-based peer-to-peer loans. Bitbond has a bold vision: To create a global lending marketplace, enabled by the revolutionary bitcoin technology. 

Here, I want to take the opportunity to discuss why we decided to invest in Bitbond and why we think the future looks bright for the company.

A truly international lending platform

Although peer-to-peer lending is an established and successful concept, and although lending is happening all over the world and is one of the oldest documented businesses out there, it is still to a very large extent a local business. By that, I mean German lenders tend to lend to German consumers or small businesses, US lenders to Americans, you get the picture. 

There are many reasons why this is the case, but one of the key reasons is that transaction costs for international money transfers are disproportionately high – especially for lower amounts. Transferring bitcoin is very cheap and fast, no matter where the sender and receiver are located. It’s Bitbond’s mission to make financing and investing globally accessible by leveraging bitcoin as a platform.

Meanwhile, the global lending market is massive. It is in the hundreds of billions per year and, as many startups have noticed, it is only waiting to get disrupted. On top of the “current” market size already being large, Bitbond can enable new lending markets in places where they may not exist today. The next point explains how.

Independent of banking infrastructure

Borrowing money typically requires a bank account. However, the majority of the world’s population does not have one. Therefore, most of the global population does not have access to credit. Thanks to bitcoin, anyone in the world can start borrowing credit on Bitbond without the usual prerequisite of having a bank account. 

Giving people the opportunity to invest their money can turn out to be just as important. Many people have to put their savings under their mattress where they get eaten up by inflation. For example, many African countries have inflation rates above 10% per annum and, without a bank account that returns you at least the inflation rate, it doesn’t really make sense to save.

The topic focuses on the keyword ‘financial inclusion’ – there are many initiatives around this, like this one. You can have a look at these maps to understand the challenge a bit more.

There is a chance that bitcoin and platforms such as Bitbond can be more effective at tackling these challenges than some of the global top-down programs. Admittedly, Bitbond users require access to the internet, however there are currently a number of tech companies – including Facebook and Google – that are working on increasing access to the internet globally.

Growing opportunities for bitcoin

While cryptocurrencies such as bitcoin are still in the early stages of development, there is a chance that they will become more prevalent and have significant impact on the world of finance. Bitbond is well positioned to benefit from positive developments in this field and play a significant role in them, primarily as a lending platform, but potentially by enabling other financial services on top of the bitcoin/cryptocurrency infrastructure.

For us, Bitbond represents a perfect early-stage investment opportunity. It had some initial success, it has a great team, it is a marketplace, it still entails significant risks and unknowns, but on the flip side has amazing potential if things go well. 

 

Bitcoin image via Shutterstock 

 

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