Why family businesses need not fear the blockchain

There is no denying that blockchain is the wave of the future, but for some it is currently too nebulous and intangible to consider investing heavily in.

After the crypto crash earlier this year, the crypto market has seen colossal corrections and some significant recoveries. This uncertainty is perhaps understandably set to continue, but blockchain VC fund Mocha Ventures believes these corrections are healthy for the industry as a whole, providing huge opportunities for savvy investors to enter the digital asset market at the right time with the right partner.

The team behind Mocha Ventures is on a mission to assure that “Blockchain networks and digital assets are landmark innovations that will fundamentally reshape the global financial system, and investors should be able to participate in this transformation”.

By working with early-stage blockchain projects and offering professional data-driven solutions for digital asset investors, they present a new way of understanding and investing in the space.

Ahead of collaboration with Campden wealth at The 24th European Family Office Forum in London on November 1 and 2, Mocha Ventures’ general partners discuss how they are capturing some of the most innovative technologies in the blockchain revolution and why family offices should get involved…

You focus on early stage blockchain companies with global growth potential. How do you identify these companies and what are the criteria they must meet?
Renato Brioni: As VCs, in 2020 we transitioned from standard investments to the blockchain because we saw the remarkable opportunities after one of our funds made huge exit returns. We felt that something was happening there.

We decided not to get involved with bitcoins and cryptocurrencies because they are completely unpredictable. So we thought, why aren’t we different? During the summer 2022 crypto crash, we analyzed more than 200 crypto companies, and discovered patterns that revealed to us what separates the winners from the losers. Of these firms, 100 simply disappeared, 60 survived and 40 flourished.

So we went through a deep dive analysis and asked what it was about the 40 companies that made them so successful. As a result, we defined seven different pillars of success that we now use in our due diligence – founder, team, go-to-market, technology, utility, innovation and community. This scorecard allows us to grade the seven things that the successful companies have really done, and helps us define the potential return on our investment. We like proper due diligence, we like things to be put in place.

What would you recommend to family offices that want to get into blockchain venture capital but don’t know where to start?
Joseph Little:One of the hardest things family offices face when they first hear about blockchain is understanding what it means – really, what’s the difference between blockchain and my kid’s World Of Warcraft account?

Our primary goal is to, as a fund, make money, but our secondary goal is to grow this community. Just as we have seen how the internet evolved and became a part of all our lives, we are seeing the same thing happen with blockchain and how it will integrate with our technology.

So to help individuals, in addition to helping with additional monetization, we really believe in bringing physical assets into the digital asset class, such as using NFTs to facilitate real estate transactions. We believe that assets that a consumer, business or investor can actually see and use are critical to crypto and blockchain adoption – not just essential, but an inevitability.

Renato Brioni: If you look at family offices investing directly in digital assets, typically led by the younger generation, our data shows that the allocation is currently about 2% of the family office’s total assets. The problem there is that if you look globally, there’s currently not a lot of regulation around the world, apart from Europe and Dubai at this point. So when we spoke to family offices and tier-one VCs from Australia, Singapore and Dubai, they said that what they lack are three things: “We need a crypto fund that is regulated. We want to sleep at night knowing that the people we work with don’t disappear overnight. And we want people to navigate us through uncharted waters of digital assets.’

So when we help family offices, we sit with them and explain to them that this can be a risky business if you don’t know what you’re doing. They need to work with someone they can trust, who is regulated and who has a past history of success.

At the end of the day, we invest in blockchain and crypto projects that are; solve real business problems, have existing users and paying customers, can survive and thrive in bear market and explode in bull market.

In Campden Wealth’s North American Family Office Report 2021, we found that the use of digital assets is on the rise, with 31% of North American family offices already investing in cryptocurrency. However, there is still a reluctance to invest in digital, why is this?
Renato Brioni: There is perception and there is reality. The perception is that there are a whole bunch of people out there who don’t want to invest in this field because they find it risky and they don’t understand it. If you don’t understand it, you don’t touch it.

Family Office managers may find it difficult to trust younger family members – the generation that more readily understands the benefits of digital assets.

When someone teaches you to drive, they also have control over the pedals. We let you drive, but we can also take control and guide you. Once you see some returns and see that the returns are realistic, people start to change their minds.

Joseph Little:The reality is that it will take time to change hearts and minds, but people will. When web 1.0 came out in the 1990s and early 2000s, nobody was going to sign a document and send it over email. But then towards the end of web 2.0, DocuSign came along and we realized that this is a non-fungible resource, a real use case for technology. Technology has now adapted or evolved – we now use DocuSign every day, it’s even allowed in court. Blockchain is just the next iteration, it is a continuation of the internet we know and use. Where we were able to secure documents, we are now able to secure a person’s privacy, and those people now also have power and control over that information.

Mocha Ventures are main partners at Campden Wealth’s 24th European Family Office Forum in London on 1 and 2 November. For further information and registration, click here.