I had a chance to interview Marc Bernegger at BlockShow Europe 2018 that was held in Berlin last week. Bernegger is a Swiss entrepreneur, investor and one of ‘100 most successful people in Switzerland according to the leading German business magazine BILANZ. Marc shared his thoughts on the current state and the future of the blockchain market and his investing strategy.
M. G.: Generally speaking, there is not a big difference between traditional investing and investing in blockchain companies. It’s essential that you have the right people behind each company, so the key driver of success is a team that is really passionate about their product and wants to change the world with their product. And that has nothing to do with crypto, fintech or anything else. The secret of successful companies is often simply having smart people behind the scenes.
I’m personally trying to see if the product has a business case and if the team is not just trying to make a large sum of money and disappear. And then I try to verify the business case and see which needs in the market it solves. The people on the team should be incredibly ambitious and really want to solve problems and change the world. Then the company should also have a certain global footprint.
It is true that sometimes it is harder to pick projects in the blockchain industry since there are many products doing the same things. In addition, there is a lot of speculation on the investment side. So I would rather go into equity than just into tokens.
Of course, the current market situation is not sustainable — the same level of speculation and fraud happened during the dotcom bubble.
Probably less than 5% of companies around today will survive. Less than 10% of the dotcom bubble of companies survived. So the “bubble” this time has nothing to do with crypto per se — every time you have new technology that has the potential to disrupt existing value makers and power structures, the same scenario occurs. There were 700 search engines before Google reigned supreme and most of them disappeared. So this “bubble” is just a normal development. People need to learn from their mistakes, and they will.
I think in the end, a few companies in the industry will be very rich but most will just lose money. As an entrepreneur, I want to support long term sustainable projects; everything else is just speculation.
This year there is already a consolidation happening in the crypto market, and that people started realizing how they lose money on the ICOs. After a certain time their investments went to zero — having that experience helps investors become mature.
I think we will see more established companies using tools like an ICO as an alternative to raising money. The whole smart money approach is becoming more and more relevant. It’s much better to raise some money and then handpick people that you want to have on board.
Thus ICOs will not disappear, perhaps we will just call them differently. Ultimately, there are a few reasons as to why the traditional way of raising money is not efficient, so this tokenized model, especially when there is a tokenized case behind an ICO, will make sense.
For blockchain entrepreneurs, I would recommend focusing more on the product, the team and the problem they solve in lieu of funding. At the moment, 90% of resources are going into the latter. But the more you can show that you are able to create value, the more investors are interested in putting money into your product. The same goes with marketing — sometimes it is possible to have a great idea or technology that conquers the market without doing lots of publicity by showcasing at ICO events and platforms. I personally prefer this approach: just build the real business.