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Ashwini Anburajan: How cryptocurrency can help start-ups get investment capital
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We're living in a golden era of innovation, says entrepreneur Ashwini Anburajan -- but venture capital hasn't evolved to keep up, and start-ups aren't getting the funding they need to grow. In this quick talk, she shares the story of how her company became part of an entirely new way to raise capital, using the powers of cooperation and cryptocurrency.
Ashwini Anburajan - Entrepreneur, writer
Ashwini Anburajan using blockchain to democratize access to capital. Full bio
Ashwini Anburajan using blockchain to democratize access to capital. Full bio
Double-click the English transcript below to play the video.
00:13
When I was raising investment
for my startup,
for my startup,
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a venture capitalist said to me,
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"Ashwini, I think you're going to raise
a few million dollars.
a few million dollars.
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And your company --
it's going to sell for 50 to 70 million.
it's going to sell for 50 to 70 million.
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You're going to be really excited.
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Your early investors
are going to be really excited.
are going to be really excited.
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And I'm going to be really upset.
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So I'm not going to invest in this deal."
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I remember just being dumbstruck.
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Who would be unhappy
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with putting four or five
million dollars into a company
million dollars into a company
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and having it sell for 50 to 70 million?
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I was a first-time founder.
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I didn't have a wealthy network
of individuals to turn to for investment,
of individuals to turn to for investment,
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so I went to venture capitalists
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the most common form of investor
in a technology company.
in a technology company.
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But I'd never taken the time to understand
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what was motivating that VC to invest.
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I believe we're living
in a golden era of entrepreneurship.
in a golden era of entrepreneurship.
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There is more opportunity
to build companies than ever before.
to build companies than ever before.
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But the financial systems
designed to fund that innovation,
designed to fund that innovation,
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venture capital,
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they haven't evolved
in the past 20 to 30 years.
in the past 20 to 30 years.
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Venture capital was designed
to pour large sums of money
to pour large sums of money
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into a small number of companies
that can sell for over a billion dollars.
that can sell for over a billion dollars.
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It was not designed to sprinkle capital
across many companies
across many companies
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that have the potential to succeed
but for less, like my own.
but for less, like my own.
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That limits the number
of ideas that get funded,
of ideas that get funded,
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the number of companies that are created
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and who can actually receive
that funding to grow.
that funding to grow.
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And I think it inspires a tough question:
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What's our goal with entrepreneurship?
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If our goal is to create a tiny number
of billion-dollar companies,
of billion-dollar companies,
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let's stick with venture
capital, it's working.
capital, it's working.
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But if our goal is to inspire innovation
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and empower more people
to build companies of all sizes,
to build companies of all sizes,
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we need a new way to fund those ideas.
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We need a more flexible system
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that doesn't squeeze
entrepreneurs and investors
entrepreneurs and investors
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into one rigid financial outcome.
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We need to democratize access to capital.
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In the summer of 2017,
I went out to San Francisco,
I went out to San Francisco,
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to join a tech accelerator
with 30 other companies.
with 30 other companies.
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The accelerator was supposed to teach us
how to raise venture capital.
how to raise venture capital.
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But when I got out there,
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the startup community was buzzing
about ICOs, or Initial Coin Offerings.
about ICOs, or Initial Coin Offerings.
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For the first time, ICOs had raised
more money for young startups
more money for young startups
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than venture capital had.
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It was the first week of the program.
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Tequila Friday.
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And the founders couldn't stop talking.
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"I'm going to raise an ICO."
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"I'm going to raise an ICO."
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Until one guy goes,
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"How cool if we did this all together?
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We should do an ICO that combines
the value of all of our companies
the value of all of our companies
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and raise money as a group."
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At that point, I had to ask
the obvious question,
the obvious question,
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"Guys, what's an ICO?"
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ICOs were a way for young
companies to raise money
companies to raise money
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by issuing a digital currency
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tied to the value and services
that the company provides.
that the company provides.
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The currency acts similar
to shares in a company,
to shares in a company,
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like on the public stock market,
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increasing in value as it's traded online.
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Most important,
ICOs expanded the investor pool,
ICOs expanded the investor pool,
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from a few hundred venture capital firms
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to millions of everyday people,
excited to invest.
excited to invest.
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This market represented more money.
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It represented more investors.
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Which meant a greater
likelihood to get funded.
likelihood to get funded.
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I was sold.
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The idea, though, of doing it together
still seemed a little crazy.
still seemed a little crazy.
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Startups compete
with each other for investment,
with each other for investment,
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it takes hundreds of meetings
to get a check.
to get a check.
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That I would spend my precious 15 minutes
in front of an investor
in front of an investor
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talking not just about my own company,
but all the companies in the batch,
but all the companies in the batch,
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was unprecedented.
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But the idea caught on.
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And we decided to cooperate,
rather than compete.
rather than compete.
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Every company put 10 percent
of their equity into a communal pool
of their equity into a communal pool
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that we then split
into tradable cryptocurrency
into tradable cryptocurrency
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that investors could buy and sell.
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Six months and four law firms later --
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(Laughter)
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in January 2018,
we launched the very first ICO
we launched the very first ICO
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that represented the value
of nearly 30 companies
of nearly 30 companies
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and an entirely new way to raise capital.
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We got a lot of press.
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My favorite headline about us read,
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"VCs, read this and weep."
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(Laughter)
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Our fund was naturally more diverse.
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Twenty percent of the founders were women.
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Fifty percent were international.
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The investors were more excited, too.
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They had a chance to get better returns,
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because we took out
the middleman fees of venture capital.
the middleman fees of venture capital.
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And they could take their money
and reinvest it,
and reinvest it,
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potentially funding more new ideas faster.
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I believe this creates
a virtuous cycle of capital
a virtuous cycle of capital
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that allows many more
entrepreneurs to succeed.
entrepreneurs to succeed.
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Because access to capital
is access to opportunity.
is access to opportunity.
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And we have only just begun to imagine
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what democratizing
access to capital will do.
access to capital will do.
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I would have never thought
that my own search for funding
that my own search for funding
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would lead me to this stage,
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having helped nearly
30 companies get investment.
30 companies get investment.
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Imagine if other entrepreneurs tried
to invent new ways to access capital
to invent new ways to access capital
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rather than following
the traditional route.
the traditional route.
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It would change
what gets built, who builds it
what gets built, who builds it
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and the long-term impact on the economy.
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And I believe that's way more exciting
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than just trying to invest
in the next billion-dollar startup.
in the next billion-dollar startup.
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Thank you.
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06:33
(Applause)
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ABOUT THE SPEAKER
Ashwini Anburajan - Entrepreneur, writerAshwini Anburajan using blockchain to democratize access to capital.
Why you should listen
Ashwini Anburajan is a serial entrepreneur and writer living in New York. She's successfully bootstrapped ad tech startups -- Social Data Collective and OpenUp -- that have worked with major media companies and Fortune 500 brands. She's done original research into consumer behavior, featured multiple times on CNBC. Prior to that she worked for BuzzFeed, NBC News and consulted for large media companies. Anburajan helped lead the tokenization effort for 22X Fund and received an "Innovation in Venture Fundraising Award" from Microsoft for her work. She currently focuses on how blockchain can democratize access to capital and expand opportunity globally.
Ashwini Anburajan | Speaker | TED.com