A dive into Haun Ventures with the agency’s first deal lead, Sam Rosenblum – TechCrunch

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Sam Rosenblum by no means imagined he would work at a crypto-focused funding agency. A Southern California native who spent a “giant portion of my life outside within the solar, taking part in sports activities and hanging out with pals,” crypto was not technically a factor till he was in school at UCLA. Stints on the DOJ and as an analyst for a enterprise consulting agency adopted, nevertheless it was a subsequent 12 months spent with Visa that opened his eyes to the burgeoning world of digital belongings — a lot in order that when Coinbase started a recruiting push to drag in Rosenblum and a few of his colleagues in 2014, two years after Coinbase was based, he jumped on the alternative.

It was a very good transfer. Coinbase, then a 30-person firm, grew quick within the 5 years that Rosenblum stayed till he determined to affix another Coinbase alums on the crypto fund Polychain Capital. Certainly, armed with a community of contacts from Coinbase and Polychain, Rosenblum was making ready to lift his personal fund final 12 months when former Andreessen Horowitz VC Katie Haun reached out to see if he would possibly be part of her new agency as a substitute.

Now Rosenblum, together with Chris Ahn, who beforehand spent 4 years with Index Ventures, are serving to Haun make investments the $1.5 billion in capital commitments that her agency — not too long ago named Haun Ventures — garnered earlier this 12 months. To get a greater sense of how the younger agency works and the way it is considering investing right into a market proper now the place each shares and crypto are being dumped, we jumped on a Zoom with Rosenblum, who lives in Solar Valley, Idaho, late final week. Excerpts of that chat comply with, edited for size and readability.

TC: Let’s begin by backing up a bit. Andreessen Horowitz is an investor in Polychain Capital, whose founder was the primary worker of Coinbase. Katie is on the board of Coinbase. She additionally spent a decade as a federal prosecutor on the DOJ, the place you spent your first 12 months out of school. With all of those potential intersections, when did you two first cross paths?

SR: Katie and I first met in 2017 when she joined the Coinbase board. We didn’t preserve in significantly shut contact after I left Coinbase, however in November of final 12 months, I really got down to begin my very own enterprise fund, and so I used to be engaged on that and, course, Katie and I’ve fairly just a few pals in widespread, and so a few of these individuals I had been type of simply prepping and brainstorming with when it comes to how you can pitch to fund earlier than going out to fundraise. And I feel Katie caught wind that I used to be in technique of that after which reached reached out to me, informed me what she was desirous about, and I ended up flying out to Menlo Park for a pair days and we jammed collectively and walked a bunch of laps across the Stanford dish and determined it was a very good time to workforce up. The remaining is latest historical past.

You had been the primary deal lead employed by Katie. What number of staff are there at this level?

We’re now 12 individuals whole — the deal workforce is at present three individuals — and I feel we’ll most likely preserve the entire agency fairly lean and nimble. We’ll add a few extra of us to the deal workforce over the course of this 12 months however actually not rather more than that. I feel you may think about Haun Ventures as a 15- to 20-person agency at regular state.

That is most likely a dumb, however to be clear, this can be a conventional fund you’re deploying, in that that is precise {dollars} that can be referred to as down. None of those commitments had been in crypto or something like that.

The technique is clearly very crypto ahead however the construction is sort of vanilla. We’re a typical enterprise construction. We ended up deciding to shut on $1.5 billion whole throughout two funds. One car is our $500 million early-stage fund, and the opposite is our $1 billion acceleration fund for barely later-stage stuff.

It’s on the market that Marc Andreessen and Chris Dixon are restricted companions. Are there different people or companies that you may point out which have backed the agency?

Most of our LPs are establishments, from sovereign wealth funds to college endowments to pension plans to hospital programs. And we even have some particular person LPs — largely simply pals of Katie or myself, pals of the agency, so to talk.

When it comes to backing later-stage outfits, I don’t see the standard nomenclature of “Collection A” or “B” or “C” assigned to numerous these web3 offers and tasks. What constitutes later-stage, within the agency’s view?

The important thing distinction is simply actually staged within the type of: how far alongside the venture is in its improvement, what kind of utilization there’s. The thought of stage possibly appears a bit bit totally different than in conventional tech enterprise. Traditionally, in the event you’re a tech enterprise play, you’re one thing the place a giant end result could be to have an organization you invested in [become a] billion- or multibillion-dollar firm, and that’s true of sure corporations within the crypto house that larger up within the tech stack. However as you get decrease and decrease, you’re really speaking about these networks, together with Layer One protocols used for quite a lot of issues, and these networks, once you suppose of what’s a home-run end result, reasonably than pondering within the billions of {dollars}, you’re really pondering within the trillions of {dollars}. So once we consider how you can outline stage for one thing in that class, [we’re taking into account the question of] what’s the terminal dimension ought to this develop into a giant winner? So these are a number of the issues that we have a look at.

What number of totally different tokens have you ever acquired or offers have you ever accomplished to date?

I’d say a dozen or so offers at this level that span quite a lot of totally different deal deal constructions or asset varieties.

Two corporations you’ve funded have introduced their rounds not too long ago, together with Zora, a two-year-old, L.A.- based mostly Ethereum-based market for getting, promoting and curating NFTs that raised $50 million in new funding. Was that an acceleration deal or an early stage deal?

The workforce at Zora has been round for a few years, they usually’ve had a few fairly essential pivots alongside the way in which. To your level, it’s one the place it’s type of humorous to outline what kind of spherical it’s. You possibly can’t actually give it a typical classification of Collection A, Collection B, no matter. It finally ends up simply being a bit bit extra loosely outlined. They’ve bought some fairly thrilling issues to announce within the close to future in regards to the path that they’re headed in, so I gained’t spoil their information for them, however they’re off to the races in a extremely cool means.

Had they raised funding beforehand?

Yeah, they’ve raised, and I don’t know off the highest of my head what they’ve publicly stated about who they’ve raised from, nevertheless it’s an important group on the cap desk or traders that we work with lots and know properly.

Are these traders the way you discovered the corporate?

I’ve really recognized the Zora co-founders since 2018 or so. The entire co-founding workforce got here from Coinbase.

What about Spotlight, a 14-month-old Bay Space-based outfit that claims it lets creators design and mint NFTs and create a neighborhood round them. What drew you to this specific firm?

The Spotlight workforce is equally spectacular, coming from the web2 world — coming locations from Sq. (now Block) and DoorDash and different well-designed web2 services. In the end what they need us to do is got down to allow people who find themselves not already tremendous deep crypto engineers to allow communities with web3 instruments, so it’s a no-code platform for doing simply that.

Based mostly on this very restricted knowledge pattern, it sounds such as you’re monitoring numerous web2 operators and founders who’re transferring into this web3 world. Is that correct?

We’re equally open to backing founders who’ve labored in crypto for a decade, or possibly they’ve labored in crypto for a 12 months. What we actually care about is their dedication to what they’re constructing and their distinctive insights and intuitions round precisely why they need to construct it.

There may be a lot whitespace in web3 that I wonder if you concentrate on conflicts of curiosity in the identical means that traders have traditionally. I’m seeing numerous NFT minting kind corporations, for instance. Would you fund one other?

That’s a extremely essential query for crypto enterprise particularly. The final web2 panorama is one wherein a founder or a startup has a really clear set of premises when it comes to what they’re constructing on prime of, issues like TCP/IP, HTTP, SMTP — the dozen or so web protocols that all of us use day-after-day.

The distinctive factor that [founders are] getting down to do in crypto is the inverse of that, the place each single layer of the tech stack is evolving in parallel. Even probably the most fundamental components to the crypto tech stack — the concept of decentralized consensus — there’s this fixed evolution of kinds of decentralized consensus or consensus mechanisms.

So when you’ve gotten really each constructing block evolving, that tends to lend itself to founders and startups that most likely should, if not pivot, at the least bear in mind numerous new data over the course of their startup neighborhood. . .

We do take the concept of conflicts severely and we do need to ensure that we’re being actually good companions to our portfolio founders, so we might not need to put that in jeopardy. However definitely, what we’ve already seen is founders possibly begin two totally different startups, beginning in an identical neighborhood of an concept that find yourself, at instances, even constructing at totally different layers of the crypto tech stack. So there’s fairly a little bit of flexibility within the path issues have gone.

Speaking about NFTs, one of many final offers Katie did for Andreessen Horowitz earlier than leaving the agency was the NFT music rights startup Royal, which raised $55 million led by a16z again in November. Does Haun Ventures have a stake in that firm?

You’re precisely proper. That was a16z-led deal, the place Katie joined the board as a part of that deal. Katie continues to be on the board of Royal for that, however it’s not a Haun Ventures portfolio firm in the mean time.

Does that make it trickier so that you can put money into one other NFT music rights startup or would you doubtlessly simply bounce right into a later spherical for a similar firm?

It’s a very good query. I feel all choices are nonetheless open there. Digitally managed royalties and on-chain rights are tremendous fascinating and likewise a extremely difficult class. It’s very complicated house. So I’d presume that there’ll be fairly just a few actually proficient founders constructing in that normal class and possibly experimenting with numerous totally different approaches when it comes to the markets they’re attempting to serve and the way they serve them. So it’s definitely a market we’ll proceed to try.

Talking of Katie’s board seats, she’s additionally on the board of OpenSea, which brings to thoughts a dialog I had not too long ago with Sarah Tavel of Benchmark, who stated web3 corporations like OpenSea and Sorare — which Benchmark has backed — are actually centralized corporations which are constructed on a decentralized infrastructure and had been by no means actually meant to be fully decentralized entities. Agree? Disagree?

On the core of the idea of web3 is that this considered decentralization, however I feel lots of people possibly have been much less considerate the place that finally ends up mattering and being essential. For my part, centralized platforms will and may exist for sure makes use of. The essential factor in relation to decentralization within the crypto tech stack is that platforms would not have the power to to “lock in” their customers.

To not choose on anybody web2 firm, however you consider a few of these social networks the place each motion you’ve taken — each each picture you’ve uploaded, your literal social graph, your community of family and friends,  is all preserved and managed by a central gatekeeper, and there’s no approach to exit that data. The thought in crypto is, positive, you may have a centralized platform the place you develop that content material, however for one thing like your social graph, you may really depart the platform and take your social graph with you as a result of these items are all being constructed on an underlying open infrastructure.

The crypto collapse of the final week or two has worn out $400 billion in market worth from cryptocurrencies, together with Bitcoin and Ethereum. What are your ideas on what’s occurring on the market proper now? It looks like a very good time to have $1.5 billion at your disposal with every part on sale.

I’ve been working on this house since 2014. I joined Coinbase in an identical second in time to the place we’re at the moment, this week, on this present market cycle, the place you most likely have a three-years-or-so slog ahead of getting to be heads down and constructing and possibly not [seeing] the euphoria that we’ve felt over the past 12 months or so within the house.

Crypto bear markets may be actually arduous on individuals for lots of causes, financially, psychologically, emotionally. However traditionally, the silver lining is that numerous the perfect tasks in crypto are born in moments like this. Going again a few cycles, you had Bitcoin’s rise in late 2013, adopted very shortly thereafter by type of a crash in early 2014. I feel the Ethereum pre-sale was in June of 2014, and [that rise and fall] performed out once more within the 2017 and 2018 cycle, the place we had peak euphoria adopted by a crash. Then in 2018, some wonderful tasks like [the crypto exchange] Uniswap and [the decentralized margin trading platform] dYdX had been based proper in that interval. So I feel fairly actually in possibly the following a number of weeks to months, you’re most likely going to have some new startups and new tasks created in crypto that, three or 4 years from now, we’ll look again out and go ‘Wow, that was born out of out of this final crypto winter.’

Is Haun Ventures structured as a registered funding advisor?

We aren’t. We’re a vanilla, exempt enterprise fund.

I questioned since you and Katie clearly know Coinbase very properly. Some would possibly argue that Coinbase is on sale proper now. Investor Cathie Wooden simply spent $3 million on shares. Given that you’ve some huge cash at your disposal, I’m curious in the event you would or have taken stakes in any publicly traded corporations which have gotten hammered these days — Coinbase or different.

I’m personally a holder of COIN and I overlook who tweeted this yesterday or the day earlier than, however somebody wrote that it appeared like a generational shopping for alternative for regular individuals who don’t essentially have entry to wonderful early-stage offers to have the ability to put money into Coinbase at lower than two instances its Collection C valuation in 2018. I are likely to agree with that personally. I’m a private holder of Coinbase inventory and definitely could be bullish that this week is a fairly particular shopping for alternative. However clearly individuals ought to must do the analysis they should do to make unbiased monetary choices. And as a fund, we’re actually not targeted on the general public fairness markets.

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