The crypto industry is increasingly growing and attracting users from all over the world, in Uganda, it is one to watch out as the new generation of investors are embracing it. This is why an investment firm called Chapter One which just raised a $50 million fund is worth your time.
The fund’s goal is to help startups bridge the gap between so-called Web2 (which offers easy-to-use centralized services like Google and Facebook) and the emerging world of Web3, whose applications are often still clunky and hard to use, or require tech-savvy. It is led by former executives from Tinder, Stripe, and Instagram—three companies known for excellent design—and its goal is to help startups bridge the gap between so-called Web2 (which offers easy-to-use centralized services)
The fast-growing crypto wallet Metamask, which features a primitive UI that irritates many users, exemplifies Web3’s design challenge. Chapter One co-founder Jeff Morris Jr. delicately described the MetaMask experience as “not ideal” in an interview with Decrypt, and said that Web3 platforms in general need to become easier to use.
“There’s a lot of things that worked in Web2 that could be incorporated into Web3,” said Morris, former VP of Product at Tinder.
Chapter One has prior experience in the crypto world having invested in the seed rounds of over a dozen businesses, including Compound and Dapper Labs, who have gone on to become industry giants. The business has made profitable investments on Lolli, a Bitcoin rewards scheme, and other companies that provide crypto features without requiring any technical knowledge.
Chapter One’s new fund is backed by Venture Capital firms such as Sequoia and Lightspeed, as well as significant blockchain players such as Chris Dixon, Marc Andreessen, and Reddit founder Alexis Ohanian. The firm will bet big on the idea of making cryptocurrency more accessible.
In effect, this means the company will set aside $10 million for initiatives involving the Ethereum Name Service (ENS), which converts large strings of characters required for wallet addresses into simple terms like “georgewashington.eth.” According to Morris, the next phase of cryptography will be defined by the creation of a “identification layer” that will “humanize” and “personalize” the technology.
According to Morris, part of this process would entail sponsoring initiatives that identify solutions to overcome another key barrier to crypto adoption: the prohibitively high “gas” fees that come with many Ethereum transactions.
A new type of Venture Capital firm.
Chapter One argues that the growing crypto sector necessitates a new form of venture capital firm than the traditional ones that have shaped Silicon Valley over the last two decades.
The most valuable thing a Venture Capital firm can offer a startup in its portfolio is money, access to a network of other companies and well-connected executives, according to the traditional model. Those ties are frequently crucial for a company to obtain visibility or find a customer base for its goods.
Project founders in the developing crypto business, on the other hand, are more interested in receiving practical, hands-on coaching than in gaining access to Silicon Valley networks.
Chapter One intends to hire people who can spend time at the startups it backs, assisting founders with challenges such as user experience and design.
Morris also feels that funding patterns for crypto businesses differ from those for traditional firms. Instead of five or six rounds in each, with VC firms fighting for the lead investor, Morris claims that crypto startups want fewer rounds with money coming from a diverse set of investors.
“Founders in crypto prefer more participants so if you get a large ownership share of a company, something’s gone wrong,” he says.
This is one of the main reasons why Chapter One intends to focus on early-stage crypto companies, signing cheques ranging from $500,000 to $2 million. “We’re beginning from the ground up for what a VC fund would look like if you were developing for Web 3,” Morris explained.