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

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, however it was a subsequent 12 months spent with Visa that opened his eyes to the burgeoning world of digital property — 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 at the chance.

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

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 — lately named Haun Ventures — garnered earlier this 12 months. To get a greater sense of how the younger agency works and the way it’s excited about investing right into a market right away 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 notably shut contact after I left Coinbase, however in November of final 12 months, I truly set out to begin my very own enterprise fund, and so I used to be engaged on that and, course, Katie and I even have fairly a number of pals in widespread, and so a few of these individuals I had been type of simply prepping and brainstorming with by way of the right way to pitch to fund earlier than going out to fundraise. And I believe Katie caught wind that I used to be in strategy of that after which reached reached out to me, instructed me what she was excited 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 superb time to workforce up. The remainder is latest historical past.

You have 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 believe 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 believe you’ll be able to think about Haun Ventures as a 15- to 20-person agency at regular state.

This might be a dumb, however to be clear, that is a conventional fund you’re deploying, in that that is precise {dollars} that will probably be referred to as down. None of those commitments have 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 corporations that you would be able to 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 methods. And we even have some particular person LPs — principally simply pals of Katie or myself, pals of the agency, so to talk.

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

The important thing distinction is simply actually staged in the shape of: how far alongside the challenge is in its improvement, what form of utilization there may be. The thought of stage perhaps appears to be like just a little bit totally different than in conventional tech enterprise. Traditionally, should you’re taking a look at a tech enterprise play, you’re taking a look at one thing the place a giant consequence could be to have an organization you invested in [become a] billion- or multibillion-dollar firm, and that’s true of sure firms within the crypto house that greater up within the tech stack. However as you get decrease and decrease, you’re truly speaking about these networks, together with Layer One protocols used for quite a lot of issues, and these networks, whenever you suppose of what’s a home-run consequence, moderately than considering within the billions of {dollars}, you’re truly considering within the trillions of {dollars}. So when we predict of the right way to outline stage for one thing in that class, [we’re taking into account the question of] what’s the terminal measurement ought to this develop into a giant winner? So these are a few of the issues that we have a look at.

How many various tokens have you ever acquired or offers have you ever achieved to date?

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

Two firms you’ve funded have introduced their rounds lately, together with Zora, a two-year-old, L.A.- based mostly Ethereum-based market for purchasing, promoting and curating NFTs that raised $50 million in latest 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 style of spherical it’s. You’ll be able to’t actually give it a typical classification of Collection A, Collection B, no matter. It finally ends up simply being just a little bit extra loosely outlined. They’ve bought some fairly thrilling issues to announce within the close to future concerning 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 very cool manner.

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, however it’s an excellent group on the cap desk or buyers that we work with loads and know properly.

Are these buyers the way you discovered the corporate?

I’ve truly 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 group 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 about out to allow individuals who will not be already tremendous deep crypto engineers to allow communities with web3 instruments, so it’s a no-code platform for doing simply that.

Primarily based on this very restricted information pattern, it appears like you’re monitoring plenty of 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 perhaps 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’s a lot whitespace in web3 that I ponder whether you consider conflicts of curiosity in the identical manner that buyers have traditionally. I’m seeing plenty of NFT minting sort firms, for instance. Would you fund one other?

That’s a very essential query for crypto enterprise particularly. The overall web2 panorama is one during which a founder or a startup has a really clear set of premises by way of 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 by day.

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

So when you could have actually each constructing block evolving, that tends to lend itself to founders and startups that most likely could have to, if not pivot, not less than take note of plenty of latest data over the course of their startup group. . .

We do take the thought of conflicts severely and we do need to be sure that that we’re being actually good companions to our portfolio founders, so we might not need to put that in jeopardy. However actually, what we’ve already seen is founders perhaps 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 in every of the 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 remains to be on the board of Royal for that, however it shouldn’t be a Haun Ventures portfolio firm in the meanwhile.

Does that make it trickier for you to take a position in one other NFT music rights startup or would you probably simply leap right into a later spherical for a similar firm?

It’s a superb query. I believe all choices are nonetheless open there. Digitally managed royalties and on-chain rights are tremendous fascinating and likewise a very difficult class. It’s very complicated house. So I might presume that there’ll be fairly a number of actually proficient founders constructing in that normal class and doubtless experimenting with numerous totally different approaches by way of the markets they’re attempting to serve and the way they serve them. So it’s actually a market we are going to 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 lately with Sarah Tavel of Benchmark, who stated web3 firms like OpenSea and Sorare — which Benchmark has backed — are actually centralized firms which can be constructed on a decentralized infrastructure and have been by no means actually meant to be utterly decentralized entities. Agree? Disagree?

On the core of the idea of web3 is that this considered decentralization, however I believe plenty of individuals perhaps have been much less considerate the place that finally ends up mattering and being essential. In my opinion, centralized platforms will and will exist for sure makes use of. The essential factor on the subject of decentralization within the crypto tech stack is that platforms would not have the power to to “lock in” their customers.

Not to select on anybody web2 firm, however you think that of 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, certain, you’ll be able to have a centralized platform the place you develop that content material, however for one thing like your social graph, you’ll be able to truly depart the platform and take your social graph with you as a result of this stuff 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 right away? It looks as if a superb time to have $1.5 billion at your disposal with every thing 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 this time, 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 perhaps not [seeing] the euphoria that we’ve felt over the past 12 months or so within the house.

Crypto bear markets might be actually arduous on individuals for plenty of causes, financially, psychologically, emotionally. However traditionally, the silver lining is that plenty of the most effective 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 believe 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 superb tasks like [the crypto exchange] Uniswap and [the decentralized margin trading platform] dYdX have been based proper in that interval. So I believe fairly actually in perhaps the subsequent a number of weeks to months, you’re most likely going to have some latest startups and latest tasks created in crypto that, three or 4 years from now, we are going to 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 will not be. We’re a vanilla, exempt enterprise fund.

I questioned since you and Katie clearly know Coinbase thoroughly. Some may argue that Coinbase is on sale right away. Investor Cathie Wooden simply spent $3 million on shares. On condition that you could have plenty of cash at your disposal, I’m curious should you would or have taken stakes in any publicly traded firms which have gotten hammered recently — Coinbase or different.

I’m personally a holder of COIN and I neglect 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 superb early-stage offers to have the option to take a position in Coinbase at lower than two instances its Collection C valuation in 2018. I are inclined 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 need to do the analysis they should do to make unbiased monetary choices. And as a fund, we’re actually not centered on the general public fairness markets.

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