While recently in Berlin meet­ing with investors we were engaged in an inter­est­ing dis­cus­sion about Ini­tial Coin Offer­ings (ICOs).  Our con­ver­sa­tional coun­ter­party, an early-stage pri­vate investor, was advo­cat­ing how great it would be if all invest­ments had trade­able, blockchain-based tokens, and there­fore the annoy­ing prob­lem with illiq­uid­ity could be solved. We under­stand the sen­ti­ment behind this think­ing, but believe it focuses too nar­rowly on avoid­ing the neg­a­tive effects of a lack of trust and not ade­quately on the pos­i­tive effects of the pres­ence of trust.

TRUST AND COMMITMENT ARE CRITICAL SUCCESS FACTORS

An impor­tant con­cept behind blockchain / decen­tral­ized ledgers is that one can elim­i­nate the need for direct coun­ter­party trust in envi­ron­ments where trust can be dif­fi­cult to estab­lish. For exam­ple, estab­lish­ing trust between par­ties that may have never inter­acted with each other prior to con­sum­mat­ing a trans­ac­tion and when there is a low like­li­hood of repeat trans­ac­tions between the par­ties. There are sit­u­a­tions where the abil­ity to remove the need for trust from the equa­tion can be extremely ben­e­fi­cial. How­ever, in our métier of ven­ture cap­i­tal and pri­vate equity, we believe that trust and com­mit­ment are actu­ally crit­i­cal suc­cess fac­tors that can­not be out­sourced to a face­less, decen­tral­ized network.

At bm‑t we have recently recom­mit­ted our­selves to work­ing dili­gently to be the part­ner-of-choice for our investee-part­ners. This part­ner­ship mind­set orig­i­nates from a deep belief that when entre­pre­neurs and investors work coop­er­a­tively and openly with a com­mon goal that out­stand­ing results can stem from this deep trust and mutual understanding.

WE AT BM|T DO NOT INVEST IN BUSINESS PLANS; WE INVEST IN ENTREPRENEURS.

In essence, we aim to find busi­ness­peo­ple who we trust will find a way to cre­ate value even when plan A, B, or C does not mate­ri­al­ize as orig­i­nally envi­sioned. We strongly believe that entre­pre­neurs should also cul­ti­vate and value this trust, which is accom­pa­nied by many pos­i­tive attrib­utes for peo­ple and com­pa­nies with big ambi­tions – such as patience, coop­er­a­tion, com­mit­ment, and a co-war­rior mentality.

Indeed, in our view, entre­pre­neurs should be very wary of the siren songs of ICOs, instant liq­uid­ity, and not hav­ing to deal directly with pesky investors, as those investors are exactly the ones who are most likely to sup­port com­pa­nies when changes to the busi­ness plan become nec­es­sary or in moments when a cat­e­gory falls out of favor with the crowd.

We at bm|t are work­ing con­cert­edly to cre­ate an envi­ron­ment of mutual trust by com­mu­ni­cat­ing pro-actively and trans­par­ently with our Investee-Part­ners; and we highly value that same com­mu­ni­ca­tion in return. We view trust as a valu­able long-term asset that can pro­duce great div­i­dends, not some­thing to be outsourced.

Your Com­mit­ted to Trust bm‑t Team