Startup News & Analysis

Why investor Steve Baxter’s changed his tune on the blockchain, but warns current hype levels are “dangerous”

Dominic Powell /

Last year, prominent Australian investor and Shark Tank judge Steve Baxter told StartupSmart in an interview he believed the blockchain was “overhyped”, and he had no blockchain-focused startups in his portfolio, nor was he “in a hurry to find any”.

Since then, blockchain startups and cryptocurrencies such as Bitcoin and Ethereum have seen an astounding boom in both popularity, recognition, and price, with multiple success stories locally and abroad. Asked if he’s changed his tune just over six months later, Baxter told StartupSmart this week he now owns “a bit” of second-largest cryptocurrency Ethereum and appreciates the tech more.

“I bought $500 bucks of Ethereum to get a sense of how it works, get some visibility,” he says.

“I understand the tech at a decent level now, and I have a lot of respect for how the tech works.”

However, the underlying technology aside, Baxter says he’s disappointed to see how some founders and companies are applying it to “shit it shouldn’t get applied to”, and compared the current hype around blockchain to that of the late 90s dot-com bubble.

“Back then we had e-commerce, then i-commerce, and then m-commerce [mobile commerce]. Everything comes in stages and everyone jumps onto new buzzwords,” he says.

“I look at people and teams and problems. The current blockchain situation is as dangerous as tulips were back in the middle ages.”

Baxter to judge $100,000 pitch comp

The Brisbane-based investor was speaking to StartupSmart ahead of the upcoming Salesforce World Tour Sydney Pitch Comp in March, which he will judge alongside fellow Shark Tank judge Naomi Simson and co-founder of Blackbird Ventures Niki Scevak. 

“I’m looking for companies that have traction, have customers, and have their product demonstrated in the market. I’m also looking for good people and good teams,” Baxter says.

The competition will be open to Australia-authorised startups with technology stacks that integrate with or are built on the Salesforce platform. To be eligible, startups must have received less than $5 million in funding to date and have current gross revenue of over $50,000 on an annual run rate basis. The winner will receive an $US100,000 ($125,000) investment opportunity from Salesforce Ventures.

While huge billion-dollar valuations and $30 million funding rounds are par for the course in the local and international startup scene, Baxter — who invests in a number of early-stage startups both through his investment company and through Shark Tank — says $100,000 in funding should mean a lot to any startup.

He says it irks him sometimes how people talk about levels of funding and revenue.

“I’ve had discussions with investors looking at startups who are proud they’ve just cracked $100,000 a year in revenue, but the investors poo-poo that fact and say they’re not interested,” Baxter says.

“Do you have any idea how fucking hard it is to get $100,000 in revenue? And if that amount in revenue is hard, that amount in funding is unbelievable.”

The Shark Tank judge is also looking forward to diving back into the tank alongside his fellow investors for the filming of the show’s fourth season, which kicks off in February, laughing that he’ll be judging the Salesforce pitch comp in full stage makeup as it falls on one of the show’s busiest filming days.

Big things ahead for Queensland

Having also stepped into the role of Queensland’s chief entrepreneur in October last year, Baxter says it’s been a somewhat slow start to getting down to business, with the state going to a drawn-out election the month after his appointment and then heading into Christmas.

Now back on deck, he says he’s facing “two weeks of solid meetings” to get everything back up and running again. He’s particularly keen to continue working on plans related to local angel investment groups, saying there’s a lot to announce there and in the venture capital space for Queensland.

He’s also focused on getting local entrepreneurs set up with a recently rolled out government-owned multi-terabit fibre connections, saying the goal of the network is to get startups in Brisbane free of the “horrible sovereign interference that is our NBN”.

“No one quite knows how absolutely amazing it will be for regional Queensland and the rest of the state if we get this right,” he says.

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Dominic Powell

Dominic Powell is the lead reporter at StartupSmart.

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