One of Australia’s leading venture capital firms believes the future of fintech is rooted in emerging blockchain technology, predicting “cryptoasset” networks will be a trillion-dollar opportunity for companies and investors in years to come.
Speaking at the annual StartCon conference in Sydney last week, managing partner at OneVentures venture capital firm Michelle Deaker outlined what she believes will be the key aspects of the next “great fintech startup” — and where she would start a business if doing it today.
Deaker founded online gift card business E Com Industries in 1999, which is notable for holding the website www.giftvouchers.com and landing major partnerships with retailers such as Coles and Woolworths. She sold the company in 2005 to a listed UK company, going on to become an angel investor before establishing OneVentures.
Deaker says those in the fintech space are currently looking to tackle a number of different problems, including things like payments, insurance, lending, contracts, and security, and she believes blockchain technology — in conjunction with artificial intelligence and machine learning — will be the “technology of the future to help us handle these services”.
“We’ve been living in the internet application world, and we’re starting to see peer-to-peer networks forming, but blockchain is really going to be the enabling technology moving forward,” Deaker told the conference.
“We think it’s got the potential to be as big as the internet in terms of opportunity for new companies coming through and investors.”
The opportunity for blockchain as a massive disruptor lies in the vast amount of “unbanked opportunities” around the world that blockchain technology can solve, said Deaker. She also believes the want from consumers for ease, flexibility, openness, and personalisation (coupled with a prevalence of mobile technology) will drive use cases for blockchain tech.
And while the discussion around blockchain usually focuses firmly on the underlying technology, eschewing the tradeable asset parts commonly associated with projects, Deaker said the future of fintech sits in “a bucket broadly defined as cryptoassets”.
These come under three classes: cryptocurrencies such as Bitcoin and Litecoin; cryptocommodities such as Ethereum which Deaker describes at the technologies helping people “enable blockchain operations”; and cryptotokens, which are more consumer-focused use-based tokens such as the ones used by the likes of Power Ledger.
“Cryptoassets have overtaken Bitcoin in value. Bitcoin grew from $US3 billion to $US38 billion in two years, and in ten years they think that cryptoassets will grow by 100 times, and be valued at $US5 trillion,” Deaker said.
“There are over 700 assets in the world that are cryptoassets, and 50-60% year-on-year growth is predicted for the next ten years, which is pretty significant growth.”
Australia at risk of lagging behind in blockchain tech
Speaking to StartupSmart after her StartCon presentation, Deaker clarified that she doesn’t think people should be investing in theses currencies themselves, but rather the projects surrounding the currency market would be “good investment opportunities”.
“Blockchain invading business is going to happen, we will start to see applications move there,” she said.
“It might take a period of time, but we’re already seeing quite a lot of activity worldwide.
“Blockchain is being used for things like supply chain logistics for example, and I think companies like that will grow up to be the future.”
Deaker acknowledges that the majority of opportunities in the blockchain space currently reside internationally, and says she’s concerned the Australian scene is a behind places like North America.
“I haven’t seen enough novelty here, and when I’m seeing things here, I’m seeing things that have already happened elsewhere,” she said.
“I think that’s an issue for Australian investment. There’s definitely investment opportunity worldwide, but it’s a matter of if we’ll see opportunities creating those niche markets in Australia.”
For projects that would really capture her attention, Deaker says niches like regulation tech where companies aren’t “crowded in already” could be interesting. If companies are not already exploring the potential for blockchain disruption, it’s time to sit up and pay attention, she said.
“Blockchain is not quite in the norm yet, but companies should be looking at it. Maybe the market won’t happen for 10 years — but if you don’t’ get involved early you’ll have no idea what’s going on,” she said.
StartupSmart attended StartCon as a guest of Freelancer.com.