The most recent addition to the Winter Expo’s panel discussion on all things virtual currency is David Chen, Associate Partner of Lightspeed Venture Partners, which is an early stage technology investor.
“We invest broadly across both consumer and enterprise software infrastructure. In particular I’ve been spending a lot of my time on enterprise software, as well as consumer software when it relates to things like financial services and Bitcoin.” David said.
Lightspeed is fairly new to the scene of Bitcoin and virtual currency, taking their time to test the water and see what patterns emerge, but they are beginning to make a bigger splash as Bitcoin becomes more and more legitimate.
“We first got interested in Bitcoin about 6 months ago, and have made a number of small investments, but probably our most substantive one is BTC China. We’re also investors in what is now called Ripple Labs, Chris Larsen’s company.” David said.
The qualities and possibilities of virtual currency that have drawn the attention of Lightspeed are the same as what has drawn other investors, but their attentions are attuned to the companies that have really risen to the top.
“Our interest in bitcoin is pretty similar to what a lot of other people are seeing as well. The promise of bitcoin is to reshape a lot of how global finance operates today. Everything from remittance to the lowering of transaction costs helps with E-commerce. There are a couple of players who are further along in this stage, a lot of guys are just getting started. I think everyone knows who the big guys are, companies like Coinbase and Bitpay.” David said.
Another one of the big obstacles virtual currency companies in face in the US, and one that Lightspeed along with other investors have been focusing on, is dealing with the complicated regulatory system.
“The challenge that we’re finding is that in the US, the regulatory environment is both uncertain and challenging because of the fifty states, and having to get money transmitter licenses in all fifty. That’s a big bottleneck to growth in the US bitcoin startup ecosystem, and gradually it will change but it’s tough to tell if it will be too late by then. We are definitely looking actively outside. It’s why we’re investing in China.” David said.
Another obstacle unique to Bitcoin innovators is their relationship to the regulatory system and the resulting need of substantial capital right from the beginning.
“Bitcoin can be a pretty big financial burden with regard to regulatory compliance. That’s where working with a bunch of capital partners is going to be pretty crucial. It could take 2 million dollars and 18 months of applying for licenses. Most tech companies these days require very little capital to get started, but Bitcoin companies require a lot of capital just to get started, that’s one thing we’re seeing that’s pretty interesting.” David said.
In order to build a successful virtual currency company, David offered this piece of advice:
“You need technologists, you need financial services expertise, and you need people with regulatory compliance expertise.”
Don’t forget to sign up for the Winter Expo happening this Thursday, where David Chen and many others will be talking about Bitcoin and virtual currency.
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