Castle Island Ventures: Investing in Infrastructure

Episode 19
  • Host

    Zach DeWitt

  • Guests

    Nic Carter and Matt Walsh

    Castle Island

  • Date

    February 5, 2019

  • Duration

    41 minutes

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Castle Island Ventures is an early-stage venture fund with a focus on equity investments at the pre-seed or seed level into companies that are building in and around permissionless blockchains.

Listen to hear from some of the smartest investors in the space--co-founders and managing partners of Castle Island, Nic Carter and Matt Walsh--as they discuss current trends, predictions, and what they’re looking out for.

Pick and shovel oriented businesses

Castle Island has the view that permissionless blockchains are a new paradigm with infrastructure still needed for support.

Infrastructure to them means things like key management, custody services, exchange technology, data companies--what they call “pick and shovel oriented businesses.”

“I think most people can agree that there’s a level of this plumbing that just needs to exist in order for any of these things to be successful,” says Walsh, “for an institution to get comfortable holding these assets and giving their customers access to them.”

Altering the topology of the internet

Carter says key management is “underrated,” and he believes “it can generalize far beyond just custodial management of cryptocurrencies.”

In a world of a bifurcated internet--the surveilled internet and an alternative internet--end users will choose to opt out of the surveilled internet and restore their own ability and discretion to manage their data.

“I think there will be a startup that emerges to do that,” says Carter, “a general, altering-the-topology-of-the-internet system. I think that is a really big idea and we’re looking at those startups right now.”

What makes a world class crypto investor?

One of the things the Castle Island partners emphasize the most is being connected back to the development community.

“We both try to really focus on building our networks and building our understanding in those communities,” says Walsh, “and we have some great advisors to Castle Island that are really deep in that world.”

It’s about “great relationships with the elite cryptographers and engineers that are actually building the networks that all of these startups rely on, indirectly or directly,” says Carter.

Key takeaways:

  • Castle Island Ventures believes that some of the most compelling investment opportunities in crypto are around public blockchain infrastructure and applications;
  • Nick talks about the importance of public-private key management and how there might be some very large businesses built around this industry;
  • In addition to looking for infrastructure and application businesses, Nick and Matt are bullish on non-sovereign, censorship-resistant store of value, with Bitcoin currently in the pull position to become this global store of value.

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