Today we have an interview with Dave Hodgson, Director and Co-founder of NEM Ventures. As the venture capital and investments arm of the NEM blockchain ecosystem, NEM Ventures is committed to nurturing the development of the blockchain space through its incubator programme and strategic investment in blockchain projects that propel the industry forward.
Dave was kind enough to speak about how he got started at NEM, what they look for in an investment, and where he sees NEM Ventures going in the coming years. Overall, it was a great interview and we thank Dave for his time!
Can you provide us with some details on your background, and how you became involved in NEM Ventures?
I have spent most of my career working on medium-large technology projects with organisations of varying sizes, laterally in Enterprise Architect and CTO type roles. This led me to leading options analysis on a variety of technology platforms and security programs. I was involved early with public cloud projects and assisted multiple large enterprises in writing their business cases and strategic plans and then executing on them. I have also worked for and co-founded a few small startups and studied both Business and IT at university. I had been informally interested and following blockchain for a while and it was this underlying interest and my career path which led me to blockchain. A project I was working on in the energy sector called for an assessment of NEM alongside several other solutions and we ended up selecting NEM as the most appropriate platform. From there I got involved with the community.
I’m currently a Director and Co-founder of NEM Ventures. My role encompasses investment reviews and negotiations, jurisdictional analysis, partnership building, corporate structure design, and day to day operational management. Along with my Co-founders, we have delivered a mandate from the NEM community to formalise a community grant scheme into an investment vehicle with an initial fund size of $10 million in year one, growing to $20m in year two, which is just starting.
Outside NEM Ventures, my most recent industry experience is in the energy and utilities industry and I still follow it keenly.
What is the story behind NEM Ventures and when was it founded?
Founded in 2018, in the midst of the Crypto Winter, NEM Ventures is a relatively new member of the NEM ecosystem. NEM Ventures is the venture capital and investments arm of the NEM blockchain ecosystem and comprises a small, highly motivated team of investment and technology professionals. We submitted a proposal to the community for how to formalise the Community Grant scheme from which the proposal was passed with a majority of 90%+.
NEM Ventures promotes the growth of the ecosystem through strategic investments in projects which align with the ethos of the NEM community, with a particular interest in social impact and environmentally conscious projects.
What was the main motivation for starting NEM Ventures?
In founding NEM Ventures, our main aim was to identify and invest in companies and projects that bring positive impact, adoption, growth services and sustainability to the NEM ecosystem. Ultimately, NEM Ventures exists to assist in bringing commercially viable projects online and to return a profit to the NEM community so that crucial development work can continue.
What sort of projects do you look to invest in?
We seek to invest in a range of projects that we feel have the potential to add value both to the NEM ecosystem and beyond. To date, we have received a wide variety of proposals. Some of these proposed projects were from established platforms, those with customers and looking to scale; others just came with a more general idea, PoC or plan. It really is a mixed bag at this stage, but we imagine this will change gradually over time as the industry continues to evolve and develop. We’re interested in having enterprises and projects of all sizes building in the ecosystem but we generally look to invest in companies that are consistent with our own ethos. As a team, we’re particularly passionate about climate change initiatives and that is one of the reasons why NEM Ventures has invested in a number of social impact projects that aim to reduce carbon emissions.
How do you evaluate the projects that you work with? Are any specific qualifications needed?
We follow a step-by-step process when evaluating different projects to work with. We find this the best way to determine the value that each project can add to our business. The process of evaluation is as follows:
- First you need to have an idea, create a commercially viable plan, and start working on the NEM protocol.
- Next, you write a pitch deck and submit it via our website.
- From there, we will review the pitch deck and, if we see potential on the surface, we will ask you to progress.
- After that, you will submit a business plan and financial forecasts.
- NEM Ventures then conducts due diligence over a couple of rounds of questions, interviews, research, etc.
- If the project passes, deal terms are negotiated.
- Next, if the proposal is investable, it goes to the Investment Committee for review.
- Finally, the decision is given shortly after, the paperwork is completed and the settlement occurs.
If the information is well structured and mature when we receive it, we can go through all of the steps above in 4-6 weeks. Generally, though, it takes 2-3 months from start to finish to decide if we’ll provide financial backing to a project.
In addition to the relevant documentation, we also like to see credible founders who can see the big picture and some proof that the thinking has been done when it comes to product/ market fit and the long-term growth prospects of the company. All of these factors together make it much more likely that we’ll give the green light and invest in the project.
What does the NEM Ventures team look like in terms of skills and capabilities?
The NEM Ventures founding executive team consists of Kailin O’ Donnell, David Mansell and myself.
Kailin O’Donnell is a privacy and open source advocate who has been deeply involved with NEM since day one and the blockchain industry before that. With a background in software development, and as an Oracle-Certified MySQL database developer, Kailin’s career spans the blockchain sector. He boasts consulting experience through working with companies building on the NEM blockchain, while also writing some of the earliest SDKs for the NEM platform. Beyond his professional career, Kailin assists developers and companies in the NEM open source ecosystem, and coordinates various community-driven initiatives.
Our other Director and Co-Founder is David Mansell. David has more than 20 years experience in project and operational environments at a senior and strategic level, with a strong focus on driving delivery, creative solutions and leveraging his deep commercial network worldwide. With broad experience in the origination and execution of investment between private and public entities, David has identified new business opportunities, researched market conditions and developments, and managed personnel across business sectors.
We also have a diverse and dedicated team of advisors to NEM Ventures, whose expertise spans a wide variety of sectors including senior C-level roles in multinational organisations, serial angel investors, having been regulated directly by the UK FCA, and having run formal investment funds for many years. Their guidance is invaluable and we’re lucky to have a best-in-business team!
What is one strategy that has helped grow NEM Ventures into where it is today?
One strategy that has really helped us to get to where we are today is focusing on founders who have a solid vision that others can truly get behind. I believe that having a dedicated team is essential to the success of a project. Founders need to demonstrate the desire to move the blockchain ecosystem forward, understand how that evolution can be commercialised, and I think that passion plays a substantial role in this. As well, it’s important that founders deliver captivating use cases that go beyond current offerings, and NEM Ventures is focused on making these big ideas a reality.
What advice would you give to other VCs in the emerging technology space?
Particularly in the Blockchain/DLT space, there is plenty of room for more investors; most existing funds and investors are very open to collaboration, sharing deal flow and analysis, and partnering. If you don’t have experience in the industry but have investment experience, don’t just assume you can do everything from day one, the crypto community has many nuances. Approach those of us that are already here, we are more than happy to help and welcome new players into the industry. Ultimately we all want the same thing: mass adoption of blockchain technology and cryptocurrencies; any investor who wishes to push that forward is very welcome in the space.
What’s in store for NEM in 2020?
Much of the focus this year will be on Symbol – the new and improved V2 of NEM that is planned for launch later this year on a public chain. Symbol provides a fully-featured solution for enterprises supported by a plugin engine that allows effortless interoperability and configuration, enabling improved business processes, and crucially, the ability to issue security tokens. This will be of primary focus for the core developers and the NEM Foundation.
For NEM Ventures, we are focused on sourcing promising companies that have found or are looking for an enterprise-grade blockchain to support commercially viable ideas. As well, we are looking to develop further partnerships while building a strong, like-minded group of co-investment partners in preparation for ongoing increased adoption. There will undoubtedly be some big announcements coming down the pipeline, so be sure to follow us on Twitter and LinkedIn to stay up to date!