Lockdown Economy Canada in an Investment Fund with Aly Madhavji

The interview was transcribed and adapted into an article by Audrey Coggins

The Lockdown Economy: Interviews by think tank AlterContacts.org with real entrepreneurs sharing insights, challenges and successes during the COVID19 global pandemic to inspire, motivate and encourage other entrepreneurs around the world.

In July 2020, AlterContacts.org’s founder Julia Skupchenko speaks with Aly Madhavji, the Managing Partner at Blockchain Founders Fund in Vancouver, Canada. He shares the information that we need to know about investing during COVID-19 and how the lockdown gave new opportunities to startups in the Health sector and the example of an affordable insurance solution for self-employed and freelancers in the US. At the same time, Aly mentions that some startup founders who experienced too much pressure had to part ways. He also talks about the initiative the fund started connecting students with startups. In less than a month, there were over 600 matches done and the number continues to grow. Some students say that they learned more in two days than in the last six months. Aly notes that the main criteria for choosing the students are not in what they know already but in their passion to learn. He also talks about the report on how blockchain can alleviate poverty, the fund is preparing for the United Nations.

Watch the video version of the interview.

Can you tell us more about Blockchain Founders Fund?

Aly: Blockchain Founders Fund (BFF) has three main components. The first is in investing in early-stage companies between seed and pre-A. We also invested in another fund called Loyal VC where we’re on the investment committee. Between these two, there are over 100 portfolio companies in the early stages.

The second area is the consulting side. This is where we work with organisations such as the United Nations, where we wrote one of the flagship reports for the UN on Emerging Tech. We also help lead Blockchain Initiatives at INSEAD as Senior Blockchain Fellow, one of the leading business schools in the world.

The third area is our venture program. This is where we work extremely hands-on with select high potential startups in the early stages. We help them with solving issues around strategy, product-market fit and early-stage scaling. Then we also help them get investment ready and driving that. We’ve had a lot of incredible companies that we’ve supported and help to grow, including things like #1 Blockchain game, #1 Decentralised Application in the World like Splinterlands and a number of other companies across different sectors related to tech.

Do you know how the lockdown affected the companies in your portfolio? What are the specific issues that startups have faced?

Aly: It has been a particularly interesting time. I think our situation perhaps differs from a lot of portfolios, other venture capitalists, maybe even some founders. There’s been a little bit of divergence with how this lockdown has affected startups. I would say for BFF, it’s been net positive — which is probably not what most people would expect.

For example, take the company Jauntin’. We recently launched what is probably the lowest cost health coverage program in the US, UnderWing Health. With UnderWing Health, we’ve been working with companies in the US who have freelance workers, gig workers, part-time workers so that these workers and their families are provided with some sort of coverage. So for $25/month, you can get unlimited telemedicine and unlimited prescriptions for your entire family. This is game-changing for the US market. Products like these are literally flying off the shelf. Recently, GrubHub started rolling this out to their drivers. So that’s one example of products that have substantially increased in the pandemic.

If I can interject here, it is very impressive that this product hit the market [in timely response to the pandemic]. For self-employed, for part-time, for freelancers, insurance is a painful topic. Was this product rolled out in time or ahead of time [of the pandemic]? What was the journey of startups?

Aly: With Jauntin’, it’s been interesting — Jauntin’s primarily been a B2B company. Our main goal is working with major insurance companies, to help streamline their processes so that they can offer corporate-like plans to individuals. There’s a number of products that are on the market, e,g., travel insurance, pet insurance, photographer insurance and liability, but they have tended not to offer these directly to the consumer. Jauntin’ is different. They have plans that are essentially an amalgamation of a number of different plans that they negotiated with major insurance companies.

The timing’s been quite perfect [to coincide with the pandemic]. A number of companies have started rolling it out (e.g., GrubHub). These companies are using them to retain staff; the staff are also reacting very positively to it, given the mess of a healthcare system in the US. The ability to get unlimited prescriptions for your entire family during this period (it won’t cover ALL medication but it covers the vast majority of standard medicine) is very good, and those prescriptions are very accessible — it can be picked up at 65,000 locations in the US, including Walmart, CVS across all fifty states.

The pandemic has been quite negative for most startups but really hasn’t impacted Jauntin’ much as far as we’ve seen. If you’re in Travel right now, that’s a difficult industry to be in. However, there’s been a few hot spots [in startups] that have benefited from this situation.

Now, stepping away from this particular company and business-speak, can we turn to the stories? What are the stories of the entrepreneurs within your portfolio, in particular, facing this lockdown?

Aly: The startup world is highly dependent on schedules and successes of rollout to the market. This lockdown situation where rollout has to be delayed, some entrepreneurs have had to part ways. In these cases, BFF ensures that this process goes as smoothly as possible. It was a good process in that BFF was able to see that the partners involved were able to stay good friends in this unavoidable outcome.

We’ve had another situation where entrepreneurs have had quite a bit of tech issues to get through and the pandemic has given them the space to access talent easier, better and cheaper in some ways.

Another interesting thing we’ve been doing is in education. A staff of mine came to me about 10–12 weeks ago and said that this situation has been hurting a lot of students. Students are really worried about lost opportunities and losing out on a year of experience. So what we decided to do was to put out a LinkedIn post, a callout for students looking for work experience. Our aim was to connect them with some of our startups. Within a few days, I received 500 CVs! Our team incorporated a form on our website and with a few more notes on LinkedIn. Since then, we’ve had over 3,000 applicants. 53% of these were Masters’ students. We’ve been able to connect over 638 of those applicants with portfolio companies. Some of those business opportunities were paid opportunities. Some students were open to creating opportunities for themselves from a learning and development standpoint; not all startups can afford to bring in an intern. It’s a tough time for startups, and they’re being conservative with their cash balances. That doesn’t mean that they shouldn’t be helping out students, and it can be a win-win. The student gets an opportunity to work with an entrepreneur with a wealth of experience. This has been super for us to see all these incredible stories from these students. One message we received was a student who had learnt more in two days [working with entrepreneurs] than they’d learnt in six months. Another student said that their dream job was to take over and lead a product team. During this time, we were able to create roles where there were none and this was created in real time. We approached one of our CEOs with a very interesting startup helping to reduce waste from restaurants. Now, this student leads their product team.

So we’ve been able to create opportunities for students and also our entrepreneurs because this is a tough time for them as well.

That’s pretty incredible to hear about the students and entrepreneurs. I hear there’s a 20% success rate in the matching! Could you share with students what are the key traits in applicants that got you excited?

Aly: Our goal is to help students. If you really want to learn, passionate about learning and you’re going to make the time to learn, we’ll figure out something for you! We want to help out as many students as we can and we’re still making introductions with our CEOs. We have CEOs that are Emmy nominated and we have CEOs that are making US$100 million businesses; so these are great opportunities to learn from great entrepreneurs. At that young age, that’s the main thing. It’s not raw intelligence or A-grades in school. That doesn’t really matter at the end of the day. It’s the determination and want to learn. That’s going to make the biggest difference in your character and how you present yourself to any of these founders.

If you really want to learn, passionate about learning and you’re going to make the time to learn, we’ll figure out something for you!

Aly: We’re working on writing one of the flagship reports for the UN on the emerging tech. It’s been quite interesting and intriguing because the UN isn’t looking at this as a research report. The UN is going to use this research as a practical tool to governments and organisations implementing the number of solutions that we propose. A lot of the issues that we are looking to solve were surrounding topics like identity and credit registries/issues, SMB enterprise loans and access to capital. We are looking into topics like poverty but where technology can come into play to help.

For example, there are 1.7 billion people without identities, undermanaged or unbanked. How can we create solutions for these individuals against factors like infrastructure cost? If there’s a lower cost for people to make the entry point to their identity, then there’s a higher likelihood of making it work.

Another instance is to look at a few of these governments for the UN report is if we can use facial recognition off of standard devices and pair it with a blockchain layer? If you don’t have an identity and you show up for the first time on one of these cameras, can that create a profile for you? All in real-time. This may (or may not) serve as day-to-day identity in the way that we think about it, but if that can start being used to create trust. What the major developed world has as a benefit are credit and trust. That essentially helps to drive economic growth and economic engines. So if you can start to know who you’re dealing with, and know whether or not you can trust them, their financial credit history or their ability to make repayments in the past, that has a fascinating way to rule out difficulties across communities. Of course, this needs a lot of government support. In a lot of cases, that is difficult. We also looked at how this system can be housed outside the government, through an intergovernmental, although that is controversial.

It’s fascinating to be looking at these sorts of challenges that are very, very important in a lot of cases — where it can be life and death. It’s good to be able to research ways to use technology to help solve these problems. Technology has changed the world in a lot of countries — 900 million people out of poverty in China using essentially financial technology. So the question is how do you leverage these sorts of benefits from technology to help improve the world.

Yes, that’s a big question and I’ll be looking forward to seeing the report because you touch on so many different issues that are crucial to being solved right now. Any last words?

Aly: It’s been my pleasure. I would say that whether you’re an entrepreneur or not, there is definitely a light at the end of the tunnel. Stay positive. Really try to understand your customer and understand how things are changing. Understand where their pain points are and where you can create value. That’s going to be a very big differentiator for you to continue to grow your companies through this tough situation.

If you’re a student, there are still opportunities out there to be had. If you’re keen on learning and want to be connected with BFF, feel free to contact Aly and his team.

About the Guest

Aly Madhavji 穆亚霖 is the Managing Partner at Blockchain Founders Fund which invests in and venture builds top-tier startups. He is a Limited Partner on Loyal VC. Aly consults organizations on emerging technologies such as INSEAD and the UN on solutions to help alleviate poverty. He is a Senior Blockchain Fellow at INSEAD and was recognized as a “Blockchain 100” Global Leader by Lattice80. He is an internationally acclaimed author, publishing three books and a monthly columnist for the leading blockchain magazine. Aly has served on various advisory boards including the University of Toronto’s Governing Council, which manages a $2.5B budget. He is a mentor with Chinaccelerator, an elite accelerator program operated by the venture fund SOSV with $500M+ AUM and the Mobile Only Accelerator (MOX). Aly holds a Master of Global Affairs as a Schwarzman Scholar from Tsinghua University (清华大学), a Master of Business Administration from INSEAD (Singapore and France), and a Bachelor of Commerce with Distinction from the University of Toronto.

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