
Bain Capital Ventures’ Kevin Zhang: The ‘Unlockable Potential’ in Lending, Investing, and Insurance
Kevin Zhang, partner at Bain Capital, assess the technological tailwinds for emerging players in lending, investing, and insurance....
We just went through a massive boom and bust cycle in crypto from the beginning of 2021 until now. We are undoubtedly in a bear market and, with FTX still unraveling, the market is far from stabilizing.
The crypto market cap hit an all time high of ~$3 trillion last November. It is hovering around $800-900M now and could still slide further as the ripple effects of FTX continue.
While token prices climbed last year, we saw speculative markets explode around NFTs, DeFi, and DAOs. There was - and still is - huge potential in the underlying technology, but the value of these markets was orders of magnitude greater than their actual utility.
What was interesting to observe during this time was that many of the startups in the web3 "space" were formed to serve these speculative markets, rather than working on actual applications of the technology, creating or improving use cases.
For example, there were a myriad of NFT marketplaces and tools for NFT traders because there was a lot of trading volume that was driven by pure speculation, but as those markets declined it wasn't clear why you would want to own or trade NFTs if you weren't going to profit from them.
As I look ahead in this bear market, this is an incredibly realistic time for companies to build in this space. I say realistic because customers are not going to buy/use your product because of “web3” or “NFTs” as a buzzword - more likely, they will use it in spite of this - but because it is delivering something of real value to them, whether that is a better user experience or functionality that is only made possible by blockchain technology. This is an incredibly difficult test for companies, but will be required to build true value in this space.
I believe in the long-term potential of blockchain technology and think that the developer community and startup ecosystem will continue to build out both infrastructure and applications through the bear market that will continue to grow the value of these networks.
Q: What can you say about the time horizon of adoption for this thesis?
A: “Timing is still a big open question for everyone. I do think that the next few years will be a very promising time to invest in companies in this sector, particularly as valuations come down from unsustainable levels, companies delay token offerings in favor of more traditional company building, and both founders and investors who are less committed leave the space.
The exciting part is that it is up to the founders themselves to drive adoption of these technologies by building products that are accessible to new users and deliver net new experiences to them which are not possible without blockchain technology - programmable revenue sharing, peer-to-peer, trustless transactions, etc.
Despite all of the volatility, we are still seeing long-term investments by forward thinking Fortune 500 companies, like Starbucks, Nike, Meta and Reddit. These companies will be critical for onboarding large swaths of customers into Web3, whether they know it or not.”
Kevin Zhang, partner at Bain Capital, assess the technological tailwinds for emerging players in lending, investing, and insurance....
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