Investing in Blockchain startups means trusting the team behind it
UNLOCK recently met with Mr. Ziad Moukheiber, CEO of Boston Harbor Angels and Managing Partner of EQXFund. Moukheiber had joined the board of Tunnel a Fintech startup that is using its own patent pending DLT (Distributed Ledger Technology) platform to provide real-time secure payments in a seamless, cost effective manner.
UNLOCK was interested to know how investors such as Moukheiber make decisions to invest in startups and what pushed him to invest in a blockchain startup such as Tunnel.
First and foremost Moukheiber states, “I invest in people, the founders, the teams, the personalities behind them. I look into the personality traits of the founders before anything else. So when Boston Harbor Angels invests as an early stage angel investor, we are industry agnostic because we are looking at the idea and the people behind the company not the hype or trends of the time.”
Boston Harbor Angels is one of the leading angel investment groups in the USA with over 15 years in the market and investments in over 150 startups across the USA and Canada. While the amount that is invested varies, there have been many success stories that include names such as Carbonite, RetroSense, Corbus Pharmaceuticals, SmartCells and others. As Moukheiber explains, “We always take an equity share and I have invested personally in 20 companies either individually or through EQXFund. We are here to help startups who have the potential to take their ventures into a liquidity event including either IPO or acquisition.”
Tunnel was the first investment in a startup using blockchain technology. UNLOCK asked Moukheiber why Blockchain and why Tunnel in particular? He explained, “Seven years ago I started mining Bitcoin with the help of my kids. We built our own mining server at home from scratch not to make money but to understand the world of cryptocurrency and figure it out. This led me to look into the underlying technology behind the cryptocurrency application which was blockchain, and it was just a matter of waiting for the right blockchain startup to come along.”
Time passed and then last year Tunnel approached Boston Harbor Angels. Moukheiber believes that during that time while many claimed to understand blockchain there were not many great business ventures being developed he states, “Very few people know how to build a business around blockchain but the founders of Tunnel knew what they were doing. They have developed a multichain application to reduce fraud, costs for payments. So we backed them and they raised their first round which we led, and they are now going for their second round.”
Moukheiber believes that blockchain will not only play a strong role in the Fintech space but will also be valuable in the realms of cyber security and health care. He adds, “Blockchain implementation is not a cheap effort as you have to rebuild your entire data structure but we are seeing more blockchain startups that have solid business cases and we will definitely invest in others that we believe add value.” He adds, “It is the best time to invest because on the Gartner Hype Curve we are dead center in the disillusionment phase of technology. Blockchain will gain traction once it becomes simple and user friendly enough so that the general public can use it without even knowing they are.”
Moukheiber will not be anytime soon investing in Security Token Offerings or ICOs as investors such as himself rely on their well-established legal infrastructure to mitigate risk and STOs unless backed by for example real-estate, would be too volatile for a typical investor. He says, “ I think the biggest challenge yet is the regulatory system in addition to the fact that deal flow is not that strong and so investors have many others choices outside of blockchain to choose from. In Boston we have one of the strongest deal flows in the USA and we rarely invest in hype”
As for the MENA region, although Moukheiber has never invested in any startup here, he is willing if he finds one that is really interesting. He states, “When you want to invest in a foreign startup, especially if you are an angel investor headquartered in Boston, you should have something amazing especially since investors will have the cumbersome task of dealing with foreign laws and regulations.”
In the end Moukheiber believes that the MENA region has a lot of potential and that if ecosystems are struggling it is because they are not building ecosystems that derive from the culture and what fits the region but rather trying to emulate others. He emphasizes, “We have to truly believe in the younger generation unconditionally and allow them to try and fail multiple times. The best statement you can ever give someone is to say I believe in you, go do it.”
