Angel investor Gil Penchina spoke last week at StartEngine in Santa Monica, California. The San Francisco-based entrepreneur has invested in Brave, Ripple and PayPal, and is a co-founder of Pryze , a decentralized sweepstakes protocol. A tech investor for 20 years, Mr. Penchina opened his talk with a quip that he had invested in the first cryptocurrency ever.
“A company called PayPal back in 1998,” the Ridge.VC partner said. “If you look at the PayPal business model in 1998, it was literally Tether. They collected US Dollars, [and] for every PayPal dollar there was USD in the bank account. They had no fees, and shockingly that did not work back then.”
In his talk, Mr. Penchina discussed a bit about what he looks for in an investment.
“Classic investor stories are things like picks and shovels businesses,” he said. “So, it doesn’t matter who wins, the picks and shovels company always sells more picks and shovels.”
He also looks for “impressive teams.” What constitutes impressive?
“[It’s] not did they work at Google or go to Stanford,” Mr. Penchina said. “It’s a sort of intensity. You see it in sparks coming off someone when they are out there hustling. You see it in the storytelling and their ability to get you excited about what they are doing.”
He added: “It helps to have massive markets. I’d prefer not to go into the restaurant business.”
Speaking of massive markets, Mr. Penchina commented on why he likes ICOs.
“The nice thing about ICOs, you see a guy who raised $100 million- $200 million,” he said. “It means they are likely going to have money to do some damage.”
Mr. Penchina says he is also looking for things “to stay dominant, things like network effects and other kinds of moats you can have.”
“Token sale gatekeepers,” he said. “Another example is infrastructure. Companies like the Ethereum Foundation and Civic [entail] nice network effects where people use them for everything. I think Filecoin will also be one of these platforms for core infrastructure.”
Mr. Penchina sees token sale gatekeepers as companies like Cointopia, Polymath, Simple Token, as well as his firm Pryze, which help ICO operators manage their ICOs or market them to potential contributors.
“The more ICOs there are, the more these companies are going to make money,” Mr. Penchina said. “With the market coming back, you will see another wave or frenzy.”
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