A Letter to Our Investors - July 19, 2021
Dear Advanced Blockchain AG investors,
Over the past months, Advanced Blockchain AG has made significant progress in growing its team, organization, and investments. We have undertaken a multitude of new incubation and investment projects, all of which we believe will positively impact the blockchain industry as a whole. As a result of the success of our new and existing ventures, we have been able to grow our team as well, augmenting our capacity to create value in the space.
We are now pleased to be able to share these updates with you, the investors who have been so critical to our mission.
We have solidified ourselves as a unique organization amongst blockchain venture builders, providing an incredibly hands-on incubation experience that best positions our projects to succeed and be impactful.
Advanced Blockchain AG is dedicated to staying at the forefront of the blockchain industry, working to build projects leveraging the most powerful, future-facing technologies to deliver new improvements, opportunities, and use cases. From the start, we realized that contributing to the cutting-edge of such an innovative industry would require an equally progressive approach.
While there are many other blockchain-based venture capital firms, the primary limitation of nearly all of these organizations is that they just provide capital and connections. Yet, the success of blockchain-based projects is based on so much more than capital and networking- it also requires deep industry knowledge, identification of a market limitation, an idea of how to effectively and efficiently address that limitation, and the correct team members, industry connections, business acumen, and other resources needed to turn the idea into a reality.
At Advanced Blockchain AG, we understand what blockchain startups require to become successful, as our own team is deeply engrossed in all aspects of the field. We unite our own diverse industry experiences, connections, and investment acumen to deliver an unparalleled level of hands-on incubation to our investments. Given this experience, we are also optimally able to identify and subsequently meet the needs of the blockchain community, who are our investments’ end users.
When working with our investments, Advanced Blockchain identifies the areas where we can be of most assistance, providing access to our corresponding team members, including a full team of developers (for product, frontend, and backend, such as UI/UX, smart contract engineers, and cryptographers), marketers, content creators, project managers, legal counsel, advisors, and technology and operations leaders. Further, our own smart contract auditing firm, Stela Labs, and a variety of portfolio companies in the industry are available to partner with our incubated projects. This cultivates a collaborative environment for portfolio companies and incubated companies alike, facilitating mutually beneficial industry relationships between these organizations as well as with others in our network.
With all of these resources at their disposal, our investments are uniquely and optimally positioned for success in the blockchain space.
Across our incubations and investments, we have also doubled down on our mission to further the decentralized finance space, particularly via improving interoperability and supporting a multi-chain future.
Our project incubator focuses on architecting a future where a multitude of different blockchains exist in symbiosis, working together and sharing in each other’s unique benefits. We have identified a number of different chains and their ecosystems as crucial in this objective, including Ethereum, Polkadot, and Cosmos. A primary focus for our incubator is projects promoting cross-chain functionality between these networks and others, as we have identified the isolation of different chains to be a major limiting factor in the growth and utility of blockchain. This approach allows us to build out the most effective, efficient, and all-encompassing solutions to help grow a diverse yet interconnected blockchain industry.
While our incubator does not have specific requirements regarding what chain or purpose its investments fall into, we do have a number of foci that allow us to concentrate our efforts on particularly promising opportunities in this incredibly broad space.
Decentralized finance (DeFi) has truly become a booming industry over the past few years, providing the average user with enhanced financial capabilities and freedoms facilitated by decentralized technologies. DeFi is therefore a large focus of Advanced Blockchain and its incubator. Ethereum and Polkadot along with Cosmos are home to the majority of decentralized applications (dApps); Ethereum gave birth to DeFi, with Polkadot finally offering the initial seeds for the unification of this disparate industry. Cosmos similarly allows for different decentralized applications to run in parallel, communicating with each other. Thus, Advanced Blockchain has identified these chains’ ecosystems as a major priority for development.
To complement this focus on decentralized finance, we also emphasize projects attempting to further a multi-chain, interoperable blockchain industry. While the many rich ecosystems in DeFi offer a multitude of unique advantages, these solutions remain incredibly siloed. This means that there is little capacity to move digital assets between different chains, lowering capital efficiency and flexibility for users.
By advancing DeFi applications and infrastructures across a multitude of different blockchains, we hope to make the industry even more accessible and valuable to users.
Composable Finance, one of our investments, is creating infrastructure resolving limitations in interoperability, acting to improve user and developer experiences, save time and money, and access new functionalities - additionally providing us with the opportunity to incubate projects using Composable’s technology.
Advanced Blockchain AG has helped with incubating Composable Finance, alongside top-tier Web 3.0-focused venture capital firm Rarestone Capital. Advanced Blockchain specifically contributed to the incubation of Composable on the technical side, including contributing to its intellectual property. Rarestone assisted in project strategy and rollout.
Advanced Blockchain then reinvested US $2 million into this project via a subsidiary, as we deeply align with its mission and believe it has the potential to resolve major limitations in DeFi interoperability. In return, Advanced Blockchain will receive 5.7 million Composable (LAYR) Tokens as a seed investor. Our organization may also benefit from using Composable’s parachain for additional projects, with parachains presently being a cutting-edge and highly desirable technology in DeFi.
Composable’s ultimate vision is to unify the entirety of the blockchain space. This company is accomplishing this with a multi-pronged approach, in which it identifies particular pain points in interoperability within blockchain, and then develops the infrastructure and technology to overcome these limitations. Their mission and technology has already been met with broad approval by the blockchain community, which widely recognizes the lack of interoperability between different facets of the industry as a barrier to blockchain’s scalability and widespread use. This has led the organization to successfully complete a $7 million round from strategic investors, which was highly oversubscribed. This round was led by Advanced Blockchain AG and joined by many prominent blockchain-based venture capital firms.
Composable is also kicking off an interactive testing landscape, Composable Labs, where it will work with community developers to leverage Composable’s technology to resolve pressing issues in the decentralized finance space. Thus, not only will Composable provide the infrastructure for an interoperable DeFi landscape, but it will also support the most promising projects working with this technology.
Our other investments including peaq Technologies GmbH, FinPro AG, and Warp Finance are also continuing to grow and make progress along their objectives.
peaq Technology GmbH has completed a financing round of EUR 2.5 million that involved the holding company Scherzer & Co. AG and Werner Geissler, former Vice-Chairman of Procter & Gamble, as lead investors, as well as Meteoric VC. Advanced Blockchain AG provided support with the fundraise. The capital will be used to expand and diversify peaq’s blockchain solution offering for enterprise. The funds will also be used to build a sales and partnerships team to roll out new and existing solutions at scale. The funding is part of a larger company financing endeavor; peaq enterprise will use the funds to continue to focus on blockchain for enterprise, while the newly announced peaq network will be responsible for the public network and token. In our eyes, it is becoming increasingly important to bring traditional equity investments into the token sector, in order to bridge the old and new financial worlds - which peaq thus facilitates. Relatedly, the peaq token and network will soon be going live.
FinPro AG has seen similar success recently. This crowdinvesting blockchain protocol stands out from competitors by building all of its own scalable technologies. Thus, FinPro implements the best technologies available and avoids the fees and delays related to relying upon another organization to greenlight and complete development - then transfers these benefits along to its users.
Additionally, FinPro secured a software development contract with a value of more than EUR 4 million. If FinPro AG does not provide the development services itself, it is intended that Advanced Blockchain AG’s subsidiaries will be commissioned to implement the agreed upon contract components. Accordingly, Advanced Blockchain expects earnings in the seven-digit from this order, spread out over the current and the following financial years.
Warp Finance is another holding of Advanced Blockchain that is continuing to prosper. Warp’s overarching goal is to improve the cryptocurrency lending and borrowing space. This platform is on its way to launching its version 2 (V2), complete with a multitude of new tools. The additions in Warp V2 all aim to improve the user experience in crypto lending, whether that is through more customization, higher rewards, or increased compatibility with other platforms and their tokens. The coding for V2 has already been audited by venerable security auditing firm Trail of Bits, helping to ensure the safety of the protocol, positioning V2 to deploy in the near future.
Our token investments have also been highly successful, contributing to significant financial progress for our organization.
Due to our various token investments, we have been able to increase our revenues from prior years in just the first half of this year alone; we have realized over 2.1 million EUR in revenue in Q1-Q2 2021. Advanced Blockchain’s yearly revenues can be found in the figure below, beginning in 2017, the year our organization was created:
As a result of these improved earnings, Advanced Blockchain has been able to realize a significant profit for the first time in its operating history: 1.5 million EUR. Further, our balance sheet total has increased from 2.1 million to 7.5 million EUR over the course of this year. This was facilitated by an increase in equity via the capital increase we had in May, as well as increasing our capital reserves significantly.
This month, Advanced Blockchain has attracted a number of public imaging opportunities, including a series of high-profile interview pieces to be published by key global media. Advanced Blockchain also received an invitation from GDA Capital and Sir Anthony Ritossa to attend the 15th Family Office Investment Summit in Monaco, where our CIO and Managing Director Simon Telian was in attendance to represent Advanced Blockchain and nakamo.to. The summit brought together the world’s top family offices, royal families, and private blockchain investors to engage in a discussion and debate of the most critical issues facing our planet, and how we can leverage technology for social impact. Simon has also been invited to speak at the Global Non-Fungible Token (NFT) Summit later this month, serving on a panel about investments in NFTs alongside Outlier Ventures and Metapurse. NFTs are an increasingly promising and popular tool in the DeFi space and beyond, as they are able to represent unique underlying assets (such as digital art, boosts for games and rewards, redeemable receipts for participation in a project, and many more use cases). Thus, we are excited for the opportunity for Simon to represent our organization and contribute to the conversation on this increasingly important technology.
Later this week, our CEO Michael Geike will take part in the Ethereum Community Conference (EthCC). This is the largest annual European Ethereum event, focused on technology and community.
Overall, the first half of 2021, our fifth year of existence, has been an incredible period of growth for Advanced Blockchain AG. We continue to promote an interoperable blockchain-powered future by investing into and incubating various promising projects. We also maintain a large token portfolio, further supporting the industry. Additionally, we are planning to establish offices in Stockholm, Dubai, and Munich to expand beyond our Berlin-based incubation and launch incubator programs in these regions.
We look forward to driving continued success over the remainder of the year, and sharing these updates with the investors who are vital in supporting our efforts to create value in the blockchain industry.
The Advanced Blockchain Management Team