News & Analysis

Trimantium Capital working with Winklevoss Capital on potential co-investment in blockchain

- April 13, 2016 3 MIN READ
Trimantium GrowthOps

Melbourne-based venture capital firm Trimantium Capital and US firm Winklevoss Capital have announced a potential co-investment in blockchain technology. Both firms are currently in the development stage and aim to leverage off each other’s deal flows to expand the presence of blockchain in Asia.

Regulatory uncertainty has been the main factor behind Bitcoin’s failure to drive critical mass attention globally. While the digital currency has attained a measure of success in the US and Europe after being recognised as a legitimate financial service, it has not yet caught on in the mainstream.

In the Asia Pacific blockchain has the ability to transform the finance industry and change the traditional way of sending and transacting money and buying and selling goods and services.

Phillip Kingston, managing director of Melbourne-based Trimantium Capital, believes blockchain will transform a number of industries in a material way.

“Blockchain is significantly underestimated as a threat to central and retail banking but as with most things, people will overestimate its impact in the short term and underestimate over the longer term. This is a little different however, as it is a disruption to governments and banking at the same time,” he said.

When it comes to blockchain technology, it will take high amounts of convincing by investors and entrepreneurs to change the financial landscape in these times of uncertainty.

Kingston believes the startups and investors that are able to convince companies of blockchain’s potential will benefit from a favourable period of regulatory arbitrage.

“Our intuition is that the first killer app may be well outside the traditional fintech definition,” he said.

Asia, which is home to more flexible financial markets than found elsewhere around the globe, has a number of blockchain applications that fall across the security, eCommerce, trust and commercial spectrums. As such, it is a region where western blockchain companies look for deals and opportunities, and investors are also catching on.

On a recent trip to the US for the annual interactive festival SXSW, Kingston organised a side meeting with American investors Cameron and Tyler Winklevoss of Winklevoss Capital. Through this meeting both firms saw the opportunities a collaboration with one another presented. Both firms said they wanted to further explore investment into applications of blockchain technology in Asia.

“Software, and more specifically Bitcoin and blockchain technology, are permeating every corner of the world; this is not a siloed phenomenon but rather a global technology with global reach, so it’s important for us to build as many investment and entrepreneurial bridges to Australia and Asia as possible,” said Cameron Winklevoss.

However, Tyler Winklevoss admitted the firm doesn’t have the same level of experience and expertise in Asia as Trimantium Capital. Working alongside each other is mutually beneficial for both firms to expand their interests in blockchain technology in Asia.

Tyler Winklevoss said, “We regularly help foreign firms navigate the US markets. We believe that collaborating with strong teams is much more powerful than trying to do everything by yourself and going it alone.”

With the Winklevoss Capital headquarters being in New York, most time is spent by the team travelling to and from Silicon Valley. Winklevoss said the firm has built a strong network of entrepreneurs and investors in the United States, however that same level of culture understanding will take time to replicate in the Asian market.

Kingston said, “The ability to share that deal flow and enrich that deal flow is significant. We don’t believe in innovation in a vacuum or investment in a vacuum. Successful investors bring in the best people in the world to help. As a model we’re extremely collaborative and like to have sophisticated co-investors in every transaction we do.”

An announcement on the finalisation of the co-investment deal has yet to be made, however both are showing strong interest.  Winklevoss believes bitcoin and blockchain technology will upend costly and inefficient middlemen in the financial sector.

Tyler Winklevoss said, “Eventually, every asset from your house to your car will be tokenised and live on a blockchain and be able to be traded with as much ease as it takes to send an email.”

Image: Philip Kingston. Source: Supplied.