BitFury Investor: Leave the Blockchain to Me

Gleb Davidyuk has one simple piece of advice for fellow investors who are looking to back blockchain projects: don't.

AccessTimeIconJul 20, 2015 at 9:30 a.m. UTC
Updated Aug 18, 2021 at 4:02 p.m. UTC

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gleb davidyuk
gleb davidyuk

Gleb Davidyuk has one simple piece of advice for fellow investors who are looking to back blockchain projects: don't.

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  • In an interview with CoinDesk, the founder of iTech Capital – one of three firms behind BitFury's latest $20m round – revealed his company is eager to get in early with the fast-moving technology, even if it means spreading a little mischief.

    "There are not that many things left in the Internet environment which you can call truly disruptive," he said, adding with a grin: "Please don't invest in the blockchain, because if you don't I will have more opportunities to do so."

    BitFury's raise – its third in two years – was the first investment of its kind for iTech. When the news was announced last month, a number of headlines hailed the move as Russia's first foray into bitcoin.

    However, Davidyuk said this thought hadn't really crossed his team's mind during the deal. "To be honest, we never thought of that because we are not truly Russian in the full [sense]. We are completely international."

    While the four-year-old VC firm has roots in Russia, he added, it now has offices spread across Europe and Asia. Both its investors and the companies in its portfolio – which span the 'digital economy' – are global too.

    Global force

    ITech's global strategy, seeking to reduce single points of failure, holds similarities with the bitcoin network – which spreads trust among different parties and locations around the world.

    Like the Internet or Skype, Davidyuk said, bitcoin's blockchain is a technology that delivers an ultimatum: get behind it, or get left behind.

    Proof of this came earlier this week when Russian president Vladimir Putin made his first comments on digital currencies. While not exactly glowing, they nevertheless demonstrated the significant change in sentiment in the country since its initial hostile statements on the topic.

    As with investors, governments also have a choice to be early adopters of bitcoin, Davidyuk said, explaining:

    "[Putin's remarks are] confirming my thesis that you cannot really be against something which becomes global, so if the sky is blue, then the sky is blue. Therefore, it's not enough to be aggressive against it."

    Currently, the best place for bitcoin companies to get funding is Silicon Valley. 49% of funding to date has taken place there and while 23 countries now have a VC-backed startup, the amount of funding in the US ($569.1m) is nearly triple that of the rest of the world.

    According to Davidyuk, this may soon change. "Today's world is not concentrated in Silicon Valley," he said, adding:

    "The Internet as a sector has the lowest barriers to entry. We started a few years ago in Russia now we are completely global ... even given the fact that the geopolitical situation is difficult for us to explore opportunities."

    Though their location and communication channels might be great, this could well work against them, he said.

    Fast and significant

    The company is already looking to back BitFury's next "fast and significant" round, which, according to Davidyuk, is already in the works.

    Why the rush? Well, the more money you have the more opportunities you get, he said. The company needs as many resources it can get to keep its spot as the best-capitalised mining firm in bitcoin or, in Davidyuk's words, its "unique position to conquer the world".

    He described how iTech is also hoping prove its value to the startup by bringing bigger investors, including an investment bank, to its next deal.

    "We are actually very much involved in creating an infrastructure and covering a lot of stakeholders within the financial industry, and I think we'll be able to bring much more capital needed and bring more brains, money and power into the business."

    Will this list include other Russian players? "Not necessarily," he said, adding: "I think we play in a global game now so there is no direct link to Russia at all, it's a purely international play."

    iTech is also fielding pitches from other startups and Davidyuk said the company is open to future opportunities in the sector.

    So far its investments – which typically range from $1m to $10m – have spanned ad tech, online travel, big data and FinTech. However, when thinking about the impact bitcoin could have, Davidyuk said, it doesn't seem too far from these areas.

    "The more we known about the blockchain, the more interesting it becomes. Everything which we have to pay for the banks or different third party providers in the financial world now becomes available for free."

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