(by Julius Müller)
Today we are welcoming the second company to our fantasy portfolio: Multis!
Multis provides “crypto-first business banking” in an attempt to bridge the gap between traditional (“fiat”) currency and the world of cryptocurrency powered by blockchain infrastructure. Should they succeed in building this bridge, we see enormous potential to introduce decentralized finance (“DeFi”) applications into the B2B world.
The investment is also an expression of our bullish sentiment on the disruptive potential of DeFi and the technology that enables it. We will dive a bit deeper into that sphere in one of our upcoming industry deep dives. As a teaser, Consensys provides a good primer into the space. Multis also published their own view here.
Multis joins our first company Abacus.ai which announced a follow-on round shortly after our investment - let’s see whether we truly have the Midas Touch!
ℹ️ Multis at a glance
- Value proposition: Enabling companies to make the most out of their crypto in a business bank account
- Founded: 2018 HQ: Paris, France (home to a certain business school with a VC-focused newsletter too)
- Stage: Seed (2020) / Funding: $2.4M
- Investors: YCombinator, Coinbase Ventures, Whitestar Capital, Greenfield One, Digital Currency Group
🚀 Why we would invest
- Market timing: The current crypto craze has the most popular assets hitting record highs and the crypto world has once again received much mainstream media attention. Following this recent peak in interest, numerous companies will look to participate in the market but want to limit their exposure to volatility. Multis bet on the promise of stablecoins, crypto either backed by or pegged to fiat currency, could provide an enticing offer to those companies. This could provide Multis with an inflow of new customers who want to dip their toes into this market. Assuming some of those customers stick around, Multis is in a great position to establish themselves in the increasingly congested field of business bank accounts: We view borderless payments with minimum friction as a strong enough vision and USP to retain customers in the long-term.
- Market potential: Speaking of business bank accounts for SMBs: VCs have increasingly accepted the pitch that the incumbent options for business bank accounts are inferior and that new solutions are required. This sentiment saw new challengers attract substantial funding: fellow French company Qonto, for example, raise $104M in a 2020 Series C from DST Global & Tencent Holdings and German challenger bank N26 joined its fellow unicorn Transferwise in offering business accounts in recent months. Granted that the solutions rolled out are more polished and approach the issue from different angles and with different target groups, it still bodes well for a crypto-rooted approach to gain a foothold in that market. We bet on a Multis product extension that emulates some of those more familiar features for companies to handle fiat while keeping crypto at their core to facilitate transfers with minimal fees.
- Usability. Blockchain technology is still confusing a lot of people. That comes as no surprise as most discussions inevitably dive into the workings of this infant technology. Multis tries to provide an abstraction layer on top of the digital assets that make DeFi understandable to the layman. In addition, the mix of crypto and fiat currency within the same wallet and the integration of multiple services within one application makes the introduction of crypto into a business account easier to understand. The backing of YCombinator also indicates that the founders are truly product-obsessed which bodes well for future iterations of Multis - if you dare to look beyond the fine meme selection, Multis’ Twitter feed is also a good source showcasing their product trajectory.
🤔 What you need to believe in
- Multis can provide a superior service to customers who are not crypto fans. As is often the case with crypto-based applications, the first adopters are those that either work in the industry or have followed it for a longer time. In TechCrunch’s coverage of Multis’ seed round they reflect that: “Multis clients are mostly companies working on blockchain products, generating revenue in cryptocurrencies or paying people using stablecoins”. An investment into Multis is therefore a bet on the company’s ability to expand their customer base beyond those first adopters. This requires a service that is superior to those of competitors on grounds other than crypto - they have started to leverage approval features and we want to see them continuously focus on streamlining transactions while providing a best-in-class user experience and keeping their focus on crypto as the enabler for frictionless transactions.
We are excited to follow Multis’ trajectory in the next months as they expand their product and ship more exciting features. We will keep you posted!
P.S.: Intrigued by some of the terms used in this short memo? Consult a16z’s crypto glossary which does a great job of explaining some of the core terms in brief.