TMT Investments’ (LON:TMT) plans for participating in a blockchain company incubator fund look like a natural development given the management’s ethos.
Techies are great at writing software, but most of them find they do not understand business, selling and marketing, says Igor Shoifot, one of the founders and investment partners of the AIM-traded group.
WATCH: TMT Investments: 'Legwork' the key to their success
Those techies that do get it, grow to become the likes of Mark Zuckerberg (Facebook) and Sergey Brin (Google).
Just as businesspeople often don’t understand the intricacies of coding, many techs don’t understand the ins and outs of company-building and that is especially true of the new wave of blockchain entrepreneurs, who have little business background.
TMT aims to help by participating in a fund to invest in what it considers to be the most promising and provide support with distribution channels, marketing, customer conversion and all of the things that help a good idea become a scalable business.
A funding last week raised US$3.3mln net at US$2.43 per share, a price equivalent to net asset value, with the money earmarked for further investments.
These funds should be supplemented by exits from certain holdings in the existing portfolio in coming months.
Scalability
Scalability is one of the linchpins of the TMT investment ethos.
Before it invests, Shoifot says management of a prospect has to give a clear and believable story on how exactly they will be growing the business.
Meeting lots of companies is another part of the way the company works, which helps reduce the risk of ‘anchor bias’ or the assumption that the first company you meet is the best.
Both of these disciplines will underpin the new blockchain fund, with details currently being prepared.
TMT has already dipped its toe in the water with an investment in the tokens of the highly-debated blockchain communications group Telegram.
Telegram is seeking to raise up to US$2.55bn through an ICO to set up a new blockchain-based transactions platform.
Half a dozen constituents of the existing portfolio of TMT might also be backed by the proposed fund suggests Shoifot, as they have started working on their own blockchain projects.
Three high-powered advisors have already been teed up for the fund, which will probably carry TMT branding, as TMT is well-established on AIM and well-known elsewhere.
Mixing the ingredients
Investments by the proposed blockchain fund will likely involve both tokens and share stakes – “equity gives us a chance to take it long term, while tokens will likely be received at a significant discount and can be turned into cash”, said Shoifot.
A year ago, Shoifot says TMT’s management realised they could be among the first venture capitalists (VCs) in the blockchain space to bring both gravitas and the business understanding of how to scale companies and build real businesses in the real world.
“We love techies but often their focus is exclusively on building software.
“We combine all of the ingredients together in the right proportions to make the soup.”
At $3.40, TMT is valued at £69mln.