Harnessing Community in Web3: Why We Invested in Flipside Crypto
The world is falling in love with crypto and web3, wooed by the industry’s rapid growth, emergent business opportunities, decentralized and democratized access, and liquid value at scale. For those of us who have historically specialized in more centralized tech and innovation opportunities, our task is to learn and adapt rapidly. Unsurprisingly, the industry has seen an enormous surge of investment in crypto-related startups by a broad mix of traditional and crypto-native investors.
There has also been an explosion of investment of value into decentralized finance (DeFi) projects and decentralized autonomous organizations (DAOs), which reimagine the way in which innovation and businesses can be financed and governed at scale.
At Commerce Ventures, we’ve been focused on investing in infrastructure for retail and financial services since our inception. In fact, many of our companies are now category-leading enablers in their respective areas, including Bill.com (SMB payments), BillGO (next-gen billpay), Forter (e-commerce fraud immunization), Marqeta (card issuance/payments), MX (banking data) and many others.
Crypto and DeFi represent entirely new opportunities to invest in infrastructure and enablers. In fact, many of the companies we’ve already invested in are providing critical capabilities to emerging leaders in this ecosystem, whether it be Marqeta powering crypto-linked card programs, Interchecks enabling fiat disbursements for crypto exchanges or Socure powering the identity verification and KYC of those exchanges. We are also increasingly excited about investing in comprehensive platforms like Prime Trust, who are powering the core custody, liquidity, settlement and compliance of crypto-native businesses, and expect to continue pursuing these types of infrastructure investments in the future.
Enter Flipside Crypto
Founded in 2017, Flipside Crypto has developed Community Enabled Analytics (CEA) for decentralized organizations like those mentioned above. In doing so, Flipside aims to provide high quality public reporting and insights, as well as help with acquiring and retaining users (developers).
To achieve this objective, Flipside instigated its first decentralized organization (MetricsDAO) late in 2021 to align analysts across all data platforms, in order to deliver metrics, growth and retention for DAOs over the long term. By focusing the excitement and intellectual curiosity of top notch web3 developers and analysts on interesting challenges, Flipside has assembled a unique community that can be directed to solve the important challenges of web3 ecosystems in exchange for community recognition and meaningful bounties in the associated tokens or digital assets.
Flipside’s challenges and bounties provide ecosystem retention rates north of 72%, while generating tens of thousands of analytical solutions per year. The company works closely with Layer 1s such as Terra, Algorand, Solana and Thorchain, as well as Ethereum protocols such as Sushi and AAVE. Not surprisingly, activity levels in the Flipside community have been accelerating since launch.
Our History with Flipside
While our involvement with Flipside only began recently, our relationships with Dave Balter (Flipside’s Founder & CEO) and Boris Revsin (Managing Partner of Republic Capital, who is leading this round) date back over a decade. Dave has a singularly relevant background in developing and activating communities for commercial objectives, having been the Founder and CEO of BzzAgent, a word-of-mouth marketing firm that was acquired by Tesco in 2010. He also has deep expertise in data-driven marketing, loyalty and engagement from his time at dunnhumby (a leading data-driven loyalty provider for leading retailers like Tesco), where he led venture investing and innovation scouting.
Our founder, Dan Rosen, got to know Dave informally when Dave was mentoring startups in the Boston area. While they didn’t work closely together back then, they kept in touch over the years as Dave continued on his founder journey and even traded deal flow in the years Dave spent as a venture investor at dunnhumby. Fast forward to earlier this year, Dan and Dave opportunistically reconnected at an industry conference (h/t to Lobby Conference) and realized there was an opportunity to work together.
While we love exciting ideas and big market opportunities (both of which are true for Flipside), Commerce Ventures is most easily persuaded by strong founder-market fit…and rarely have we seen it be stronger than it is here. We count ourselves lucky and are extremely grateful to be able to join forces with Dave, Boris, and a number of other top notch investors on this exciting journey to provide analytics and data-driven applications for the web3 world.