On this episode, Hall welcomes Anton Golub of flovtec, a financial technology company focusing on providing liquidity for digital assets. After exhibiting a talent for mathematics at an early age, Anton eventually entered the high-frequency trading space, in a research position. Later he began working at a hedge fund, before transitioning to the blockchain space. He talks about riding the surge of interest in blockchain as part of a startup, and how he identified the problem of liquidity with digital assets. This realization led him to start flovtec in 2018.

For potential investors in the blockchain and digital asset space, Anton advises a healthy dose of realism, and an understanding that this space is still at the early stages. Anton discusses the future evolution of the digital asset space, and how the next couple of years should bring clarity-particularly on the regulatory front. He expects tremendous growth in the space of the coming years, and points to several cities that he believes will serve as the hubs for this future growth. In addition, Anton emphasizes that an understanding of the "building blocks" of blockchain is critical to investment success. Finally, he discusses the scalability challenges facing the space.

Here are three key pointers for investors who are funding startups.

The team is the most important part of a startup. Diligence should focus first on the team, not the product, space, or anything else.

Monitor the startup for three months before investing to gauge momentum and traction.  You need to peel back enough layers of the onion to know what’s there.  Ask lots of questions -- your mantra should be ‘let’s peel the onion.’

The biggest challenge in angel investing is not that the startup goes under but that it turns into a lifestyle business.  Historical returns indicate that 10% of your investments will be home runs, 15% will be singles/doubles, 10% will go out of business, and 65% will turn into a lifestyle business. 

To avoid your investment turning into a lifestyle business, ask for a redemption right at investor sole discretion.  If they go on the payroll exit, you can exit with the redemption right. 

 The Payroll exit, is when a startup gives up trying to make a go at a venture exit and decides to sit back and just take above market salaries for their exit.  This leaves the investor on the equity exit with no clear path for a return.

 Thank you for joining us for the Startup Espresso where we help startups and investors connect for funding.

Let’s go startup something today!