David Vatchev of R3 gave us some predictions for the future and further insights into DeFi at R3.
For a more in-depth analysis of the landscape of DeFi, see our full report: "Decentralised Finance: Usecases & Risks for Mass Adoption".
David Vatchev, Venture Development Lead at R3, shared with us some predictions for R3 and the Corda Venture Development Ecosystem. Delving into R3’s stance on DeFi and OpenFI, he outlined the biggest challenges blockchain start-ups are currently facing and the future potential opportunities in the sector.
Hi, David. Thank you so much for taking the time to talk to us.
First off, could you tell us a bit about who R3 is?
Developed in collaboration with our ecosystem, our enterprise blockchain platform Corda is transforming entire industries by digitalizing the processes and systems that firms rely on to connect and transact with each other. Our blockchain ecosystem is the largest in the world with more than 350 institutions deploying and building on Corda and Corda Enterprise. Our customers and partners have access to a network of leading systems integrators, cloud providers, technology firms, software vendors, corporates and banks.
To ensure our customers derive the greatest value from their investment, we provide services and support to shorten time-to-market, as well as guidance on implementation, integration and building ecosystems based on a blockchain platform. Learn more at www.r3.com and www.corda.net.
The Venture Development program is the gateway into this ecosystem for early-stage blockchain startups building an application on Corda. We help start-ups build, launch and scale their enterprise go-to-market (GTM).
Wow, sounds like there’s a lot going on there. As you are running the EMEA Venture Development program for R3, what are some of the biggest challenges for blockchain startups right now?
Blockchain startups are dealing with two major challenges right now: 1) How to secure fundraising 2) How to combat the lengthened enterprise sales cycle.
On startup fundraising, the recent impact has been very clear. Global Venture Capital (VC) funding has fallen over 20% since March, both in terms of deal size and quantity, and valuations have similarly dropped reflecting the expected future business uncertainty. While most startup investors have spent much of this year making sure their portfolio’s companies are okay, they are now back looking at new potential investments. The acceleration of digital transformation, and the role of DLT to enable this, is becoming a central focal point for future investments.
The next biggest issue for startups is securing enterprise customers in a scalable and repeatable way, as uncertainty grinds sales cycles to a near halt. Startup products and solutions can give enterprises access to new revenue streams, cut costs, facilitate new connectivity and drive out legacy inefficiencies. However, the current climate has even the largest of enterprises re-allocating budgets and headcount.
And, where are some of the biggest opportunities? or sectors that you are excited about?
We recently put out a Corda Challenge: Call to Action with the objective of sourcing and supporting innovative startups addressing a challenge caused by COVID-19, using Corda. With submissions from over 20 countries and as many industries, we got a great snapshot of future potential innovative trends and new opportunities.
The major recurring theme is the current fragility and lack of connectivity in our global supply chains. Critical goods should not be sitting idle for days when they are needed and blockchain enables this.
In healthcare, we see opportunities in public-health tools to add capacity to the healthcare system rapidly. At-scale testing, real-time healthcare surveillance, rigorous contact tracing will continue to dominate. The insurance sector shows huge potential for leverage DLT to settle claims proactively using smart contracts. Finally, the recent growing skepticism around cash has brought the potential for digital payments and a central bank digital currency (CBDC) to the forefront.
Why should a startup get involved with the R3 Venture Programme?
We help startups validate their business models, find their product-market fit, get production ready and accelerate their go-to-market strategy. We support early-stage companies with content, resources, industry experts mentorships, customers and investor introductions. Over 300 pre-series A blockchain startups looking for help to build, grow and scale are now part of our program. We welcome all founders looking for help to get customers, secure fundraising and access the resources of our wider ecosystem.
As we recently published our report on DeFi, what is R3's stance on OpenFi and DeFi?
R3 strongly believes that there is a need for greater transparency and access to the legacy financial system. Through shifts such as open banking, new financial products are beginning to materialize as a result of innovation from, for example, third-party developers, who previously did not have the opportunity to innovate on top of the existing financial stack. What is unique about Decentralized Finance (DeFi), is that it harnesses the open-first nature of cryptocurrency networks to deliver a range of new offerings. Currently, the majority of DeFi use cases focus on lending, allowing anyone with a crypto wallet to transact as either the lender or borrower directly.
To continue growing, R3 believes that DeFi needs to include high-value service players, bringing robust and regulatory compliant services to augment the DeFi ecosystem. DeFi platforms can, for example, leverage banks and payment providers to expand the breadth of lending offerings through their access to liquidity and international regulatory foothold. Corda is well positioned to bring these institutions into the world of DeFi, through our enterprise-ready peer-to-peer network and well-established ecosystem. Most recently, supporting Nasdaq’s market technology arm to enable other exchanges to digitize asset marketplaces. Through our work with new and existing ecosystem partners, R3 continues to be a key player in the open finance movement, driving digital transformation in legacy operations.
Where do you see the Corda Venture Development Ecosystem ten years from now?
As well recognised as R3 is in the enterprise DLT space. Our goal is to continue expanding our blockchain ecosystem into new verticals and development phases. Corda’s strength is derived from its community, which includes a diverse range of start-ups from a myriad of industries — from insurance to education, supply chain finance to payment messaging — building and deploying apps for customers across the globe. Over 300 startups are currently enrolled in our program, and more than half of these are already building an enterprise blockchain app for their industry on Corda.
Thank you so much for your time and insights, David. We look forward to seeing how blockchain continues to evolve, and how platforms and ecosystems can help to foster innovation. And, if you want to learn more about the state of DeFi, our report, “Decentralised Finance: Usecases & Risks for Mass Adoption”, is a good place to start.