Why Verda Bets on Brand and Owning the Customer in Emerging-Market Stablecoins

Cool. Alright. We're back for another live conversation here in Mexico City. We're in the StableDash. I guess we're gonna call this the StableDash podcast booth. It's been really fun. We've been here with Bits of Business. Booth is powered by Agora. StableDash live is sponsored by Agora, built for global institutions, moving money at the speed of the Internet. You can learn more at agora.finance.

We've been having this is our second day here at the conference, having live conversations with the top founders, operators, and investors in the space. So, Alex, let's start with your intro and what you're building at at, Verida Ventures, and we'll kick it kick it off with that. Sounds good. And thank you for the invitation.

So I founded Verida Ventures about a year and a half ago, solely focused on stablecoin infrastructure, in particular around emerging markets, global south, and cross border.

An interesting time to start a stablecoin focused. I think that was right around the time we started our media business, just like a year and a half ago. Perfect time to kinda get in the game with the infrastructure stack.

Absolutely. So this is pretty genius Yep. Which follow like, getting past. And because we were early, we we actually got a lot of advantages in getting some interesting strategic LPs. Like, we're the first fund that, Tether invested in. So because of sort of that first to market early advantage, we were able to land some interesting

strategic LPs as well. Yeah. How did, yeah. Maybe we start there. So how did the maybe the the history of your career lead you to the point where that was a good idea or that was something that made sense? You you I'm I'm gathering you probably had some, you know, you knew it was the right place at the right time to go build this. Like, where did that

insight from your background come from? So I've I've basically been building towards the same thing for the past decade. And, yeah, I started my career in traditional finance, very boring, Goldman Sachs and JPMorgan. And it was very clear to me that the financial system was quite broken and inefficient and did not work for the vast majority of people. So after that, I I started a equity crowd investing platform.

And it was around that time that I read the Ethereum white paper and realized that there's a far more efficient way to raise capital to transact. And so I went head first and created a or cofounded a a sort of cross blockchain liquidity API company. The problem at the time I realized was that the infrastructure wasn't there. And so this Like, late teens? Or This is 2018, 2019. Yeah. So if you remember back then, like, an Ethereum transaction could cost, like, a $100. Yep.

And you're waiting, like, up to an hour for it to properly, like, settle, assuming, like, paid enough gas to to actually get it, you know, in the mem like, across the mempool. And you've survived, like, the awful user experience to get there, to create a wallet or whatever it might be. So I created so create, yeah, created this wallet and liquidity API, but then we were bottlenecked at the infrastructure level.

So I ended up joining Cello in 2019 before so pretest net, very early days, just sort of had a a white paper and, you know, one of the first sort of dozen people to build out sort of a mobile first stablecoin payment blockchain. So it started as a layer one, as a fork of Ethereum, but, like and then it went to to eventually become a layer two. But it was very to me, it appealed to me on many levels.

Like, one, they had public key address phone number mapping, so you could send money to anybody in the world just knowing their phone number. A second piece was you could pay gas fees with the stablecoin. So instead of needing to use ETH to pay gas, you could just use USDT, USDC to pay the gas fee. Yep. So fast forward to 2023, like, Infrared, in my opinion, was largely solved for. Meaning, you know, you know, n e l two was processing transactions for less than a penny. You had near instant settlement.

Throughput was in the thousands of transactions.

So And there were some great companies using, like, the the brands we we've actually hosted some of these these founders, like Phone Bank, Opera. Portcos. Yeah. And then there's another wallet begins with a v. I think they got acquired. I'm forgetting the name. Met Laura. Yeah. Jackie. Yeah. Like, some really, really amazing founders and businesses, like, within that sello ecosystem.

Yeah. And and from day one, embedded in the white paper was, like, mobile first stablecoin payments. Like, that was, like, the vision from day one. And now we're seeing a lot of that play out. And so is that in many ways, it was quite, like, ahead of its time in visionary. So fast forward to 2023, like, in my view, the the this infrastructure blockchain infra bottleneck was solved for, and I wanted to move up the stack to be closer to the application layer. And I was thinking, okay.

What's the best way to express this bullishness? Because we felt that there are gonna be a lot of regional champions. So you're gonna have, like, a regional champion in Latin, a regional champion in in Africa, and it's, you know, it's gonna be somewhat fragmented in that sense. So I decided the best way to express that bullishness and sort of help move the space forward was through a fund.

So I created Verda Ventures, as a stablecoin and for focused fund, with a, you know, global mandate in about sort of end of twenty twenty four, beginning of twenty twenty five. And it's yeah. I I believe we're now sort of able to realize the value from the infrastructure that has been built over the last decade, and we're placing our our bets on what I think are the best founders in the space. Let's go. Okay. So give us the kind of

bird's eye view of the firm right now. So what have you raised? Who have you raised from? And then would love to like kind of highlight a couple of these, even companies in the room right now that you guys have gotten behind. What does that look like so far? I think a third of the logos in this Yeah. We got Mural. Yeah. MuralPay,

Lumex, Eldorado. Like, I I think that's I wanna say, like, a quarter of the the booths here are companies we've Nice. Invested in. Big raise from them yesterday. That was awesome. Yes. Shout out to the Eldorado team. Yeah. No. To Guillermo is incredible. They have a great team. And, yeah, we were we're one of the the investors in that last round alongside, Paradigm and and Coinbase Ventures. So, yeah, we the basic situation, we raised $40,000,000 in, in capital.

We've deployed, over 25 of that, and we continue to to actively look for the best companies in the space. So the the primary areas we've invested in are, like, the the leaders in LatAm, Africa, and Southeast Asia. So in Africa, for example, we invested in yellow card through, through secondaries in that case. And we're very bullish on Latam, Africa, and Southeast Asia as sort of the the areas that are gonna see the most explosive growth around stablecoin adoption

in the next twelve to eighteen months. Yep. So what are some of these, like, key focus areas in terms of opportunities? I think you mentioned, like, FX is one, privacy is another, agent to commerce is another. I don't know if you want to hit one of those or how you think about the opportunity that's ahead, but would love to would love to kind of get into your brain a little bit in terms of where you really see defensibility and like true value being created as as kind of the coverers or followers of the space.

It's like we have a similar vantage point in some ways of like tracking and following what's happening. And it seems like we're in a really interesting moment of, like frankly, I think a lot of these kind of orchestrator layer middle middle layer companies are struggling to find their footing and truly know who they are and where they play. Everyone's kinda trying to be a lot of things. And at least right now, we're seeing we're, like, we're kind of in the middle of this consolidation period.

So I'd I just would love your, like, macro takes on on any of those three topics and how you're thinking about, like, yeah, truly what's valuable. Yeah. Loaded question.

Yeah. A lot of good embedded questions there. So in in terms of, like, what's truly valuable, in general, we are looking at companies that own the customer or the client relationship.

Snaps. We just got a snap for that. Yes.

Yes. Because that's extremely sticky Mhmm. Particularly for these cross border b to b payments. You know, they are once they invest in a relationship with these companies, they tend not to move. And there's there's a few reasons behind that. One is, you know, their compliance stack is built out. Right? So rewriting that compliance stack around a different company, very, you know, cumbersome, high friction.

Another is they have a lot of their treasury management associated with these these, stablecoin infra facilitators. So there's sort of multi several dimensions to the relationship that make it extremely sticky. So that's in terms of value accrual, like, that's a key focus area for us. And, you know, like, it It's like Eldorado is a great example of that. Eldorado is a great example. I think Yellow Card is another great example of this where, you know, they really have the brand. Yes.

They have the They're not embedding themselves under some other company. It's like when you think about who you're working with, you think of them. Correct. Yeah. Right? If I say if it's a business in Africa, then you say Stablecoin Infra, like, more likely than not, they're gonna think a yellow card. Another one we did, which you just mentioned, was PhoneBanc. Yeah. Awesome. Also Shout out, Chris. Yeah. The both of the founders' names are Chris. Yes. And so and he's also a super strong founder Yeah.

And similarly has has taken that route. So on the on the three sort of verticals you mentioned, I think the the nearest term biggest opportunity is the FX piece. I think that's, like, very ripe for disruption. Yeah. So FX is the largest market by volume. It was in the tens of trillions of dollars on a daily basis, and it's still extremely inefficient. And there's, like a lot of the transactions happen through OTC desks and relationship driven Manual process.

Super manual and and, you know, has to be done in super big clips. And, you know, you have, like, all these inefficiencies around the rates. Like, there's a black market rate in some of these, and then there's, like, an official market rate. And there's a clear opportunity here. Just like you had a breakthrough with creating markets through Uniswap. Anybody could create the market. You had a automated market maker.

Like, we're gonna see breakthroughs to dramatically increase the efficiency of FX transactions on chain, I think, within the next twenty four months. So near term, we see that as the biggest opportunity, and you're gonna see a lot of that go through the relationships I just mentioned. Meaning, you know, you have a one of our, you know, portfolio companies, Alford Pay, and others, Mural Pay. They own these relationships.

In our mind, it's a natural evolution for them to offer this additional service, meaning they're already helping you facilitate cross border payments.

They're already helping you manage, you know, some of your treasury, and then you sort of cross sell or add on this additional layer of providing FX services so that they these businesses, which are operating in different jurisdictions, different currency regimes, can make sure they have the right balance of currencies to meet their liabilities and their local expenses in those markets. So we think that's sort of a very natural evolution of where we are. Right? Obviously It seems so confusing to me sometimes to

know the difference between, like, you have, like, just think about Alfred or a company like them. You have, the treasury management business, and then you have these, like, on and off ramping or how what we call on and off ramping where you're swapping between, like, stablecoin to fiat, fiat to stablecoin. Like, that seems already very similar to this, like, FX. Because, like, FX could be traditional, but it can also be, like, tokenized in terms of how these things are represented.

We we were meeting with, like, EtherFuse earlier today. You have Mental Labs doing some really cool stuff. Agora is doing some really cool stuff. Like, like, what how do you differentiate maybe those kind of traditional ways of thinking about on off treasury management, moving between stables and fiat versus, like,

really, like, FX more broadly? Like, how how do you think about the differences there? So we're in this transition period where you kinda have really good native support of US dollar stablecoins and tokenization, so you think USDT, USDC, but not so much for the non USD pairs. And do you kinda have this relatively inefficient process where you're going, you know, between sort of a local, fiat account into USDT USDC?

And we think the natural evolution is you're going to have, you know, a tokenized Mexican peso that can directly interact with the USDT and, you know, real time settlement, you know, kind of transaction fees under, you know, 10¢. Yeah. And It's like with BITSOs, like, MXNB, for example. Right. And so, like, I know But it's still early days. Yeah.

And and like, we think that it it is, like, a little bit harder than many people think to build out the proper liquidity and network effects, but our bet is that it's gonna happen in the next twelve to twenty four months. Is that why, in your view, you see just, like,

the the the brand that comes to mind is OpenFX and just, like, how much did they raise again? I'm, like, blanking. It was just absolutely I was, like, I saw that raised announcement, and I was, like, like, just completely blown away by it. Do you think that's why that is so large is that they can kind of solve some of those liquidity problems with that capital? Is that the idea, do you think?

I think that is part of the idea. I think so we're we're relatively cheap as a fund. Like, we don't sort of you know, we're not Andreessen Horowitz with $2,000,000,000 raised or Katie Hahn with a billion dollars raised. So, you know, those kind of rounds, we we generally are are, you know, think are a little expensive. But with that significant amount of capital, they can use some of it to create liquidity pools, to support,

sort of some of the initial bootstrapping. And that's like oh, is that generally a good is that, like, a good use are you seeing that type of behavior where, like, the investment capital that comes in is actually used to kind of solve some of these network effect problems? Is that common? To be honest with you, I think there's

too much money. I I yes. I think there's too much money chasing highly bid up opportunities, and our view on the market is that we want to invest in players that already own the relationship and then expand the capabilities and offerings to those preexisting clients with FX versus try to, like, create everything themselves from scratch. You know, we have a great portfolio company called Kappa. Founders Fundy, and he works very closely with with Bitso.

And they're able to collaborate in a very capital efficient way and just had massive revenue growth and, you know, didn't need, like, a massive raise to to do it. But they were able to sort of tap on these preexisting resources, these preexisting relationships, and build out that traction. Yeah. So those are the kind of opportunities that that we're bullish on and and see the clearest go to market for. Yeah. And so talk a little bit about the,

something that you seem really clear on that I also really resonate with and believe in that, I see a lot of companies underprioritize is this idea of brand and owning the relationship. And, like, I think we're about to enter this, like, really powerful, like, value around brand and being able to use a lot of the infrastructure to go build the new primitives. Why do you think that why do you think things like brand is so important right now?

Why do you think why do you think that's so powerful when you're when you're looking at companies to invest in?

I think it's because when you have a brand, you become the default choice. So, like, when when people buy a phone, like, they often just buy iPhone, not even looking into, like, the other options. It's just the default option, and and that means you are acquiring customers for a much lower cost. So Apple doesn't, you know, have to worry as much about their competition because they're they're attracted to that brand, and they they become the sort of default, that people go to.

And so we look for the dominant brands in these in these regions. And in many ways, like, one of my chief jobs is to sort of pattern recognize what's working in one region and apply it to another region and find those local leaders, you know, either the top one, the top two.

And so as you look at some of the companies we've invested in in in this region, like like Alpharette, like BureauPay, they have a you know, emerged as a a brand that people trust, and that brand also translates into a lot of referrals, which is sort of the quickest conversion, the best form of marketing, to expand the business. So we we think that brand in general is a is a vastly underestimated asset.

And sometimes if you you can, like you can learn a lot by looking at other industries, and you see the value of brand you can you can more clearly see the value of brand in in by cross referencing. You know, it's like Coke or Pepsi. Is Coke really that good? Like, maybe, maybe not. But they have the brand. Mhmm. They have the distribution, and that is sort of a key attribute to their success. Yeah. Of course, you still have to have a great product, but great product plus brand is the is the magic formula. What

do you think is, more important right now? Brand or product? I mean, both are You need both, but, like, I do you see I see less brand focus and way more product focus right now.

Yeah. So there you're correct. Like and historically, our our, like, industry in general has had a lot of, like, tech nerds that have not valued the brand, the marketing, the sales piece nearly as much as they should. Mhmm. Ultimately, like, you can have a great technology, you can have a great product, but nobody uses it. It's not Sure. It's not very useful. So I I think you you you start, in my opinion, with a product that solves the most painful need, and then you evolve from there.

Instead of trying to, like, go out the door with the perfect product, you start with something that addresses the the pain point, and then with customer feedback, iterate from there. But we I mean, both are obviously critical, but I think in our industry, there has been a huge bias towards overly focusing on product without thinking about the go to market, the marketing, the sales. And in many cases, especially with Claude and AI now, the product is not the hardest part. Interesting. Yeah.

I mean, you you and I could could jam on Claude, could vibe code, and actually come up with an MVP on Claude code with relatively little effort. So I would say that this is be not only a preexisting bias, but it's being exacerbated as the worst direction be it due to the rise in AI

making product development much easier, much quicker. Yeah. Yeah. There's definitely a I think an outcome of this reality where media and, like, conversations like this become extremely important in decision making, whether that decision making is on behalf of a human being or an agent looking to, like, get insight. So, yeah, we could open a whole can of worms on that, but I know we we gotta wrap here. We're going a little over. So as we end, you are 25 out of the 40 deployed.

You're like a little over halfway through. What what can we expect from Verida Ventures through, through years end? How, what is like the typical check size? How often are you writing checks into these companies? Are you how how long of a runway are you expecting to go through that with?

What can we be expecting, especially for founders right now that are fundraising? Like, what should they know? Yeah. So the the total deployment period that we've been communicating is, like, three and a half to four years, and we're, like, a year and a half through that. Some of our remaining capital is gonna be doubling down on our winners. Like, some of the players I've mentioned, like, Europay, Alfred Pay, Lumex, etcetera. And we have, like, a little bit of a barbell approach to our portfolio con construction.

So we've got 80% of the money goes to sort of post revenue companies, and then we've got 20% that goes to these pre seed bets. So these are early days companies, and we are actively looking at both buckets right now. So a lot of our honestly, a lot of our best investments have come from founder referrals. So we're, you know, actively looking for, you know, who are who are the the best players, the the strongest founders.

We also you have a a website that we publish called stablescape.xyz, and it's the most comprehensive overview of stablecoin companies globally. So we track over 3,500 stablecoin companies in real time, and we're, you know, every day going over like, rinsing over that database of companies and looking at the the on chain analytics, the real time traction. So, you know, we're we're like I said, we're actively deploying capital. We are open to to that out. That's a and and you're mainly looking at, like

if we can we'll we'll have to pause there. I wanna talk so stablescape.xyz. Go check that out. .Xyz,

and it slices and dices the the data by all sorts of I mean, you can see the number of AgenTick stablecoin companies founded in a certain year. Okay. So you can you can really nerd out on the data. And it's it's completely open source. It's free. It's open source.

You know, you could quote it. No. No. We we're we believe in open source. Let's go. Cool, Alex. Thanks for the time. It's so fun. I'm excited to stay in touch with you. That was our live conversation with Alex from Verit Ventures. Thanks for tuning in live. We're gonna take a quick break, and we'll we'll keep it rolling. Alright. Thanks, sir. Thank you.