Mathias Ruch talks about the History of Crypto Valley

Transcript

My name is Matthias. I'm a founder and CEO of CV VC and CV Labs. That stands for Crypto Valley Venture Capital. So we have two activities. We invest in blockchain startups and we create startup ecosystems in Switzerland, here in Zug, but also around the globe. I have been an entrepreneur since 20 plus years and I was active during the 90s in the internet bubble. I kept in touch with digital tech startups and when we were looking into crowdfunding from an investment perspective in the markets, we stumbled across very large crypto-based

crowdfunding events around 2013 and we looked into that and we realized there is a technology behind it. The name of the technology is blockchain and there is something called Crypto Valley. And we had our company based here out of the Zug in 2016, focusing on digital startups but not necessarily on blockchain when we realized that something is happening here. Early vibe and first steps toward Crypto Valley There were companies that settled down early here in Zug and the Zug area such as the

Swiss companies Bitcoin Suisse, they were here when nobody understood what on- and off-ramping crypto means. And nobody understood that was actually a very good way to enter the Bitcoin world. And we've met with Niklas, the founder, and his whole team a couple of times when they were still in apartments, living in apartments, basically really they would also sleep there. And already then he had this kind of pirate attitude, long hair, but it was very compelling, you could see there is a lot of passion involved and strong belief that this

is going to be the future. I mean way more so compared to me, for example. So I'm a technology enthusiast, of course, and I believe in technology in many aspects but that conviction, this is going to be revolutionizing the world, that was really, you could really feel that in that apartment. And so we liked to go there. They were of course instrumental because they were servicing many of the companies that came here when it comes to on/off-ramping, onboarding investors.

And they were a crucial part of the infrastructure. And when you look at the ecosystem like the Crypto Valley, similar to the Silicon Valley, there's a couple of aspects that are always there. And if you narrow them down, basically you need talent, you need the founders, the projects, the great ideas in the end. Because normally if you have that, money follows automatically so the capital flows towards these great ideas but then you need of course infrastructure, you need service providers that can cater to the needs of the startups and the founders, you need basic technology, co-working spaces, universities that have the talent,

that can develop stuff. Many, many things, right? And then of course you need the regulatory environment and the supportive government. And all of that was there, about to be built. And that is, I think, what's differentiated Zug from many other regions in the world and why this could happen so fast. So going back to these pillars, I would say Bitcoin Swiss was really an infrastructure pillar, but also talent of course and then of course Ethereum settled down in 2013.

And there's many stories how they came here and the officials that welcomed them couldn't, of course, understand what they were about to do but helped them find an apartment. And they developed and finished the product here, launched it here, so that was absolutely crucial before my time. And then you had a growing community of people, of founders and people that wanted to create the ecosystem.

There were people engaged in the Crypto Valley Association, in task forces both on the government side and also on the private side of things. There were founders that brought their projects here and were very committed to being here. It was it was a mixture of government people that were supportive of early adopting service providers such as lawyers, Luka Müller for example , he was one of the crucial players here who, with his company MME, supported many of these startups and organizations in setting up the legal structure here.

They greatly evolved over time and have a big team now catering to these needs. So there's many people also like him that serviced the needs and we were happy to be part of that group that tried to create a sustainable ecosystem for these next-generation startups. Navigating the bad reputation of Bitcoin Yes, this tension between, "this is a technology that can change the world," and the fact that it's always controversial.

Innovation is often in the beginning a very controversial topic and creates fear because people don't understand it. That's a big problem also today with AI, for example. I was used to mitigating that because when I started my first companies in the early 90s, they were all in the internet space, and as a matter of fact I think my first product was a dating platform for teenagers, mid 90s, I would say, and you can imagine that... I liked what I did and it was a fun project but not all of the mothers of my colleagues in school,

female colleagues, liked what it was. So I was used to it because at the time, if you remember, what industry drove adoption or you know the development of the internet technology, it was the sex industry. at the time and many connected internet with the sex industry and if you do a dating platform, which was completely harmless, it was like, people meet people, that's it, online.

It had a... there was something to it. So we were addressing the topic then initially when we started our activities, we very much realized there is a big gap between the people here in the bubble in this Zug-Zürich area and the rest of Switzerland, the rest of the world, basically. But what was at risk was that the regulator, the government basically comes up with a legal framework that will kill innovation. So we wanted to prevent dumb regulation and have a smart one instead.

That's when we became active and started to talk to the national government as well and of course explaining what the technology is, and what's the upside, what's the downside, addressing these aspects was crucial, and we did that for years. So normally, initially a discussion about Crypto Valley, it would take one minute and 37 seconds and you would actually talk about terrorism financing, and it took a long time until that changed. So the narrative that cryptocurrencies and Bitcoin is just a use case of the technology, of a great technology with a lot of potential called blockchain, that only came later.

So today you can talk about blockchain as a technology and various use cases besides Bitcoin. So maybe Bitcoin is still the number one topic in the media, but in professional circles you are discussing use cases and the potential of blockchain technology on a much broader range. The first CV Summit The first CV Summit, many people think because we have just had our ninth edition, and of course it's evolved over time, I think it's a professional event these days. We know what we do, it's well-visited from all over the world but they think that was a concept, we said,

"let's do a conference and that's how we'll design it." Which wasn't the case because one of our first activities that the co-founders of our activities did in 2016, we started a startup competition for insurance, blockchain-based insurance startups, which meant we were calling for proposals, basically ideas, what can you do with blockchain in the insurance sector. And we would then go through a selection process and nominate three winners, and there

would be an overall winner. And, the closer we came to nominating and deciding the winner, we thought, "well, this has to happen in some public form, so we need a stage." And when we started to think that through, we said, "well, that's not going to take much longer than an hour. Who's going to come for an hour to watch ten startups pitch in front of a couple of people? Is that really interesting? Is that something we can do?"

And so, "no, we have to create some content around it." And that's how the CV Summit started. We've had this final event of the competition, where we would do the selection process on stage, and each startup would pitch for, I think, one minute. And then we would announce the winner. And we said, "okay, let's add some panels to it, since we have a whole ecosystem of interesting founders, pioneers, startups, service providers here.

Let's have them on stage, and let's have them share their experiences." And that's how, initially it was only half a day, the CV Summit came to reality and evolved over time. Crypto Valley now: Swiss Finish Where are we today, when we talk about crypto valley? I initially said, the 'why' is a different one. And I think something happened that is very typically Swiss in my opinion. We have it all. We don't have any problems. We are very wealthy.

Most of the people have a proper life, we have jobs, we have money, we can consume. And then we're told, since many generations, we're the best, we're the most innovative. We have the best universities, we have the best schools. And then what happens is, you take things for granted. And if you don't have to fight really, maybe you lose touch. And I think we've lost a bit... this sense of urgency, this drive to do the next step.

We have the legal framework now. We have the companies here. What's there more to do? And I think that's happening a bit right now. When of course, meanwhile, other jurisdictions, other countries, other people, they have caught up. Many other governments have identified blockchain, crypto, this technology as a huge opportunity. And of course, they also shape their environments accordingly. They create legal frameworks that work. And in a sector that is so fast, that is so innovative, people, founders, projects, and companies are very agile.

They go where it's easy. And we have to be very cautious that we don't lose this pole position, that we don't lose this competitive advantage right now. And I think that is a curcial moment, where we have to reactivate this fascination, we have to reactivate this electrifying way to look at Crypto Valley. Because I know it's still there, we still have the people.

We have new people in the system. But I think it has lost a bit its glow, in the meantime. What should Crypto Valley do now? What Crypto Valley should do, and we have to understand Crypto Valley as all of Switzerland these days, right? What can we shape? We can shape a bit of local frameworks, cantonal frameworks, but I think where it's really important is on the national level. There's a term called Swiss finish. If there are standards, you just add 10 or 20 percent on top and make it even a bit harder to achieve something or do something in a certain area.

And that Swiss finish is a bit dangerous also here for Crypto Valley. What we should do is we should be a bit more corageous, take a bit more risk when it comes to being able to shape the Financial Markets 2.0, the Capital Markets 2.0. So this really next version of many industries that are going to be technology and digitally driven. Because we could really become a global hotspot for digital innovation technology,

such as crypto and blockchain, where we already are in a pole position. But we need to be active to not lose it. So more courage, take more risks is something that we as Swiss citizens all should take. How has your own company changed during the development of Crypto Valley? So our biggest change over time compared to when we started in 2016 is that we are a global company today. And as I said, of course, other jurisdictions, other countries have evolved and identified this opportunity as well. So we as an investor, we need to be where the best startups are

globally. So we started to expand internationally. We have hubs, of course, still here in Zug and in Vaduz, but then also in Lisbon, Portugal; in Berlin, Germany, and also a hub in Cape Town, South Africa. Why? We have an Africa strategy because we think that the real use cases of blockchain are not so much tailored to the needs of first-world countries, but rather more to emerging countries, where you can see that challenges suddenly become opportunities.

And that's very much the case on the African continent. For me, being able to transform this Crypto Valley vision and bring it to a global level and travel internationally, and experience founders and ideas from all over the world has been very fulfilling and it's probably the the greatest thing that happened to me in my professional life. We have all also changed, as a company.

Now for me personally, it means that I'm the old guy now, which is really interesting. This industry is so young and it's so great to see new talent joining these activities. And I'm currently in the process where, I don't have to shape everything and be active everywhere. We have now a size where people develop great ideas and shape their part of our company as they see it.

And for me personally, that's really great. Because I can see how this can go on and move forward. We've grown, so we're more people, we're probably also more professional. Normally, a company in these early stages goes through various stages. You maybe lose a bit of touch because you're more people. You have to change your organization. I think we're also a bit more clear, more focused when it comes to what we actually do. What we want to do, where we want to go, what's our mission, what's our vision, where do we want to end up, where do we say no.

That's always been very important to me, to be very focused. And if you are active in an ocean of opportunities, you could do anything or something different every day because there's so many opportunities and ideas around. It's very important to stay focused. And that has always been one of my goals because that's just how I am. And I think we've managed to be even more focused over the years. Conclusion: Ten Years Crypto Valley Ten years Crypto Valley.

To me, it's only a success story. I mean, I'm just grateful and thankful that I am in the middle of this ocean of opportunities. Every day, there is something new I can learn. Of course, there has been ups and downs, but that's something that happens everywhere all the time, so you just try to learn from maybe the mistakes you've made. I and we have done them as well. But there's only upside. There's only upside if you are as privileged as we are.

With all these opportunities and great people that come here, I'm just really grateful that this happened in front of my door.