‘Crypto Is Inevitable’ So We’re Going ‘All In’: Meet Vance Spencer, Permabul
9 months ago Benito Santiago
Framework Ventures co-founder Vance Spencer remembers the exciting day in 2019 when he and his roommate Michael Anderson went “all in” with their first fund.
Having been into crypto since 2013, the pair were early adopters of ETH and raised as much as they could from $2, with Spencer in Netflix and Anderson in Snapchat and Dropbox.
That nest egg “was a really big part” of scraping together the money for the fund, which had only one outside partner, and also absorbed the proceeds from the sale of the Hashlets' digital collectors business.
“We were all in,” Spencer told the magazine.
“I remember the day we sold 401(k)s. I remember the day we sold all our shares in Netflix and Snapchat. And basically there was no Plan B. He was like, ‘This was going to work, or it was going to be a negative net worth.'
From the beginning, with the most successful early investments in Chainlink and Synthetics, the company's modus operandi was to buy around 5% of the project's token supply, roll up their sleeves and try to improve the coin offering, exchange, trading and management.
Spencer says the style was born, “really, just out of desperation. Like we need perfume to work and we want it to work in the first fund.
“Nobody asked us to do it. And to be honest, even though we didn't know what we were doing half the time, we learned,” he said.
“The team was two people for the first two years. It was me and Michael. [spending] Nights at the kitchen table. We didn't have an office. We do not charge any management fees from our fund. Now we say ‘pay us by performance'.
But thanks to its ability to see where things are headed before the rest of the space takes hold—too early, in some cases—Framework has raised $8 million in 2020, turning its kitchen-table operations into Framework Labs. Chainlinks and nodes on a graph.
I have been involved in crypto for 11 years
Sometimes the superpower is just to keep believing and also not blowing yourself up along the way.
— Vance Spencer (@pythianism) January 29, 2024
Table of Contents
Toggle400 million dollar fund for Framework Ventures
When 2021 magazine caught up with Anderson, the pair had raised $115 million in two funds and invested in Aave, The Graph, Tokemak, Zapper, Uniswap, Compound and others. In April 2022, they raised $400 million for a third fund, by which time Framework had accumulated $1.4 billion in assets.
Their success is a big “wow” to the Silicon Valley VC community, which looked down on them when they first raised the money.
“They were like, ‘That's not the right model' — like, ‘Fuck, you're not doing it right.' And I think we still have that. Not everyone respects crypto every year. They think it's a hoax, they think it's a joke,” he says.
But I think it's the most amazing industry. And we're here to make a framework work. But we are here to make the industry work. There aren't many protagonists, good characters, side characters are still here and still pushing crypto in a positive direction – and we want to be those people.
Avoiding “dogshit” SBF projects
While some crypto VCs buy cheap, hold the project until their tokens are unlocked, and then dump it on retail, Frameworks has avoided easy money so far.
“We had opportunities to invest in SBF projects when he was courting us. We had opportunities to invest in clear dog work,” he says. “And I'm not, and Michael's not willing to do that either,” he said, noting that all of their investments were long-term views.
“We can hold things in our fund for up to 10 years. That's what we intend to do for most projects,” he says.
About $200 million of the latest fund was earmarked for their conviction bets on the blockchain game, with investments in Illuvium and AI Arena, among others. Illuvium founder Kieran Warwick recalled that he spent weeks in frantic meetings with companies and finally closed the project's seed funding when he realized that his brother, Syntex founder Cain Warwick, had forgotten to introduce him to Framework.
As Kieran's range entered a few minutes, Spencer paused briefly, had a quick chat with Anderson, and then offered to support the entire round.
“I can't help but laugh as I recall the grueling month we spent talking to over 50 organizations. Here we were, moments into the meeting, and all around us were ready to commit. Vance and Michaels also thought it was funny and blamed Kane for surveillance.
Kieran says “Vance's insights and strategies” were critical in helping the project survive the bear market.
Ethereum and blind classmate days
Born in Toronto, the son of a bank manager, Spencer had “a pretty middle-of-the-road life” — at least until he moved to America for high school and began experimenting with identities and ideas.
“I was in the communist club in high school. I was trying to experiment with different philosophies,” he said. “I was a kid who wanted to skateboard and do philosophy, but I also had good standardized test scores. And that's how I got into college.”
In the year In 2009, he studied philosophy for one semester at the University of Southern California and switched to economics before realizing he “couldn't get a job.” Upon graduation, he got a job with Monitor Deloitte for two years.
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In the year Two life-changing events happened in 2015: First, he read the Ethereum white paper. “Immediately it was like a light bulb went off in my head,” he said. “A lot of what I feel about myself was revealed in this technology. The technology was forward, but it was fringe. And Spencer and the Ethereum project both wanted to change the world for the better.
Second, he got a job at a mail-order DVD company called Netflix. “It wasn't a good company to join,” he says of his three-year stay in Tokyo. But I saw them starting streaming, doing originals, starting internationally. It was a blast.”
When he joined, the streaming service was struggling in Japan, but Japan has become one of its biggest markets in Asia. “And as soon as that happened, I was like, ‘Well, I want to go do something else.' So I came back to the States and started the real crypto journey with Michael.
Vance Spencer meets Michael Anderson
In the year In 2015, Spencer reunited with his longtime business partner Anderson on “Living Blind Together.” Anderson was a Yale graduate who was rocked by the 2008 financial system collapse. The couple bonded immediately and lived together for years. in Venice, California and later in San Francisco.
“The first dinner we talked about ETH and it was on. I think ETH was $2 at that point, and we both started buying as much ETH as we could. And that was the genesis of our competitive friendship to plan on business ideas and want to do things with crypto,” recalls Spencer.
“I lived in an apartment with him, and we had no money, and we put everything into the fund. I lived in his mother's basement for about six months. So yeah, I mean, we did everything together.
He described Anderson as “the warm center of the universe. The rational. You know, I'm the hardest on the edge [guy]He said.
But we've basically worked together for eight years at this point, and we've literally never had an argument. It is rare,” he said.
The founders of Framework Venture invented Top Shot first
But not everything they touched turned to gold. Inspired by CryptoKitties, they foresaw great potential in connecting sports fans with NFL collectors and in 2018 created Hashletes, an NFL-licensed collectibles game.
“We were quick before Top Shot was invented,” he said of his later, wildly successful NBA Collectors Forum. I think, in the end, we were like a year, or a year and a half, too early.
We were the first crypto deal we negotiated with a major sports league. We were the first real crypto app on the iOS app store,” he said. But the rights cost $6 million a year, meaning even Hashlet's 50,000 users weren't enough to keep it afloat, and they sold it after 18 months.
They took the money from that and their crypto investments and “basically put it all in that first fund. And yeah, I mean, that was the first one that kind of put us on the map.”
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Investing in Chainlink
Although they have made angel investments in 20 projects, it was their 2017 decision to put between a third and a half of their funds into Chainlink's initial coin offering and LINK tokens at the $0.15–$0.17 mark that cemented their reputation.
“For us personally, it was everything. On the fund, that was probably the range. [of 33% to 50%]He said.
They became interested in the project after reading a Cornell University paper called “Town Crier” by Ari Jules (who co-authored the Chainlink white paper) describing a proven data feed for smart contracts.
At that time, it was very difficult to get reliable information on real-world prices and events into modern contracts, and problems with this information could lead to huge losses – as in 2019, an invalid word caused a loss of $ 1 billion in one hour at Syntex. .
“Blockchains are not connected to the Internet. You can't go and search Google,” he explained. “From the early days, even if you didn't know what the use cases were going to be, you knew that was going to be a problem anyway. “
Chainlink founder Sergey Nazarov, who has been in crypto since 2012 when he owned the smartcontract.com domain, impressed them. “There weren't a lot of good entrepreneurs to invest in back then,” says Spencer.
You can read Chainlink Thesis December 2017 online. Suffice it to say, LINK will hit nearly $50 in 2021, surpassing their $1 base case and $20 bullpen. Today's price of $20 represents a nearly 12,000% return on ICO investment.
At Chainlink, Oracle's investment has led to investments in Aave, dHEDGE Synthetix, Yearn.finance, Dodo, Edgeware, Fractal, Futureswap, Kava, Pods, Primitive, Teller, The Graph, and Zapper, while powering more DeFi.
A big bet on Synthetix pays off
Another major achievement was the purchase of SNX offering “5% or 7%” for $0.30 in 2019. They met Syntex founder Kane at the Polkadot conference and were excited about his plans to lead the old Haven stablecoin project. Protocol to Strange New Derivatives.
“And we knew that derivatives were a big market in crypto, and they are the first project that is taking for that purpose,” he says. “We know the community is extremely strong, we know Cain is a great leader, and we know they're going to do something. When it came out, we didn't think it would pop up completely.
Syntex built a head of steam in the “DeFi Summer” of 2020, and SNX topped $28 in early 2021. While Spencer didn't say when or how the fund made gains during the bull market, he said, “You know a big part of our portfolios are in really good times.
This is a lesson that anyone who has seen more than one cycle will tell you: If you never make a profit, you won't make any money before the cycle ends.
“My first Coinbase account was opened in 2012, 2013. So, I've seen this happen, I think four times this time,” he says.
Vance Spencer's prediction about crypto in 2024
Although their Syntex investment has generated a lot of value, the theory that it holds a good yield market is not yet complete – the annual volume is still less than the volume of Binance's daily derivatives.
The crypto game has yet to materialize. From the 2022 fund, around $200 million has been earmarked for the sector.
“It took longer than I thought to ship these games. They're not DeFi protocols. You can't ship them with two dudes and Red Bull,” he says. So, he thinks he just needs a little more time on the stove.
“Time goes by, and teams build … I think it's not played yet.
But Spencer's successful predictions far exceeded those that were yet to come true. In the year In a 2019 Bankless interview, “DeFi TVL was predicted to go from $5 billion to $100 billion. And it did, you know, and I invested in all the right protocols to ride that wave. We did well with that.”
So how does he see the development of the space today? If you've heard him interviewed on Bankless, you're familiar with the SMELL portfolio, which is basically a group of FAANG stocks similar to traditional markets with a core group of protocols similar to DeFi: Synthetix, Maker, Ethereum, Lido, and LINK (Chainlink).
“Look at what's happened in the last 10 to 15 years with tech companies, the ones that are winning, the ones that have distribution, branding, scale — they continue to mix. And that's what happens here.”
“Both have a path to $500 million to $1 billion in revenue in the next couple of years,” Spencer said of Maker and Lido in particular.
“I think you'll probably see $10 billion in real-world assets on-chain in the next year, and then maybe $100 billion to trillions in the next three to four years,” he said. , arguing that Wall Street is attracted by lower costs, faster settlement and wider distribution than being on the chain.
Of course, that chain will be Ethereum, because big money will not bomb-proof the most valuable assets on the blockchain.
Crypto predictions for the future
He also believes that artificial intelligence will eventually take over decentralized autonomous organizations: “There's no reason to have people in the middle living in the flesh.” It's just not a good solution.
“And I think, you know, if you look back at the previous cycle, the games were huge results,” he says. “I don't think you'd be surprised if you see one or two or three games to grow faster than people expect.”
Looking forward, he says.
“Crypto is somewhat inevitable. And really, every idea that's thrown out there works at some point. So I think I'm kind of a steward of it to some extent, and it takes some time to play out. But I've been here for 10 years. I'd be good to do another 20 or 30.” !”
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Andrew Fenton
Based in Melbourne, Andrew Fenton is a journalist and editor covering cryptocurrency and blockchain. He has worked as a film journalist for News Corp Australia, SA Wind and national entertainment writer for Melbourne Weekly.
Follow the author @andrewfenton
