The venture arm of one of the most recognizable names in the tech industry hasn't yet put its money where its mouth is on blockchain – but that may be about to change.
While global tech giant IBM has so far focused mostly on investing employee time and energy into the emerging technology, it's only just now gearing up to take an equity stake in an industry startup. In what will no doubt be taken as a sign of the blockchain industry's maturity, for IBM Ventures, investing cash is finally becoming more attractive.
And with several hurdles removed from the investment firm's strategy – including, most notably, the need for the rounds to be Series B or higher – IBM Ventures has got its eyes on candidates.
Christoph Auer-Welsbach, a partner at the firm, told CoinDesk:
"From a time perspective, the time already is right."
Auer-Welsbach went on to shine a light on who the companies may be, hinting that the blockchain startups he's been watching are in the supply chain management and compliance verticals.
Investing in blockchain
In short, a cash investment in a blockchain company is square in IBM Venture's sights, but there are several conditions that now need to be met. For starters, IBM's investments are expected to occur within 18 months to five years of the company's maturity – the widespread adoption of its product – and further, investments are limited to purveyors of business-to-business products.
This last criteria is one of the reasons IBM has eschewed cryptocurrency applications, said Auer-Welsbach.
He told CoinDesk:
"Most companies in the space are in the cryptocurrency field, which we don’t see from a B2B perspective as the ultimate angle for us to add value."
Plus, IBM's main priority continues to be to creating critical mass around its blockchain platforms (IBM Blockchain Platform and Hyperledger Fabric), and this trumps generating revenue on any investments.
In order for a company to attract Auer-Welsbach's attention, then, it has to have a proven, repeatably successful business model, with multiple clients, making it better suited for the kinds of interaction that create a strong sense of community around a platform.
For example, IBM Ventures recently opened up its coffers as the lead investor of a $15 million round in Lightbend, an open-source platform for users of the Scala machine-learning language that already has multiple corporate customers.
Building the fabric
But because there aren't many blockchain companies at that level, Hyperledger Fabric remains IBM's pride and joy for cultivating its work with the blockchain industry.
Within Hyperledger Fabric, groups of like-minded firms often develop into more formalized consortia – such as the global trade digitization effort led by shipping giant Maersk and a food safety effort spearheaded by Walmart.
In interview with CoinDesk, the general manager of IBM's blockchain unit, Marie Wieck, elaborated on Auer-Welsbach's notion that the company wants to develop more such communities.
Specifically, Wieck said that IBM's internal investment in cloud computing could be seen as the "plumbing layer" of blockchain ecosystems, while outside IBM, getting institutional investors like Boldstart VC to back companies building enterprise solutions on Hyperledger Fabric is key to its mission.
In his work with Fabric, Auer-Welsbach is on the lookout for services that can be implemented with only minimal consulting, and platforms that can be adjusted for new industries with just a few "little tweaks here and there."
"That's the time when I would say this is really interesting to us to invest in."
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