Chain Venturer: Mike Grantis of Contango Digital Assets

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Happy Weekend 🙋🏻‍♂️,

Welcome to Chain Venturer, a series of intriguing conversations with crypto investors. This week, we have Mike Grantis from Contango Digital Assets.

Contango Digital Assets is a crypto-native venture firm investing in companies that accelerate the global adoption of decentralized technology. It serves as a parent company of specialized business lines, including Contango Fund (a crypto VC fund), Vanta (a private community), and Contango Labs (a venture builder).

Contango collaborates closely with crypto founders, providing not only capital investment but also strategic partnerships to nurture growth and innovation.

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Mike Grantis of Contango Digital Assets

Mike Grantis is the co-founder and managing partner of Contango Digital Assets, a crypto-native venture firm investing in companies that accelerate the global adoption of decentralized technology. Contango collaborates closely with crypto founders, providing not only capital investment but also strategic partnerships to nurture growth and innovation.

Mike's entry into crypto began with a role at an OTC desk in Canada, followed by his early involvement with Satstreet, where he played a key part in scaling the business during its first year. Afterwards, Mike ventured into the crypto media world, founding a company named CryptoWeekly, which he successfully exited in 2023.

Together with his co-founder Joshua Field, Mike established Contango in June 2021, pooling their own funds initially. Their background in liquid token investing and angel investing laid the groundwork for Contango. The decision to merge their resources was strategic, aiming to enhance their investment capacity and influence.

Contango then brought in some of Mike and Joshua's connections from the OTC space, alongside support from friends and family, it then gradually moved to syndicate capital for early-stage crypto projects. To date, Contango has raised and invested around $8M in 65 different projects.

Contango's commitment to value addition extends beyond mere funding. The firm actively engages in advisory roles, community growth hacking, project launch support, influencer marketing, and community management to ensure the success and scalability of early-stage ventures.

Here’s my conversation with Mike Grantis.

Quick takeaways:

• Contango Digital Assets is the parent company of Contango Fund, Contango Labs, and Vanta (a private community).

• Contango Fund I is a $5M fund dedicated to investing in North American companies at the convergence of blockchain and AI.

• Mike views blockchain and AI as parallel industries poised for significant convergence.AI necessitates blockchain to establish a source of truth and ‘proof of human’.

• Contango is bullish on the Bittensor ecosystem, where the token is TAO. Contango holds a treasury position and is actively involved in building within this ecosystem, particularly on the lab side. 

• A community that benefits from the substantial price appreciation of its tokens typically becomes a robust marketing force for the protocol.

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What was the defining moment that drew you into the world of crypto?

Mike's interest in the world of crypto was notably influenced by the documentary series "Hidden Secrets of Money" by Mike Maloney. The insights from the series deepened his understanding of global economics more than his formal education had. 

His encounter with Bitcoin began practically, as a payment method for his digital marketing business. With a background in entrepreneurship and a grasp of Austrian economics and libertarian principles, Bitcoin's concept resonated with him.

The defining moment: It was after watching the Bitcoin-focused episode in the "Hidden Secrets of Money" series that Mike fully appreciated the potential impact of crypto. Motivated by this realization, he immersed himself in the industry and created "Bitcoin 101," a course that attracted 13,000 participants from 50 countries. 

This venture not only confirmed the public's interest in crypto but also affirmed Mike's commitment to the field. These moments were pivotal for Mike, solidifying his decision to pursue a path in the crypto sector.

What is Contango Digital?

Mike regards Contango Digital Assets as a parent company that serves as a holding entity for various specialized business lines. Among these is Contango Fund I, a $5M traditional fund dedicated to investing in North American companies at the convergence of blockchain and AI.

Contango also has Vanta, Contango's private community akin to a syndicate DAO. This curated collective of approximately 300 individuals, encountered throughout the crypto space, encompasses key opinion leaders, successful post-exit founders, investment analysts, and notable angel investors. This group, meticulously assembled over time by Mike and Joshua, operates under a DAO structure, actively syndicating capital for early-stage investment ventures.

On the venture builder side, under Contango Labs, the venture is crafting software solutions beneficial for internal operations and potentially serviceable to external entities like DAOs, VCs, syndicates, or private investors. One such platform, Raisebase, is designed as a comprehensive tool for Web3 investors, streamlining the pooling and distribution of funds and providing an investment management dashboard to monitor private sales, track investments, and receive notifications for unlocks, among other features. 

Can you elaborate more on Contango’s Blockchain X AI thesis?

Mike views blockchain and AI as parallel industries poised for significant convergence, fostering a mutual co-evolution.

From this perspective, AI necessitates blockchain to establish a source of truth and ‘proof of human’, a necessity in an era where distinguishing human-generated content from AI-generated material becomes increasingly challenging. As generative AI becomes more pervasive, the need for provenance and authentication technologies, evolving in tandem with AI, becomes paramount.

Moreover, as AI gains autonomy in managing daily tasks, the likelihood of these agents relying on traditional financial infrastructures like SWIFT or conventional digital banking seems minimal. A digital-native AI would naturally gravitate towards a digital-native currency, illustrating a harmonious relationship between the two technologies.

Contango also perceives the decentralization of AI as a critical issue, with the centralization of AI being one of the most significant but least understood risks to humanity. This concern is not rooted in the fear of AI commandeering destructive forces but in the potential for a concentrated ownership of powerful AI technologies to emerge, potentially leading to disproportionate control and influence.

Decentralized AI, as championed by Contango, aims to democratize the benefits of AI, allowing widespread ownership and participatory value creation, thereby elevating society collectively. Blockchain and crypto have emerged as pivotal technologies for actualizing this vision of decentralization. Hence, Contango's commitment to financing projects in this nexus is driven not merely by financial motives but by a profound ethical and moral imperative.

Any projects that you're particularly excited about?

Mike expresses considerable enthusiasm for the developments within the Bittensor ecosystem, where the token is TAO. Contango holds a treasury position and is actively involved in building within this ecosystem, particularly on the lab side. 

Bittensor's innovation is particularly noteworthy, having established a peer-to-peer market for digital commodities, ranging from compute power, storage, and bandwidth, to machine intelligence capabilities like image, music, and text generation.

• This network enables the sourcing of specific digital resources as needed, facilitating the creation of complex applications on a comprehensive market for digital commodities.

The tokenomic structure of Bittensor, inspired by Bitcoin, features a cap of 21 million with a four-year halving cycle, no pre-mine, no VC capital overhang, and an immaculate conception, mirroring Bitcoin's original approach.

The decentralized computing model, as demonstrated by Bitcoin, scales more efficiently than centralized alternatives. For instance, the Bitcoin network boasts a computing power exceeding 500 times that of all of Google's data centers, highlighting the unparalleled potential of decentralized networks.

In the realm of AI, the size of the model is critical. While centralized entities develop robust models with immense complexity, Bittensor allows any developer to contribute their machine-learning models to the ecosystem. These models, when utilized, can earn TAO rewards, akin to mining. This open-source approach enables millions of developers worldwide to contribute and interconnect their models, enhancing the network's value exponentially and surpassing the capabilities of centralized models.

Mike believes that these core facets position decentralized AI models for success, not just technically but also ethically, due to the inherent advantages of decentralization over centralization. He emphasizes that the conversation around decentralized AI is not only necessary but should be more prevalent, given the significant technical and moral implications of this rapidly evolving field.

Can you elaborate more on what is Vanta?

Vanta represents a private, curated community of Web3 tastemakers, carefully assembled by Mike and his team.

These tastemakers, influential figures in the ecosystem, range from influencers, product founders, and investment analysts, to private and angel investors. Over 14 years, Mike and Josh have fostered relationships with key individuals, forming a powerful collective within the ecosystem, operating under a DAO structure.

• Vanta, functioning as a syndicate DAO, empowers its members to pool capital and contribute to the investment process, with the autonomy to invest varying amounts in projects and provide input on investment choices. The community’s consensus drives the investment decisions, ensuring a collaborative and democratic approach.

• Vanta is now poised to elevate its operations through an NFT launch, offering 500 NFTs priced at 1.5 ETH each. These NFTs serve not just as a membership pass granting access to Vanta's private community Discord and the opportunity to invest alongside the community but also offer substantial financial advantages. Vanta has halved its pooling or service fees for NFT holders from 10% to 5%.

• Furthermore, holding three NFTs grants access to a 'whale chat,' offering early deal access and guaranteed allocations. This tiered approach ensures a balanced and incentivized participation structure. Beyond these immediate benefits, the NFT signifies a stake in Vanta's evolutionary journey towards complete decentralization over the next 50 deals.

The transition to a fully decentralized DAO involves democratizing processes such as deal flow, scouting, and research report generation, with community members being compensated for their contributions. Vanta is committed to activating its community through exclusive events and creating a treasury funded by half of the NFT mint fees and future pooling fees. This treasury, governed by the community, will drive decisions on capital allocation, reinforcing the ethos of community ownership and shared success.

Mike emphasizes that Vanta's distinction lies not in being a mere pool group but in the tangible value its members bring to the table. With a network of influential figures, technical experts, and seasoned entrepreneurs, Vanta positions itself as a value-added partner on any cap table, offering a decentralized alternative to traditional VC involvement.

This approach enables projects to harness a broad spectrum of support, from marketing and beta testing to strategic advice and resource provision, underscoring Vanta's commitment to mutual growth and collaborative success in the Web3 space.

What are your thoughts on Cosmos?

Mike acknowledges Cosmos as a trailblazer in the web3 space, particularly for pioneering the appchain concept. Technically, he regards Cosmos developers as exceptionally astute, often standing out as some of the most intelligent in the field. However, Mike points out that Cosmos's primary shortfall lies in its marketing strategy.

One critical aspect he highlights is the performance of Cosmos's native token, ATOM, which doesn't exhibit the same value accumulation as tokens from networks like Solana.

• This discrepancy is significant because a community that benefits from the substantial appreciation of its tokens typically becomes a robust marketing force for the protocol.

Unfortunately, due to the way ATOM's tokenomics are structured, it doesn't capture the collective value of all appchains built on Cosmos. This lack of value accrual means Cosmos doesn't foster the same extensive network of grassroots marketers that ecosystems like Ethereum and Solana have cultivated.

This situation places Cosmos in a paradoxical position. While it boasts one of the most technically competent developer communities, it hasn't generated comparable wealth for its community, unlike what's seen in ecosystems like Solana. This disparity makes it challenging to engage the average user in promoting the product, especially if they haven't already benefited significantly from holding the token.

Despite these challenges, Mike believes in the inherent value within the Cosmos ecosystem and acknowledges its significant contributions and potential in the broader web3 landscape.

What is the sentiment towards crypto in Canada?

Mike notes that Canada has a profound connection with crypto, having been the birthplace of Ethereum. This history has fostered a community rich in talent within the crypto space.

While Mike acknowledges that Canada's regulatory clarity could be improved, he points out that it's relatively more favorable compared to the United States.

• For instance, Canada was proactive in approving a spot Bitcoin ETF, a significant step ahead of many other countries.

Initially, Contango aimed to become one of Canada's most regulated token funds. The team embarked on establishing a GP/LP structure within the country. However, in 2021, amidst ongoing lobbying by 3iQ with the Ontario Securities Commission and substantial litigation costs, Contango decided that the Canadian regulatory landscape wasn't sufficiently mature for its ambitions. Consequently, they pivoted to the British Virgin Islands, capitalizing on its more developed digital asset regulatory framework.

Nevertheless, with the gradual maturation of regulatory clarity in Canada, Contango is now revisiting its initial mission. The firm is considering launching a fund in Canada, coupled with an offshore feeder fund, reflecting a strategic response to the evolving regulatory environment.

Mike is optimistic about the future, especially with the ETF approval in the US signaling a potential easing of the regulatory landscape in Canada. He anticipates that as traditional institutions solidify their presence in the crypto space, the market will open up further, potentially unlocking more opportunities for retail participation. This progress, he believes, is contingent on the extent to which these institutions can profit and establish their positions in the market.

Rapid Fire Questions

1. What's one piece of content every aspiring investment professional should read/watch?

   • Hidden Secrets Of Money - Mike Maloney

2. What’s your biggest investment mistake?

   • Selling NVIDIA in 2020

3. What’s the most underrated use case of crypto?

   • The decentralization of ownership

4. What’s your most contrarian view in crypto right now?

   • Mike aligns with Bittensor’s founder Jacob Steeves' outlook, viewing current global disruptions as a shift towards a more prosperous era, driven by the rise of decentralized technologies and AI, marking a transformative phase away from traditional centralized systems.

5. What’s the biggest risk that the crypto space is facing?

   • There's still considerable leverage in the system, along with a high degree of correlation among various assets in the ecosystem.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.