In this episode of Inquisitive VC, host Nawaz Ahmed interviews Travis Scher, co-founder of North Island Ventures, to explore crypto investing and venture capital. Travis shares his journey from a disgruntled lawyer discovering Bitcoin in 2014 to becoming a seasoned crypto VC at Digital Currency Group and launching his own fund. He discusses North Island’s thesis on crypto as an enabling technology, the challenges of fundraising during COVID, and building a values-driven firm. Travis offers actionable insights on selecting partners, diversifying investments, and backing entrepreneurs solving real-world financial problems with blockchain, making this a must-listen for crypto investing enthusiasts.
Key Moments
[00:01:50] Travis’s crypto journey: From lawyer to crypto VC at Digital Currency Group.
[00:03:51] Lessons from DCG: Scaling blockchain investing during Ethereum’s rise.
[00:06:55] Choosing a partner: Values alignment for venture fund success.
[00:11:36] North Island’s enabling technology thesis for crypto’s financial applications.
[00:14:17] Portfolio diversification: Spreading risk across time and use cases.
[00:16:49] Fundraising challenges: Navigating the 2020 COVID market shutdown.
[00:27:40] Travis’s obsession: Broad knowledge for better crypto investing.
Guest Bio
Travis Scher, co-founder of North Island Ventures, is a crypto investing expert with a decade of venture capital experience. Formerly at Digital Currency Group, he now leads a crypto VC fund focused on blockchain’s financial applications. His values-driven approach emphasizes integrity and long-term blockchain investing success.
Resources
North Island Ventures: Discover Travis’s crypto VC firm advancing blockchain investing.
Digital Currency Group: Learn about Travis’s early crypto investing experience.
Silver Lake: Explore the firm connected to North Island’s co-founder.
Love these crypto investing and venture capital insights? Subscribe to Inquisitive VC for more blockchain investing tips and share on X with #CryptoVC!
Transcript
[00:00:00] Travis Scher: I actually briefly started my career as a lawyer at a big firm, and fortunately for me, I really hated it. It was just, uh, an excruciatingly boring experience for me. We’re both introspective people and we strive to build a firm where ego doesn’t get in the way. We’re on a quest to discover truth together.
We kicked off our fundraise in early March of 2020 before COVID hit and the, uh. Financial world basically shut down, but we really didn’t know what was gonna happen. Our goal is to back the best entrepreneurs solving real problems in the real world.
[00:00:49] Nawaz Ahmed: Welcome to another episode of The Inquisitive vc. Today I’m excited to have with us Travis Cher, co-founder and managing partner of North Island Ventures, a crypto focused venture fund with the belief that is the next great enabling technology. Travis’s journey is particularly compelling from his early days as a lawyer who discovered Bitcoin in 2014 to becoming one of the most experienced crypto VCs in the industry.
After spending four transformative years at Digital Currency Group, during crypto’s early venture era, Travis co-founded North Island Ventures with the mission to enable the convergence of crypto and traditional finance. In this episode, we’ll dive into Travis’s perspective on crypto as an enabling technology, his approach to building a values driven investment firm, and the philosophy behind North Island’s focus on real world financial applications of blockchain technology.
Thanks for joining me, Travis. Keen to have this interesting conversation with you. I wanted to start with, you know, a quick background on yourself and your entry into crypto and, and venture capital.
[00:01:50] Travis Scher: Sure. So I have been incr as a VC for almost 10 years now. So I mean, if you take a step back, I actually briefly started my career as a lawyer at a big firm, and fortunately for me, I really hated it.
I think had I hated it a little bit less. I might have hung on for a while, but it was just an excruciatingly boring experience for me. So while I was practicing law, this was, you know, 2014, I started looking for things in the world that might be a bit more interesting. And so I started learning about different areas of technology.
Um, and, and the one that really resonated with me was Bitcoin at the time. I read a book about Bitcoin and, you know, I had some, some background in. E-com and some of the ideas around, you know, what blockchain could enable, particularly around payments. That I think was what caught a lot of people’s interest at that time, was really exciting to me.
So, you know, in 2015, I, I just quit my job as a lawyer and I got very fortunate and found this opportunity to join Digital Currency Group, DCG, on their investments team in the very early days of crypto. So. You know, that was latter half of 2015, so I’ve now been a VC in the space for almost 10 years.
[00:03:06] Nawaz Ahmed: That’s amazing. It’s probably quite a long time considering how young venture is in, in crypto.
[00:03:12] Travis Scher: Yeah, I, I mean, at the time that I joined, there were only a handful of firms in the world that were focused full-time on crypto. Though there was DCG, which wasn’t really a venture capital firm, it did other things as well, but I think we were most well known for our VC investments and there was Panera and Blockchain capital and that was really it at the time.
[00:03:29] Nawaz Ahmed: Yeah, that sounds like it sounds about right. And you know, so you were an investor, you were there for, you know, a couple of years and then you decided to leave to start your own fund. Can you walk me through the thinking on, you know. Spending your, your time at DCG, some of those learnings, and then what kind of drove that decision to go start a, a new fund?
[00:03:51] Travis Scher: Sure. So I was at DCG for four years, from 2015 through 2019. And it was, it was an incredible experience. I mean, I. The blockchain space during that time really experienced a radical transformation. You know, we had the emergence of Ethereum and ICOs and sort of the beginnings of the crypto venture sector.
So, you know, I, I kind of learned the ropes there. You know, we made about a hundred investments during that time. We were the world’s most active VC during that period. And so, you know, in working for Barry, frankly, I was jealous of him. In that respect too. I mean, he really put everything he had into DCG in the early days and created, you know, what he wanted to build.
So that, that was kind of the selfish reason, you know, I wanted to go on my own entrepreneurial journey. There were other things as well. I mean, at DCG we were writing smaller checks. That was the model. You know, we were in a proper VC firm. We were really a, a corporate investor of sorts. There’s a unique beast, but I wanted to.
Write bigger checks, you know, own a little bit more of the companies and projects that we invested in, you know, and, and kind of like, you know, be a bit more focused, make fewer investments. So that was a huge thing. I, I also think on the investment side, when you are. Working for somebody as a venture investor, you know, you’ve got your own views of the world and your own preferences for what you wanna invest in, what you think will be successful.
But I think that unless you’re a gp, at least part of, if not all of what you are doing is. Expressing somebody else’s thesis and, you know, using their filters. Because ultimately, you know, I had, I had a lot of autonomy at DCG, you know, particularly after spending a year or two there, and I could, I could pound the table on things and, you know, get things done.
But a lot of what I was doing was trying to figure out what was it, the dairy. I wanted to invest and were the companies that I was meeting, you know, what he was looking for and things he would like. And, and as somebody who loves investing and wanted to be a real investor, I wanted to figure out, uh, what it would be like to.
Be the one coming up with the filters and these without this sort of complicating factor of, you know, having a, another ultimate decision maker.
[00:06:13] Nawaz Ahmed: Yeah, that’s a great point. I think, I think that is a, that’s a real reason I, I feel like a lot of people. Do leave to start their own firms so that they can kind of control exactly what they’re investing in, which is super interesting that you mentioned it, you know?
And so in, in saying that, you know, you, you started to think about this new firm. I know you have a partner in, in the firm that, that you started North Island Ventures with. Could you talk through, you know, the thinking of North Island Ventures itself, coming up with the name and, you know, deciding you’re, you are wanting to go into this partnership and how.
How should somebody think about, you know, when they’re picking a potential partner to start a firm with? It’s a pretty intense job and you’re gonna be with them for, for a long time.
[00:06:55] Travis Scher: Yeah. This is another huge part. Picking a partner is incredibly important. Picking the right partner, I should say, it is not something that is to be taken lightly.
And for me, you know, probably by 2018, I think that I knew at some level that I wanted to start something and it was all about. Finding the right person to do it with. And so, you know, there were, there were others, you know, in the ecosystem around the ecosystem who, who courted me at that time. ‘cause I was so early and, and the, you know, I had a lot of respect for some of these folks, but it just didn’t feel like there was this perfect sort of values alignment or personality alignment.
You know, had I gone with. Any of those opportunities, I think it would’ve been a bit more transactional. It would’ve been, you know, maybe they had access to capital and I had all these connections and knowledge in the space, but it wouldn’t have been, you know, these are the things that we really care about.
This is how we think, this is how we wanna work together. You know, I, there’s, there’s an element of chemistry too, and so. I met James, who’s my partner through his father Glen. So his father Glen, who’s our third co-founder. And our chairman was one of the founders of Silverlake, the big tech private equity firm.
And he was an early investor and board member at DCG. So his son James, who’d been a tech investors’ whole career, had left CO two to join the family office around 2018 and, and started focusing full time on crypto. And so he and I. You know, we met through Glen. We went out to dinner once and you know, it was kind of like one of these.
Dating experiences. I, I came home and I said to some of my friends, I think I found the guy, you know, it also had to do with synergies. I think James had, you know, he, having grown up with Glen and having worked at Code two, he knew a lot about how the world of finance work that I didn’t, he also had a deep research background.
So my background, you know, as I mentioned, was in law. And I, I studied business before then, but you know, my, my skillset is really meeting founders, connecting that with them, you know, high level pattern matching, building partnership with them, getting deals done. Whereas he frankly is much better at thinking about technology markets, business models, and big trends.
You know, those are some of the things he learned to code to. And so, you know, there, there were these synergies, right? That kind of like check the boxes, but that’s. I’d say that’s less than half of it when you pick a partner. The other half is values alignment and personality fit. And I think the thing that James and I, you know, really both had in common was a first off a desire to build a firm with a real long-term focus.
You know, neither of us were particularly focused, um, like. Getting rich super quick, which is possible in crypto. I think that we both were excited about the process of building a firm that could last for decades. I think both of us, it was really important to both of us to build a firm that had integrity, you know, where we don’t really play in the gray.
We know what we think is right, and we really try to hold ourselves. To high standards in that respect. And then the third thing is I, I think we’ve really, you know, we’re both introspective people and we strive to build a firm where ego doesn’t get in the way, in any way, shape or form. And that’s not to say I don’t have an ego, he doesn’t have an ego and doesn’t rear its head sometimes, of course it does.
But you know, at the end of we’re on a. Quest to discover truth together, to do right by all of the stakeholders in our ecosystem. So, you know, our LPs, our founders, our, our entire team, you know, even, even the service providers that we work with, we want this to be a value creation ecosystem for everybody that we touch.
You know, a, a checklist of surface level items. You really have to, I think, be more focused on. Um, some of the deeper factors that are going to enable the relationship to sustain, you know, big ups and downs, which you’re certain to encounter in, in this space.
[00:11:09] Nawaz Ahmed: For sure. You know, and I, I think you mentioned a, a little bit around the thinking of, of the firm.
I would love to understand the overall thesis that you ended up coming up with for North Island Ventures. You know, kind of going into the, if, if you do look at specific sectors within crypto, how you thought about check sizing, how you thought about the number of companies in your portfolio would be great to kind of understand that thinking.
[00:11:36] Travis Scher: Yeah, so I’ll talk about the thesis first. Back in 2020 when we set out, you know, our thesis was that crypto is the next great enabling technology. It offers a set of capabilities that the world had never before seen, particularly in combination, and those capabilities could unlock. Applications and experiences that could not previously exist.
And, you know, our view then was really around, you know, finance, including things like payments and, and you know, trading, lending. It was also around, gaming was a big focus of ours and, you know, decentralized social media things related to user owned data. And so I think that our, our thesis on crypto being an enabling technology is, is.
Certainly proven to be true. I think that where we are today, I look at crypto primarily as a financial technology and that, you know, our mission now is to enable the convergence of crypto, which remains quite segregated in its own silo. You know, mostly speculative, but a technology that has proven its potential and the traditional financial.
System, which has improved somewhat in the, you know, five to 10 years that I’ve been doing this, but, which really has not benefited from the new capabilities that crypto enables. And, you know, those capabilities are basically instant peer-to-peer payments anywhere in the world. You know, smart contracts and open platforms on which you can design.
A whole host of new sorts of financial services and financially enabled applications of the future. And so, you know, while while the thesis is around the financial capabilities that blockchain offers, it doesn’t mean that those capabilities will only serve to better the financial services industry. I still think that those financial capabilities have applicability and.
Things like deep end and computing markets and AI and things like gaming and, and social media. But you know, I do think it is very important to remember that the applications are first and foremost financial. So if there’s no financial problem to be solved, it is, it is. You really have to pause and think hard about.
You know, whether the company that you’re looking at is solving a real problem.
[00:14:07] Nawaz Ahmed: Yeah. Okay. That makes sense. And then, so how you went from that into deciding your check sizes and portfolio construction, how did you go about that?
[00:14:17] Travis Scher: So, you know, I would say that in some ways James and I are more conservative than your typical crypto investor.
The space is extremely volatile, extremely, you know, risky in many respects. And you know. I like risk. I have, I think in, in the world at large a high tolerance for risk. I think, you know, risk is, is what creates opportunity. But James and I, being very long-term focused, wanted to make sure that we were investing in a style that would maximize the probability of long-term success.
Rather than, you know, just merely creating an opportunity for extreme short term outcomes while also creating the opportunity, well, extreme outcomes in either direction. Right? So in that sense, you know, we, we make a fair number of investments, but you know, out of our first fund, we made about 35. This is not abnormal for a seed fund out of this.
Second Venture fund, we’ll make, you know, probably 40 to 45. But critically we wanna diversify across geography, across, you know, use cases within crypto and across time. So I think we’ve probably deployed our funds. A bit more slowly than your average investor? I think historically the best predictor of success in venture, well, first it’s probably been something like, you know, brand.
The mega brands in venture have been very successful. But secondly it’s been vintage. And so, you know, I think that very much helped us with our first fund, which we raised over the course of 2020 and 2021, but we didn’t deploy it all ultra quickly. There were funds at the time that were getting deployed in as little as.
Nine months. But, you know, our first fund we deployed across two and a half years. This fund will be like three and a half to four years. So, you know, people talk about diversification in a lot of ways. I think for, for us in venture time diversification is critically important as well.
[00:16:16] Nawaz Ahmed: Yeah, great point. I, I think a lot of people do end up leaving that out as a point of differentiation or, or divers diversification.
So it’s pretty interesting that you guys are thinking that, you know, and so you. You have now left. DCG, you’re working on NIV. Can you walk, walk us through your first kind of fundraising experience. I imagine you haven’t you, you didn’t fundraise at DCG the way it was set up, so how was fundraising for Fund one?
What were the main challenges that you experienced?
[00:16:49] Travis Scher: Yeah. Fundraising for Fund one was quite the journey. We kicked off our fundraise in. Early March of 2020. So we did about three or four meetings before COVID hit and both James and I separately fled the city and you know, the financial world basically shut down.
Nobody was investing a penny. And so from March to April, you know, we had a few small commitments at that point, but we really didn’t know what was gonna happen, you know? And so what do we do? Well every day, James and I, I mean, there really wasn’t much to do at the time because we decided that I. We should actually pause our fundraise rather than trying to beat our heads against the wall and just wait for hopefully things to turn around.
So James and I would just get on the phone every day at nine o’clock in the morning to maintain a normal schedule and we would talk about, you know, what was happening in the market. You know, refining our thesis. You know, we’ve met some companies during that time, even though we weren’t quite ready to invest, and, you know, kind of improving our pitch to investors working on our materials.
And so then at really the, I think at the end of April, early May, we said it’s go time and, you know, as, as quiet and strange as March and April were. May and June, things just started to go like this. So what seemed very unlucky actually turned out to be quite lucky. You know, we hit the market while there weren’t a ton of people fundraising initially, because we had nothing else to do.
We had no money to invest and we caught momentum quickly and we got to a first closing a few months later. So, and then, you know, we ended up. Closing the fund in full in January, 2021. So, you know, fundraising was basically impossible and then it was frankly fairly smooth because of the sentiment in the markets.
[00:18:44] Nawaz Ahmed: Yeah, that timeline sounds, you know, pretty, pretty amazing if you were able to go from April to Jan and, and fully closed, so that’s pretty cool. What would you say was the most surprising thing? You learned about raising a fund?
[00:18:58] Travis Scher: Surprising? Well, look, I, I think that when you’re raising money, what you’re trying to do is build trust in every way, shape and form.
You know, particularly with fund management and asset management, people give money to people who they trust. And so, you know, I think that you build trust. By telling a coherent and honest story, being very prepared and very reliable in terms of your follow up, keeping people updated on a regular cadence and generally seeming organized, right?
That is. One piece of it. The other piece of it, which is just a reality, is that, you know, social signaling matters a lot. So, you know, the secret sauce of fundraising, in my opinion, is to do it in concentric circles, right? And what you do is you start with the people who know you best, who can kind of vouch for you.
So James and I got, you know, our ex employers to invest. You know, very early on, and then you kind of go out to the next concentric circle and you say, Hey look, these people are investing and this is how much money we have. And with that, you kind of capture as much as you can of the next concentric circle, and then you go back.
Then you go to the next circle, you know, people who are a little more distant and you know, to some extent it really ties into the fundraising advice that I give founders, which is, you know, not necessarily smack in the middle of a process, but let’s say you meet an investor who might be a fit for a future wrap in in six months.
12 months, two years, whatever. It’s the absolute best thing you can do is when you first meet them, you tell them what you are going to do and when you point back to what you said and you said, Hey, I did what I said I was gonna do. Right. Because that shows. Conscientiousness capabilities, you know, integrity to some extent.
And so, you know, I think fundraising is a little bit like that. And the way in which you have the opportunity to tell people, to show people that you’ve done what you’ve set out to do is to show them momentum in terms of the dollars raised.
[00:21:13] Nawaz Ahmed: Yeah, great point. The concentric circles method, does that still apply when you’re raising your second fund?
[00:21:20] Travis Scher: It can, but it’s, it’s a very different process when you are raising, you know, a second fund. The first fund is the hardest to raise because you are building an LP base from effectively scratch. I mean, there are people who, you know, maybe they left the fund where they participated in the fundraise, and it’s not from scratch, but.
Building the, the building, the LP base from scratch is different than raising a future fund. The Future Fund, what you really wanna do is, you know, between funds one and two or two and three, whatever, you know, you wanna be building relationships with folks who could be a good fit for the new fund. And again, you know, what you wanna be able to do is show them that you, you know, you do what you set out to do, but then you know you wanna kick it off by.
Gathering as many commits from your insiders as possible, you know? And so in that sense, yes, there is this concentric circle element, which is you start with your existings and then. You touched base with the new folks who you’ve been in contact with, and maybe then, you know, you can try and get connected to folks who you haven’t met before and, and close down.
[00:22:26] Nawaz Ahmed: Mm. Makes sense. Is there, was there any rejection from an LP in that first fundraise that really stuck with you?
[00:22:33] Travis Scher: Didn’t stick with me that much because I don’t remember it. Now, oh look, I would say that there were, there were family offices that I had built relationships with during my time at DCG because we had interactions with a bunch of family offices and they had, you know, these were family offices who were very early to crypto.
Right. And I think I had naively assumed because I had great relationships with them, that they saw me, you know, do what I thought was great work at DCG for four years, that they were like. Very high probability investors in the new fund. And then when we pitched them, you know, some of them didn’t get there and some of them never even gave us a final answer because I think, you know, they, it wasn’t to be rude, but they had a hard time saying no to me because I knew them.
It’s just a handful. But the reason was, you know, they were very early to crypto and they had made other investments. Directly in crypto in DCG, in other funds. And so it really wasn’t personal. It was that they had made their allocations to the space and, you know, these, these weren’t family offices with, you know, many billions of dollars, right?
But they were smaller than that. And so, you know, I, I think what you learned is what, what, what I learned from that is, you know, these many, you know, these rejections are not necessarily personal. They have a lot to do with. The financial allocation needs of the investor at that time.
[00:24:05] Nawaz Ahmed: Yeah, that’s a fair point.
What would you say that success looks like for the North Island Ventures for the next five to 10 years?
[00:24:12] Travis Scher: Yeah, I mean, look, I think we’re still early in building this. I think I. Crypto has had a remarkable run over the last 10 years with a tremendous amount of wealth creation, and that’s been great, you know, because it’s enabled so much development of infrastructure and new ideas and testing.
But we’re still in the very early days of the real implementation of this technology in ways that matter and so. You know, our goal going forward is to back the best entrepreneurs in the world who are building for real use cases, solving real problems in the real world. And you know, I know and acknowledge that there are going to be more companies that get built and more projects that get launched that, you know, succeed without delivering any lasting value to anybody.
You know, I think the latest. The latest, the incarnation of this has been the meme coin frenzy. You know, that’s not our game. That’s not really what we’re interested in. And so, you know, for us on the venture side, you know, we just wanna keep doing what we’ve been doing. You know, evolve as the market evolves, get better at investing, get better at supporting our founders, you know, get better at.
Providing LPs with, you know, not just a product that, not just a product that, you know, hopefully has great returns for them, but also an experience that they value and enjoy, you know, continue to build kind of a great internal culture. Bring in. More great talent that’s values aligned. And so, you know, that’s, that’s what we’re excited about over the next five to 10 years.
And I think, you know, if we succeed, it may be the case then in 10 years. There’s no such thing as a crypto investor. I, I do think that’s where this is headed, but I think that for five to 10 years there, the window remains open for specialists in this field.
[00:26:11] Nawaz Ahmed: Hmm. Makes a lot of sense. What would you say is one thing about being, you know, a founder of a new firm that you wish you had known before you started?
[00:26:20] Travis Scher: I, I think, I wish I had known how much I enjoy it. You know, I think that, and as I mentioned, a big part of the reason I left was to really try by hand at investing with no guardrails, but it was also to be an entrepreneur. I have very much enjoyed the process of building a firm from scratch. You know, hiring great people, integrating them into our culture, trying to train and push them to be the best that they can be.
You know, build out RLP base. Build great relationships with our LPs that I hope are super synergistic. You know, all really build a community around everything that we’re doing. I, I actually think while I, while I knew that I, I was jealous of the people who had done things like this, I probably wasn’t as sure that I would love it as much.
Had, had I known, I might’ve done it a bit earlier. I might’ve taken the leap earlier, although, as I mentioned earlier. You know, you gotta wait for the right person to come along unless you wanna do it as a solo gp, which is not, it wasn’t very common at the time, not something that appealed to me. So. I think doing it as a partnership is, for me, is more fruitful.
Yeah. That’s, that’s, that’s the first thing that comes to mind on that question.
[00:27:34] Nawaz Ahmed: That’s good. And you know, the final, final question I have is what’s a secret obsession of yours that nobody knows about?
[00:27:40] Travis Scher: Oh man. You know, I, when I was a kid, I used to be very obsessive about things. I would like memorize baseball statistics.
I was totally obsessed with baseball and. Memorize all the specs on all the cars that were sold in the us. I, I’m not that obsessive today. I’m much more of a generalist. I, I kind of in, in that sense, you know, I’m obsessed with knowing a little bit about a lot of things. You know, I read very widely, you know, I’m very interested in.
In health and wellness, but I also love to eat, you know? So yeah, I, I would say on the whole, I’m, I’m, I’m probably obsessed with making sure that I know kind of a good amount about a lot of things. ‘cause I think the world is a hugely diverse and fascinating place.
[00:28:26] Nawaz Ahmed: Yeah. No, I appreciate that and I think that definitely makes you better and better as an investor knowing a little bit about a lot.
I hope so.
[00:28:34] Travis Scher: You know, it’s a balance. Breadth and depth is a trade off in this world. You know, I, yeah. I personally just find myself drawn to, to many different things.
[00:28:44] Nawaz Ahmed: Fair. Well, thank you so much for joining, Travis. This was an amazing conversation and I’m looking forward for, for people to hear it.
[00:28:50] Travis Scher: Yeah, thanks, Nawaz.
It was, it was a little different than the typical. You know, crypto podcast I’ve done or investor podcast. I really enjoyed it. Thank you for your questions and yeah, it’s been great getting to know you.
[00:29:01] Nawaz Ahmed: Fantastic.
Disclaimer: The Inquisitive VC is provided for informational and educational purposes only and is not intended to provide commercial, financial or legal advice. Nothing in this article and podcast constitutes an offer of securities or regulated financial products or financial services to any persons or a solicitation to buy or sell any tokens or securities or to make any financial decisions. Do not trade or invest in any project, tokens, or securities based upon this podcast episode. The host and guests may personally own tokens or be an investor in projects that are mentioned on the podcast.
