Article written by Commerce Ventures. Read the original post here.
Our Market POV
- Market Timing — Crypto adoption has spread explosively…but is still early in the mainstream. In fact, only 16% of Americans have bought crypto at all, and cryptocurrency trading volume has recently fallen almost 75% since all-time highs in May 2021.
- Tax Enforcement — Regulation and legislation will increasingly require retail and institutional investors to account for crypto-related gains in their tax filings and payments
- Lack of Solutions — Despite the existence of a few simplistic retail crypto tax products, there are almost no players offering more sophisticated tax preparation capabilities.
- Crypto Infrastructure for Financial Services — We see an opportunity to help incumbent financial institutions deliver crypto account aggregation and better automate tax preparation for their clients.
This is where Ledgible comes in.
Our connection to Ledgible started with one of our strategic partners, a very large financial institution. As we spoke with them about our thematic exploration of supporting crypto adoption in wealth management and retirement investing, they mentioned some of the needs they’ve identified and the interesting companies they had seen addressing these needs.
This need for digital asset data aggregation serves investment tracking and tax accounting purposes and requires both data infrastructure (read: plumbing) and data processing (intelligent parsing). After our partner articulated these needs, they mentioned that the only company they had seen providing both in an institutional-grade way is Ledgible.
After getting connected with the company and educating ourselves on the business, we confirmed that the company fit a profile we had seen in our portfolio many times:
- Strong, entrepreneurial leader — Kell Canty is a serial entrepreneur, who was very early to crypto, having served as an early member of the Bitcoin Foundation.
- Infrastructure/enablement focus — Ledgible handles data plumbing from a broad set of wallets, exchanges, and blockchains in order to present that data and enrich it in important accounting and tax applications needed by the customer.
- Strong confirmation of thematic need — Because we had recently completed a deep dive into how crypto may/will be supported in the wealth management industry, we were able to leverage the analysis and relationships from that exercise to better understand the potential size and timing for demand for solutions in Ledgible’s space.
- Strong confirmation of startup’s position — We were also able to call on many close relationships from incumbents within the banking, wealth, and financial processing segments to confirm that Ledgible had either won or was positioned to be embedded as the solution of choice for their clients.
- Strong signal from a trusted investor partner — While we don’t always see this with new investments, we were excited to learn that our friends at TTV Capital were amongst the earliest, lead investors for Ledgible. We have extensive experience working with TTV across several investments, including Bill.com (SMB bill pay), Blooom (retirement investment automation), and MX (banking data aggregation). This helped us better understand the team and business because we understand how TTV thinks about and works with their portfolio companies.
As the Ledgible Series A round came together with a killer group of strategic investors, we were grateful and excited to be invited to join the journey of this exciting company!
Ledgible — a CV Case Study
In review, the Ledgible investment highlights how we approach investing broadly:
- We proactively identify and explore a theme.
- We speak with our corporate partners about the theme — to get a sense of their real interest and to identify interesting companies with differentiated offerings in these areas.
- We connect with these companies to understand and assess them specifically for fit with our investment approach and interests.
- We pressure test the companies with our strategic friends and investors to ensure we understand the value proposition, differentiation and the prioritization of the problem they are solving.
This highlights why as a sector-focused, infrastructure investor it is so critical to be thematic in your exploration and deeply connected with the key strategic players that matter as you research themes and specific companies. This is how the Commerce Ventures team approaches investing, and we are so grateful that it has led us to invest in Ledgible.
We look forward to the exciting journey ahead!