Wavemaker Partners Pitch Deck Teardown: A Macro Thesis

Introduction: The Macro View of Decentralization

The Wavemaker Partners 'State of Cryptocurrency & Blockchain' deck, dated December 8, 2017, is a historical artifact of the first major crypto bull run. Unlike a standard startup pitch, this 82-slide presentation functions as a comprehensive investment thesis. It attempts to rationalize the explosive growth of the sector while simultaneously warning of the structural risks inherent in the 2017 ICO boom. The deck is structured to move from basic definitions to total addressable market (TAM) expansions, eventually landing on the 'Smart Money' institutional landscape.

Slide 5: Defining the Pillars

Wavemaker begins by bifurcating the industry into two distinct categories. First, 'Currencies' like Bitcoin and Dash, which are designed to function as fiat money. Second, 'Utility Tokens' like Ethereum, NEO, and EOS, which serve as the 'gas' for decentralized platforms. This distinction is critical for their later arguments regarding market absorption and industry disruption.

Slide 9: The 2017 Growth Explosion

This slide provides the quantitative justification for the deck's existence. It notes that while Bitcoin increased by 1,839% in a year (from $772 to $14,200), other assets grew even faster. Ethereum rose 5,233%, and NEO saw a staggering 27,692% increase. The total market cap of all tokens is shown climbing toward $400B, setting the stage for a discussion on whether this growth is sustainable or purely speculative.

Slide 13: Institutional Validation

To counter the narrative that crypto is purely a retail phenomenon, Slide 13 presents a 'march of financial services firms.' It maps out deals from Q2 2014 to Q2 2017, featuring logos from Goldman Sachs, Citi, Visa, Nasdaq, and Wells Fargo. This slide serves to build credibility, suggesting that the world's largest financial institutions are already deeply embedded in the ecosystem.

Slide 17: Merchant Adoption

The deck claims that 120,000 merchants already accept Bitcoin, with another 400,000 planning to do so. It lists major names like Microsoft, Expedia, and Tesla. A specific callout to a $325 million luxury real estate project in Dubai highlights the transition of crypto from a digital curiosity to a medium for high-value physical asset transactions.

Slide 21: The China Ban Impact

A pivotal moment in 2017 was the Chinese regulatory crackdown. Slide 21 illustrates that China's share of Bitcoin trading dropped from 85% to just 9% in a single month. Interestingly, the deck uses this to show the resilience of the market, as JPY (43%) and USD (31%) trading volumes immediately filled the vacuum, proving the decentralized nature of global liquidity.

Slides 25-29: The Fiat Replacement Thesis

This section contains the core social thesis of the deck. Slide 25 argues that crypto is 'simply better' for the 'Bottom 30' economies (e.g., Venezuela, Nigeria) characterized by 20%+ inflation and corrupt leadership. Slide 29 quantifies this 'Currency Replacement Opportunity.' It suggests that to absorb the M2 money supply of these 30 economies ($4,000B), the crypto market would need to expand by 16x. To replace the entire world's currency ($86,000B), a 344x expansion would be required.

Slides 33-41: Industry Disruption and TAM

Wavemaker identifies specific verticals for utility tokens. Slide 33 focuses on Cloud Computing and Storage, worth $550B, citing projects like Filecoin and Storj. Slide 37 looks at the $120B loyalty points market, arguing that tokens remove liabilities from airline balance sheets. Slide 41 aggregates these opportunities, suggesting a total market of $13.5T. The deck calculates an 'Expansion Multiple' of 72.8x for utility tokens to fully absorb these sectors.

Slides 45-49: The ICO Reality Check

Despite the bullish macro outlook, Slide 49 delivers a harsh critique of the ICO market. It notes that the 'vast majority trade below ICO price' and suffer from a lack of utility, with software launches often years away. It specifically names Polkadot and Filecoin as examples of delayed utility. This section serves as a warning to investors that while the sector is growing, individual project selection is fraught with risk.

Slide 53: The Rise of Crypto Hedge Funds

The deck notes that 110 hedge funds had launched by late 2017, with 200 more 'on deck.' It observes that many early participants believe they are 'talented' despite the fact that most underperformed the broader market. It categorizes strategies into long-only, arbitrage, and activist models, signaling the professionalization of crypto trading.

Slide 61: Corporate Investment Leaders

This slide lists the largest blockchain investments by corporates. Circle Internet Financial leads with $136M in funding, followed by Coinbase at $117M. The presence of investors like the NYSE, Mitsubishi UFJ, and Santander reinforces the 'Smart Money' theme of Section Seven.

Slide 65: The Valuation Disconnect

This is one of the most important slides for a fundraising analyst. Wavemaker points out that the average fully diluted valuation for the last 100 ICOs was ~$30M, while the average traditional VC Angel/Seed post-money valuation was only ~$4.5M. This 7x premium for crypto startups, despite being at identical stages of development, is highlighted as a significant market inefficiency.

Slide 69: Shady Practices

Slide 69 addresses the 'Wild West' nature of the 2017 market. It features celebrity endorsements from Floyd Mayweather, DJ Khaled, and Paris Hilton, noting that such promotions often violate SEC and FINRA laws. This slide serves to distance Wavemaker's 'Smart Money' thesis from the retail-driven hype and potential fraud of the era.

Slide 73: The Failure of State Coins

Wavemaker takes a definitive stance on Central Bank Digital Currencies (CBDCs), labeling them as having 'Zero chance of success.' The argument is that state-issued coins retain all the flaws of fiat (unlimited supply, traceability, and mutability) while removing the core benefits of blockchain (unmalleability). They view these as 'recreating the same problems' that drive people to crypto in the first place.

Slide 77: Regulatory and Central Bank Opposition

The deck concludes the risk section by noting that 300,000 central bankers globally are 'just waking up' to the threat of crypto. It highlights the US Congress's constitutional power to coin money and predicts that the SEC will soon rewrite rules to bring ICOs under their purview.

Slide 81: The Path Forward

The final slide compares the 2017 crypto market to the 1993-1996 era of the internet. It suggests that a 100x return is possible for those who hold through the inevitable volatility, similar to the dotcom bust. It ends on a note of 'extreme volatility' expected for the next decade.

What Wavemaker Partners Got Right

Wavemaker was remarkably prescient regarding the institutionalization of the asset class. Their focus on the 'Smart Money' (Slide 61) correctly identified Coinbase and Circle as the foundational infrastructure plays that would survive the subsequent 'crypto winter.' They also correctly identified the regulatory hammer that would eventually fall on celebrity-promoted ICOs (Slide 69) and the valuation bubble that existed in 2017 (Slide 65).

What is Missing from the Deck

As a macro overview, the deck lacks specific unit economics for the mentioned startups. While it lists TAMs in the trillions, it does not address the technical hurdles of scalability that plagued the 2017-2018 era. Furthermore, there is no mention of 'Stablecoins' as a distinct category, which would eventually become the primary bridge between fiat and crypto, rather than the volatile 'currencies' like Dash mentioned on Slide 5.

Lessons for Founders

Macro Context Matters: If you are raising in a nascent or hype-driven sector, you must provide a macro thesis that justifies your valuation relative to traditional benchmarks. · Address the Disconnect: Wavemaker's Slide 65 is a masterclass in identifying market premiums. Founders should be aware of how their sector's valuations compare to the broader VC market. · Identify the 'Why Now': The deck uses the failure of fiat in specific economies (Slide 25) to create a sense of urgency and inevitability. Founders should similarly identify the external pressures making their solution necessary. · Acknowledge the Risks: By being honest about 'shady practices' and regulatory opposition, Wavemaker builds more trust than a purely 'hype' deck would. Founders should not shy away from discussing the headwinds their industry faces.