The Plug and Play Bitcoin Accelerator will soon welcome its inaugural class of entrepreneurs trying to build new businesses around the digital currency.
Silicon Valley is betting big on virtual currency. Developers have been launching new Bitcoin projects at a rapid pace, and now a crop of incubators such as 500 Startups and Boost has emerged hoping to discover the next great idea in the space.
The latest to enter the fray is Plug and Play Tech Center, a California-based startup accelerator that in early March will commence a three-month program to help entrepreneurs build businesses around the cryptocurrency. The Plug and Play Bitcoin Accelerator will host its first group of five startups in the Tech Center's Sunnyvale, California, flagship space. Each startup will receive a $25,000 seed investment for a 5 percent stake, but Plug and Play founder and CEO Saeed Amidi says his organization is willing to invest $100,000 to $500,000 for the right company.
The startups, which Plug and Play declined to name, will go through boot-camp iteration sessions, 20 hours of one-on-one meetings with mentors each week, and weekly pitches at the Silicon Valley Bitcoin Meetup networking event. At the end of the three months, there will be a demo day for venture capitalists looking to make early-stage investments. The most promising company will go on to pitch at Plug and Play's Bitcoin Expo day in June.
Amidi, who is also a co-founding partner of seed investment firm Amidzad Partners and founder of 14 other companies, says Plug and Play started the accelerator to help make Bitcoin more widespread and easier to use, and to add strong Bitcoin-related companies to its investment portfolio, which includes PayPal and Zoosk.
"PayPal was revolutionary, but we haven't found that for Bitcoin yet," Amidi tells Inc. "We want to bring entrepreneurs who think Bitcoin will change the world to Silicon Valley. I am hoping for the next PayPal or Dropbox."
Scott Robinson, Plug and Play Tech Center's webmaster and one of the coordinators of the Silicon Valley Bitcoin Meetup, founded the Bitcoin accelerator after convincing Amidi that digital currency will have a place in the future of asset transfers. Robinson says the program is focusing on startups working to expand Bitcoin's infrastructure and build Bitcoin software, as well as B2B startups, software-as-a-service companies, and brand and retail innovations.
"We are looking for solutions that are tailored to the mom-and-pop shops that may or may not understand Bitcoin," Robinson says. "At the core of it, there are a lot of broken methods used in point-of-sale systems that are responsible for things like the Target breach. At the end of the day, we're looking for things that will benefit the consumer and help the merchant."Providing Mentors
To help guide the entrepreneurs, Plug and Play has brought in more than 20 experts in areas such as fundraising, government regulation, and getting to market. Among the roster of mentors are Bill Tai from Charles River Ventures; Andreas Antonopoulos, the CSO of Blockchain.info, a website that tracks all Bitcoin transactions in real time; and founding member and adviser for the Bitcoin Foundation, Roger Ver--also known as Bitcoin Jesus. The experts will each dedicate two hours of their time a week to advise the startup founders.
In addition to their other duties, the mentors are expected to help entrepreneurs ensure their companies are compliant with all the regulations concerning Bitcoin and other digital currencies. Many of the rules are still being decided, but Robinson says for now, the startups will all be focused on operating within the know-your-customer regulations from the U.S. Treasury Department's Financial Crimes Enforcement Network.
Navigating the evolving legal standards won't be an easy task, says David Chen, an associate partner at Lightspeed Venture Partners and a mentor at the accelerator. "Financial services, as an industry, is an area where moving fast and breaking things is not a good policy. If you move fast and break things, you may end up in jail."Community Atmosphere
Robinson says the Bitcoin startups also should benefit from their proximity to the other companies in Plug and Play's stable. "They will be equipped with the community, which may be the most valuable thing, with 300 startups working out of our 100,000 square feet of space at any given day," he says. "The fact that you can have somebody from Spain working on mobile ads and you're working on your Bitcoin mobile payment solution right next to each other is unparalleled."
Although the winter session has already closed to applicants, there is a rolling application process for the spring class, and Robinson is currently in Berlin looking for promising European Bitcoin companies to make future classes more diverse.
Robinson stresses the program should be an exhilarating experience, but people looking for a frivolous extended hackathon need not apply. "We are looking for people who will forget about their girlfriend, walk in the door, and bang out some exciting stuff," Robinson says. "We are hoping to pioneer through Bitcoin. By the third quarter of 2014, we're hoping to have five to 10 Bitcoin startups up and running."
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