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USV recently invested in a company called Patch Homes and they are announcing that financing today along with some other important information on their business.

You can read about the financing here and USV’s investment blog post here (we do one of these for every new investment).

What I’d like to talk about is the bigger idea behind Patch and some other startups out there which is the ability to break up your home equity into pieces and sell some of it while holding onto most of it. I call this fractionalizing home equity.

In the existing home finance world, the only thing you can do with your home equity is borrow against it. And many homeowners do this. It is a big market and helps a lot of homeowners out. But once you borrow against your home equity you have larger monthly mortgage payments to make and many can’t afford to do that. And you need a certain credit score to be able to access the home equity loan market.

What Patch offers instead is to take a piece of your home equity (currently limited to $250k maximum) and sell the upside on it to a investment fund. Note that I said upside. This is effectively a call option on the equity not a full transfer of that equity. That makes things a lot simpler in many of the scenarios that could arise.

There are some great use cases for a partial sale of home equity. One example I like a lot is a family whose children are heading to college and soon will be out of the home. They plan to sell the home when all the kids are gone but don’t want to do that until then. They could sell some of their home equity, help pay for college, and then sell the house after all of the kids have graduated. There are plenty of examples like that where you are in a situation in life where you plan to sell but not just yet and you don’t want to add to your debt load and/or your monthly payments.

And that is why having more home finance options is great. It expands access to capital and that is a core part of the current USV thesis. And we are excited to be working with Patch to help them do that.

This is a cool project that combines textiles and malware. I backed it this morning.

Projects like this always makes me wonder what someone will think of next.

Our portfolio company Duolingo is known for their super popular language learning app. According to Wikipedia over 300mm people all over the world have used Duolingo.

Back in May 2014, Duolingo launched something called the Duolingo Test Center. The idea was to compete with expensive and inconvenient foreign language tests like TOEFL.

It makes sense. If you are in the business of helping people learn a foreign language, you might as well be in the business of helping people demonstrate their mastery of a foreign language.

But there is a “chicken and egg” problem in the foriegn language testing market. If you don’t have a lot of test takers, it is hard to get your test accepted by educational institutions and corporations. But if you aren’t accepted by educational institutions and corporations, it is hard to get anyone to take your test.

Duolingo has been patient, largely because they have a primary business that is doing incredibly well. Slowly but surely they have gotten institutions to accept their test.

I saw this tweet this morning from Luis, Duolingo’s founder and CEO:

Super proud that the Duolingo English Test (@DuolingoENTest) is now fully accepted as a proof of English proficiency at 10 of the top 20 US universities according to US News.

— Luis von Ahn (@LuisvonAhn) August 21, 2019

That is the kind of adoption that Duolingo’s tests need to become a standard.

And once you become a standard, you have a fantastic business, largely because it is so hard to accomplish that.

Many companies would have given up on a project like this. The payoff is too long and the effort too high.

But Luis has a personal interest in this offering. You can read about it in the blog post when he announced the service.

That is the power of founders on a mission. They can be patient and see things through that big companies never will.

There is a virtue in patience. You don’t see it that much in business. But it is powerful in the right hands.

This post on the WeWork IPO ends with the following observation:

In fact, I would argue that the WeWork bull case and bear case have more in common than it seems: both are the logical conclusion of effectively unlimited capital.

I don’t think there is unlimited capital. If that were the case, every idea, every startup, every person would be able to get the capital they need/want.

And I see proof every day that is not the case.

But it is true that for some things, some companies, some ideas, there is effectively unlimited capital.

Probably the biggest change I have seen in my 30+ years in VC is the huge amounts of capital that are available to “big ideas” like WeWork, Uber, Bird, etc

And the questions to ponder are whether this is a temporary phase based on global macroeconomic conditions or the new normal and whether it is only true for companies at certain stages of their development.

Does Uber, now that it is a public company subject to the rules of rational capital markets, have the same unlimited access to capital it had while it was a private company?

Will WeWork, once it becomes a public company, have the same unlimited access to capital it has had in the last five years?

And what does the next economic downturn look like? Will capital availability dry up like it normally does?

I have heard the arguments why the business cycle has changed, why monetary policy is more effective now, and why rates will remain near zero for a long time.

I just don’t know if they are correct. I suspect we will find out in the next few years.

I love when old meets new. And so when I saw this project this morning, I backed it immediately.

The promise of blockchain games and non-fungible tokens (NFTs) is extensible games. Imagine if developers could build new worlds/games/experiences on top of Fortnite and you could take your character, your weapons, your vehicles, etc with you into those new worlds/games/experiences. That is what I mean by extensible games.

We are seeing the beginnings of that in blockchain games now. There are many game experiences that third-party developers have built on top of Cryptokitties (built by our portfolio company Dapper Labs).

And now Dapper Labs is pushing this idea even further by turning their CheezeWizards game over to the community.

The idea is pretty simple actually. This summer gamers will be competing to win the first CheezeWizards battle royale. But after that ends, the players will still have their Wizards because they are NFTs. The Wizards are like Bitcoin or Ethereum or any other cryptotoken. They can be stored in a wallet and used again and again in new games.

So Dapper Labs has released all of the CheezeWizards IP under an NFT license and is inviting developers to build new game experiences for all of these Wizards that are now out there.

And they launched the CheezeWizards Hackathon yesterday with over $15,000 in prizes for the winning game experiences.

I will be judging this hackathon along with a number of other crypto investors and I am excited to see the gaming experiences that developers build on top of CheezeWizards.

A few weeks ago, I got an email from a reader. She asked if he could subscribe to this blog without the funding friday posts. He thought they were “spammy.” I replied to him “think about them as the ads” and politely told him that wasn’t possible.

I love funding things. And I love sharing the things I fund with all of you.

I saw this project this morning and backed it instantly. A musical art project. Awesome.

I was sitting in my backyard this weekend looking up at the roof on my house, which I can’t see because of a parapet, and wondering how all of the solar panels we put up there a few years ago are doing. I was also wondering how the roof itself is doing.

Then it hit me that USV has a portfolio company that can help. I went to my Dronebase account and ordered a drone mission that will do an aerial inspection of my roof and also a thermal inspection of our solar panels.

Yes, one drone pilot with an off the shelf drone can do all of that for me in less than an hour.

I scheduled the flight for next week and should have a full report with aerial imagery and video and thermal scans of the solar panels within a few days after that.

And I am going to get all of that for a less than it costs me to keep my pool serviced!!

But it gets better. Today, Dronebase is announcing that it has acquired the Drone Reports business from Betterview and will turn that into a new product line called Dronebase Insights.

From that blog post:

DroneBase Insights aims to help insurers and property managers assess damage and mitigate risk for commercial properties, and we’ll expand our offering over time

So now you can get a full blown report from Dronebase in addition to aerial imagery and video and thermal scans.

I didn’t order that myself this weekend but maybe I should have. I probably will next time.

One of USV’s newest portfolio companies, Otis, had a coming out party yesterday.

The idea behind Otis is that cultural assets like fine art, rare books and comic books, jewelry and watches, sneakers and skateboards, etc are appreciated by everyone but are only collectible/affordable by wealthy people.

Otis intends to change that by securitizing these cultural assets and selling them off in shares for as little as $25 per share. These fractionalized cultural assets will be shown publicly while they are owned collectively.

You can see how this all works by downloading the Otis mobile apps here.

I did that yesterday and I have already set myself up to try to buy a share of Kehinde Wiley’s Saint Jerome Hearing The Trumpet Of Last Judgement on August 13th.

I’ve also opted to be notified when these assets “drop” so I can purchase a share of them too.

I am not a sneakerhead but for those of you who are this might be of interest to you:

This is just the start of what will hopefully be a highly liquid secondary market for the trading and collecting of shares of cultural assets. The market is starting out highly curated by Otis but that may change over time as things develop.

USV’s focus right now is on backing trusted brands that can open up access to captial, knowledge, and well-being and Otis fits in all three of those categories. We are very excited to be involved in this ambitious effort.