Crypto Venture Capital Firms Face Headwinds

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Shed a tear for venture capitalists. After years of riding high, the Silicon Valley crowd drags their tails as a sudden shift in the macro economy, including soaring interest rates, wipes out their hometown bank and leaves them searching. of funds as investors look elsewhere for high yield bets. It’s tough out there, but no one is having a tougher time than crypto-VCs, as a new Fortune report reveals.

Our very own Leo Schwartz has teamed up with crack funding journalist Anne Sraders to examine how crypto-VCs are faring at a time when token prices continue to crash and the overall economy looks very different from the market. bullish from two years ago. The pair spoke to venture capitalists in the trenches and discovered that when it comes to crypto funds, they face a unique set of challenges.

First, crypto-VCs have nowhere to hide. In the case of traditional venture capital, companies can carry a bunch of dogs in their portfolio for a while without having to recognize that valuations have fallen. It’s a different story when their portfolio doesn’t consist of thinly traded private stocks, but of tokens that are bought and sold on public blockchains around the clock.

This transparency was not an issue back in the go-go days two years ago, when companies like MultiCoin and Polychain Capital were posting jaw-dropping returns of 10x or more as tokens went to the moon. Now, however, most token projects are down the toilet, and market value accounting rules and transaction frequency require VCs to deliver bad news immediately to sponsor investors.

The job of crypto VCs has become even more thankless since many of these LPs are unfamiliar with the rollercoaster cycle of crypto and are reluctant to hold on until the market turns. As Delta Blockchain Fund founder Kavita Gupta told Fortune, we need to continually educate family offices that are, like, a Vietnam shipping cottage industry. They’re like, What did you do? You were 6x higher!

While crypto-VCs interviewed for the report suggested that the headwinds they are facing are very real, they also expressed confidence that market conditions would improve, and they remain committed to the long term. Venture capitalists are always an optimistic bunch in the public, at least so who knows when (or if) their token portfolios will improve. But for now, let’s give them credit for betting on an emerging industry and hope their fortunes change.

Jeff John [email protected]@jeffjohnroberts

DECENTRALIZED NEWS

Tether has fully recovered the $20 billion lost after Terra’s collapse, hitting an all-time high in market capitalization. (Bloomberg)

In a blow to Paxos, decentralized lending protocol MakerDAO pulled $500 million of the stablecoin from its reserves. (Coindesk)

Binance delisted a dozen privacy coins, including ZCash and Monero, in France and three other EU countries. (The block)

Changing Twitter’s logo to Dogecoin Shiba Inu for a few days in early April is cited as the latest evidence in an ongoing lawsuit that accuses Elon Muskof of manipulating the themecoin’s price. (Fortune)

The death of SB 1751 in Texas has made it a little easier for crypto miners to breathe. (Decrypt)MEME O THE MOMENT

“Only to be bolstered by Goldman and Apple”:

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