VC Funds more wary over crypto funding rounds

Crypto execs say that the huge amounts of VC funds that were thrown at crypto in the last bull market are now a thing of the past.

VC funds were putting crazy valuations on new crypto projects during the crypto bull market that began when Covid erupted in March 2020 and which lasted into November of 2021.

However, that is starting to be a distant memory as crypto continues to plough deep into the current bear market. In a recent podcast called The Scoop, hosted by Frank Chaparro of The Block, and guests Meltem Demirors, CSO of CoinShares, and Vanessa Grellet, managing partner of Aglaé Ventures, the executives put their views as to what was going on in the crypto funding space.

When asked for her take on the crypto environment, Vanessa Grellet said that in her view things were looking great. She said that new founders were creating new companies, and in spite of a few overvalued deals that sporadically happened, deals were happening at a reasonable valuation now.

She said:

“The quality of the talent that’s flowing into the space is incredible. Everyone from Web2 is coming in, and second-time founders from Web3 are continuing to create really interesting projects.”

Grellet also commented on how she still had “PTSD” from how things were done in 2021, given that 5 to 10% of deals were being done incredibly quickly without proper diligence, and the “talk today, sign and wire tomorrow” was the way they were closed.

Custody was mentioned as a very interesting niche right now. It was suggested that if you accept that all assets will be tokenised, then providers will need to offer custody services for them.

However, on the typical token model, Demirors suggested that it is not the best way to capture value:

“There’s now consideration of the fact that tokens and particular governance tokens are not necessarily the best way to capture value creation… an investor who’s willing to write really large checks is going to have some fundamental questions around monetization that doesn’t just rely on ‘number-go-up’ tokenomics.” 

In contrast, Grellet stated that tokens made sense if they could form part of an equity investment:

“We see a lot of investors being comfortable with both the equity and a token option so that if the main company has one project, but also has several other projects that warrant tokens, then you can have upside in the ongoing life of the company.”

Disclaimer: This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.