Naval Ravikant thinks crypto does not actually need the VC approach to financing startups. Paradoxically, the leading investor has supported multiple projects with venture capital. 

The crypto model does not require VC funding, said Naval Ravikant, one of the leading US investors in early-stage products. The statement arrives at the tail end of a trend where crypto projects actually drew in more VC funding than ever, to build some of the most prominent chains and projects. 

Crypto VCs are largely unnecessary.

— Naval (@naval) July 17, 2024

VC was key to the latest batch of startups arriving during the 2021 bull market. Previously, crypto projects relied on the ICO model, which provided high-level funding from regular buyers. The ICO fundraising also did not ensure a fair launch every time, adding problems with the credibility of projects. 

The problem with VC funding is that it helps create low-float projects. Retail investors then notice they are the exit liquidity for those projects, which permanently depresses the token price. 

Funds have moved into crypto space for a decade, as in the case of Pantera Capital. Other big names included Andreessen Horowitz, Sequoia Capital, Coinbase Ventures, and Blockchain Capital. 

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Some of the big names in venture funding also worked to give legitimacy to FTX Ventures, the now-defunct exchange. Sequoia Capital, Black Rock and SoftBank were just a few of the backers that took FTX to prominence. The presence of VC funding also accelerates the cycle of crypto startups, leading to faster exchange listings and more aggressive marketing. 

In 2024, however, even exchanges became skeptical, with Binance increasing the scrutiny of projects with a low initial float. Skepticism about VC accelerated as Worldcoin is preparing for one of its biggest insider unlocks in just a week. WLD was an asset to start trading and gain market exposure with a float of just 1.4% of the supply.