According to TechFlow, on September 19, according to Cointelegraph, Tom Schmidt, general partner of Dragonfly Capital, said in an interview at the Token2049 event in Singapore that although a large number of talents are pouring into the field of artificial intelligence, the current state of the AI market is discouraging venture capitalists. Schmidt pointed out that cryptocurrency and AI are currently competing for talent. As an emerging technology, AI is more attractive to professionals. He explained: "If you ask a recent graduate or founder which field they want to develop in, I think more people will choose AI. This constitutes the main point of competition between the two industries."
However, for venture capitalists, the situation is very different. Schmidt said that investors are gradually losing interest in the AI market because it appears "frothy and over-allocated." He emphasized: "People are very concerned about the valuations of some AI companies and are uncertain whether their revenues can meet expectations." Schmidt compared the current risk environment in the AI field to 2021, believing that the risk level is at 5%. He said: "We have observed that many teams face challenges in increasing revenue. This situation may eventually lead to a compression of valuation multiples." In the financial and investment fields, higher valuation multiples generally mean that growth contributes more to the company's value.
Schmidt responded in the affirmative to whether this market environment will bring opportunities to cryptocurrency startups seeking venture capital. He explained that cryptocurrencies provide venture capital with another asset class to allocate funds. However, Schmidt also advised crypto projects to carefully evaluate their financing needs. He pointed out: "Not all companies need venture capital support. Some companies can succeed by building a profitable bootstrapped business model. In fact, many companies that adopt this model perform well." He added: "While many teams have good ideas or business models, they may not fully meet the expected return model of the venture capital market."