Multicoin Capital Managing Partner Tushar Jain said the crypto venture capital sector still hasn’t yet caught up to the realities of the last market downturn in a fireside chat at Messari’s Mainnet conference with Fortune’s Leo Schwartz.
“I would say the market still has a bit of a hangover to work through,” Jain, who has worked at Multicoin 2017, said on stage. “This is true across all of venture — it's not just crypto — there was a lot of money pumped into the venture asset class in 2021 and 2022, and a lot of people don't want to take their medicine yet.”
According to a report from the time, investors pumped $33 billion into crypto startups in 2021, accounting for 5% of the venture funding across all sectors globally. At the height of the pandemic-era bull run, several crypto firms like NFT platform OpenSea and since bankrupt lending company BlockFi reached unicorn status — though Jain said many of these on-paper valuations were likely inflated.
“We are not seeing that many down rounds,” Jain said, referring to the occurrence when private firms raise money at a lower valuation.
However, this apparent hangover isn’t relegated to venture capital alone. Jain noted that many of crypto’s promises have yet to be fulfilled.
“There's so much hype, so much excitement. At the same time we've seen really a stagnation of prices, major token launches over the past year have plunged in value for a lot of them, and like I said, there's this uncertainty around what the political situations that look like right now,” Jain said.
That said, the longtime crypto investor hasn’t completely lost faith.
“I still fundamentally believe in the core principles that underlie the industry, and we've been through these cycles before,” Jain said. “This is the most cyclical industry possibly in the history of capitalism, and a lot of times, people's emotions follow the price.”
In 2022, Multicoin raised its $430 million Venture Fund III, which Jain said the firm is still deploying. He noted that the firm is not actively looking to raise additional funds, and it has likely made bad investments.
“We've made plenty of mistakes, and we'll make mistakes in the future, too,” Jain said. “Actually, one view that I have is if your venture fund doesn't have any zeros in it, then you're not taking enough risk.”
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