Tushar Jain, managing partner of Multicoin Capital, recently held a discussion with Fortune magazine reporter Leo Schwartz at the Mainnet Conference hosted by Messari. He said that the crypto venture capital field has not yet fully realized the real-life impact of the last market decline.
According to The Block, Tushar Jain said on stage:
“I think the market still has a bit of a ‘hangover’ to digest. This is true across the venture capital space – not just in crypto – with a lot of money pouring into venture capital as an asset class in 2021 and 2022 , and many people have not yet faced reality and accepted the current situation.”
A report at the time noted that investors poured $33 billion into cryptocurrency startups in 2021, accounting for 5% of global venture capital investment across all sectors. At the peak of the bull market during the epidemic, many cryptocurrency companies such as NFT platform OpenSea and bankrupt lending company BlockFi became "unicorns" with valuations exceeding tens of billions of dollars. However, Tushar Jain pointed out that the "book valuation" of these companies is overvalued due to excess capital investment.
However, Tushar Jain said that despite changes in the market environment, the valuations of many companies have not significantly declined or adjusted, but have remained at previous high levels. This may suggest that the market adjustment in the valuation of these companies has not yet fully occurred. In addition, this "hangover" phenomenon does not seem to be limited to the field of venture capital. Tushar Jain believes that many of the promises of the cryptocurrency industry have not yet been realized:
“There is a lot of hype and excitement. At the same time, we are seeing stagnant prices and a significant decline in the value of many major token issuances over the past year, in addition to uncertainty regarding the current political situation.”
Still, the longtime cryptocurrency investment expert hasn’t completely lost faith.
"I still firmly believe in the core principles that underpin this industry, and we've been through these cycles before. This is probably the most cyclical industry in the history of capitalism, and a lot of times sentiment will fluctuate with price movements."
In 2022, Multicoin completed a $430 million "Venture Fund III" fundraising, and Tushar Jain said the company is still investing. He noted that the company is not currently actively seeking additional capital, but acknowledged that it has made bad investments.
"We have made a lot of mistakes, and we will make them again in the future. In fact, I have a point of view: If no investment in your venture capital fund goes to zero, it means you have not taken enough risks."
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