Executives from Blockchain Capital, MetaGood, Dragonfly, Arche Capital, and Breyer Capital came together in an Aug. 21 panel to discuss venture capital strategy at this year's Wyoming Blockchain Symposium.
Rob Hadick, a general partner at venture capital firm Dragonfly, explained that investors with traditional institutional approaches tend to lag behind their crypto-native counterparts in terms of investment performance because crypto is a different asset class with a completely different profile to conventional finance. The executive told the audience:
"The liquidity profile is different, the time to development is different, the surface area of risk and attack is different, the open source nature, and what we do is different—you have to have a breadth of understanding of what's going on."
Bart Stephens, founder and managing partner at Blockchain Capital, explained his firm's long-term approach to holding tokens and equity in crypto startups. This includes slowly coaching the companies the firm has invested in and helping them to grow organically, as opposed to trading the companies and profiting from short-term pre-token sales.
Bill Tai, co-founder and chairman of MetaGood, touched on the importance of selecting teams and projects that were mission-oriented, rather than purely revenue-oriented. The venture capitalist also warned against selecting teams strictly by picking projects with a high degree of technical talent but a lack of overarching purpose:
"You get a lot more productivity when people are mission-driven and believe in what they're doing than a bunch of high-paid good resumes that you throw into a bucket to try to engineer a solution."
Crypto VC funding in 2024
Despite a quarterly drop in the total number of crypto startup deals for Q2 2024, the total amount of capital invested in these companies rose by 2.5%, bringing the total for Q2 to approximately $2.7 billion.
Venture capitalist Adam Cochran recently told Cointelegraph that he believes the slowdown of VC funding in the crypto sector was primarily due to the significant price appreciation gained from simply holding blue-chip digital assets such as Bitcoin (BTC) or Ether (ETH).
The VC explained that many institutional investors were fine with taking those gains, which are substantially higher than the S&P 500, and avoiding the unnecessary risk of investing in comparatively riskier startup projects.
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