Talent flocks to AI, but ‘frothy’ market turns off VCs — Dragonfly Capital #TalentConcentration

Dragonfly Capital general partner Tom Schmidt urged crypto projects to consider whether they need venture capital funding.

Despite many talented professionals getting into artificial intelligence, Dragonfly Capital’s general partner said that the space is turning off venture capitalists in its current state. 


In an interview with Cointelegraph’s Ciaran Lyons at the Token2049 event in Singapore, Schmidt said that crypto and AI are currently competing for talent. With AI being a new technological development, the venture capital executive said that professionals are currently more attracted to the field. He explained: 
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AI project valuations cause worries for VCs

In addition, Schmidt said that the valuations of AI-focused companies are a cause of concern for venture capitalists. He said: 

“There’s a lot of worry about some of those valuations and if the revenue can sort of match up to expectations.”
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The executive added that if one looks at multiples versus growth, the space is currently at “insane levels.” Schmidt compared current levels to 2021 and said the risk environment is at 5%. 

“I think what we’ve seen is it’s very difficult for teams to grow revenue. You ultimately see this sort of multiple compression,” Schmidt explained. 
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In finance and investing, the higher the multiple, the more valuable growth is to a company. For example, a multiple of three would mean a company would generate three times more shareholder value from adding 1% of growth. 
An advantage for crypto.

Cryptocurrency exchange Binance has reportedly laid off over 1,000 employees, as per a report by the Wall Street Journal. Binance's CEO, Changpeng Zhao (CZ), dismissed the news as FUD (Fear, Uncertainty, and Doubt) and claimed that the reported figures are inaccurate. CZ stated that involuntary layoffs occur in every company and that Binance is still actively recruiting. According to a Binance spokesperson, the decision is not downsizing but rather a reassessment of talent and expertise in critical roles to ensure agility and dynamism, particularly as they prepare for the next bull cycle. Binance currently has around 8,000 employees globally.

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