Tushar Jain, Managing Partner of Multicoin Capital said The crypto venture capital industry has yet to recover from the post-pandemic market downturn.
Following a glut of venture capital funding in 2021/2022, token prices fell sharply, spreading investor losses across the market. Despite bleak outlook, Jain still believes cryptocurrencies will weather the storm A challenge based on its core principles.
Cryptocurrency VC Market Still Suffering from Post-Pandemic Downturn
Tushar Jain, managing partner at venture capital firm Multicoin Capital, recently discussed Crypto Venture Capital Market Outlook. In a discussion with Fortune correspondent Leo Schwartz at the annual Messari conference, Jain said the industry has yet to fully adapt to the realities of previous market downturns.
Jain revealed Investors invest heavily in risky asset classes During the bull market in 2021 and early 2022.
Report exhibit 2021 is the greenest year yet for crypto venture capital, Investors poured more than $33 billion into startups. This valuation represents 5% of global venture capital funding across all industries.
At the peak of the pandemic bull market, many cryptocurrency companies, including bankrupt lender BlockFi and NFT marketplace OpenSea, Valuation exceeds $1 billion.
However, due to the economic downturn in 2022, most of these valuations have shrunk, with many assets plummeting in value, resulting in huge losses.
Many people have yet to recover from this loss. This has led to a decline in cryptocurrency venture capital funding. according to Reportthis Financing volume in the cryptocurrency and blockchain industry reached $1.975 billion in the third quarter of 2023the lowest since 2020.
Confirming this, Jain said: “We are not seeing that many failed rounds.”
Private companies typically raise capital at lower valuations. However, according to Jain, this situation is not unique to cryptocurrencies. It touches on the broader venture capital industry.
Multicoin executives also Blame the economic downturn on unfulfilled cryptocurrency promises. Many crypto tokens launched with the promise of huge gains, only to crash quickly, and some asset prices remain stagnant, deterring investors.
Additionally, Jain noted that political uncertainty has led to a bleak outlook for the venture capital industry.
“There’s so much hype, so much excitement,” Jain said. “At the same time, we’re seeing prices stagnate; a lot of major token issuance prices have dropped significantly over the past year, and as I said, right now There is uncertainty about the political situation.”
Cryptocurrencies will weather tough times
Despite the uncertainty and market downturn, Jain has yet to lose faith in cryptocurrencies. He is confident that, like previous cycles, the industry will weather the current challenges. Jayne is confident about this The core principles of cryptocurrencies and their future potential.
“Still fundamentally believe in the core principles that underpin this industry, and we’ve been through these cycles before,” he said.
Just as investor sentiment follows price, venture capital will pick up when the next bull market arrives.
Jain also noted that Multicoin has made bad investment decisions in the past, and he believes mistakes are inevitable. “One of my views is that if you don’t have any zeros in your risk fund, then you’re not taking enough risk.”
Multicoin Capital raised $430 million in 2022 in its Venture Fund III. Jain said the company is still in Deploy the fund and plan to raise additional capital.
Disclaimer: The opinions expressed in this article do not constitute financial advice. Readers are encouraged to conduct their own research and determine their own risk tolerance before making any financial decisions. Cryptocurrency is a highly volatile, high-risk asset class.
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