Tushar Jain, managing partner at Multicoin Capital, said in a conversation with Fortune’s Leo Schwartz at the Messari Mainnet Conference that the cryptocurrency venture capital sector has yet to catch up with the realities of the last market downturn.
“I would say there is still a hangover in the market that needs to be resolved,” Jain, who worked at Multicoin 2017, said on stage. “This is true across all ventures, not just cryptocurrencies. There’s a lot of money pouring into the venture asset class in 2021 and 2022, and a lot of people don’t want to take the pill yet.”
According to a report at the time, investors poured $33 billion into cryptocurrency startups in 2021, accounting for 5% of venture funding across all sectors globally. Since several cryptocurrency companies like NFT platform OpenSea and bankrupt lending company BlockFi reached unicorn status at the height of the pandemic-era bull market, Jain said many of these paper valuations are likely inflated.
“We’re not seeing that much of a downturn,” Jain said, referring to instances where private companies raise funds at low valuations.
But this apparent hangover is not limited to venture capital. Jain pointed out that many of the promises of cryptocurrencies have yet to be fulfilled.
“There is too much hype and too much excitement. At the same time, we have actually seen price stagnation, the value of major tokens launched over the past year have plummeted and, as I said, there is uncertainty about what the political situation is at the moment. “Jane said.
‘We’ve been through this cycle before’
That said, longtime cryptocurrency investors haven’t completely lost faith.
“I still fundamentally believe in the core principles that underpin the industry, and we’ve been through these cycles before,” Jain said. “This is the most cyclical industry in the history of capitalism, and in many cases people’s emotions follow prices.”
In 2022, Multicoin raised $430 million in Venture Fund III, which Jain said the company is still distributing. He noted that the company is not actively seeking additional funding and may have made bad investments.
“We have made a lot of mistakes and we will continue to make them,” Jain said. “In fact, one view I have is that if a venture fund doesn’t have any zeros, it’s not taking enough risk.”
Disclaimer: The Block is an independent media outlet delivering news, research and data. As of November 2023, Foresight Ventures is a majority investor in The Block. Foresight Ventures invests in other companies in the cryptocurrency space. Cryptocurrency exchange Bitget is an anchor LP of Foresight Ventures. The Block continues to operate independently to provide objective, impactful and timely information about the cryptocurrency industry. Below are our current financial disclosures.
© 2024 The Block. All rights reserved. This article is provided for informational purposes only. It is not provided or intended to be used as legal, tax, investment, financial or other advice.