The Role and Challenges of Crypto Assets Venture Capital
Recently, venture capital (VC) in the field of Crypto Assets has become a hot topic of discussion. On one hand, the community has some criticisms regarding the so-called "VC coins"; on the other hand, media reports have highlighted numerous cases of VC rights protection and closures. In fact, the VC industry has always had a high elimination rate, which is not a phenomenon that has only emerged recently.
A Review of the VC Industry During the ICO Boom
During the ICO boom in 2017, the encryption currency VC industry experienced explosive growth. At that time, there were over 100 VC institutions in the Shanghai area alone, and there could be hundreds across the country. The threshold for establishing a VC was very low; all that was needed was an offshore entity, a signature and seal, and the ability to make external payments. However, this prosperity did not last long. Within just a few years, a large number of VC institutions exited the market, and the industry underwent a harsh reshuffling.
Common Misunderstandings About VC
The market's view of VC often exists at two extremes. When a popular project has VC involvement, people tend to believe that Crypto Assets VCs are all making profits. However, in reality, the failed projects in a VC's portfolio are often unknown. It is precisely because of the high failure rate that individual projects are required to have high return expectations.
On the other hand, when the projects invested by VC fail, the community may blame the VC for colluding with the project parties to "cut the leeks." However, people often overlook that the VC is also a victim, and their losses may be greater than those of retail investors.
Criteria for Evaluating VCs
To measure whether a VC is excellent, there are mainly two criteria:
Performance: The primary task of a VC is to generate returns for limited partners (LPs). Some large and well-known funds do not necessarily perform outstandingly.
Industry Contribution: In addition to financial returns, it is important to consider whether the VC investment projects have technological innovation and whether they promote industry development. Institutions that only invest in air projects or highly valued star projects are hard to be regarded as excellent.
Current Challenges Faced by Crypto Assets VC
Overvaluation: Some projects launched by financially strong institutions have inflated valuations, resulting in reduced opportunities for retail investors to enter and limited potential for price increases.
Adjustment of Investment Strategies: As the industry matures, simple cash-splashing strategies may become ineffective. VCs need to engage more deeply in project operations and co-create with the project parties.
Professionalization Demand: A solo-operated VC may struggle to cope with the complex market environment and needs to move towards specialization and teamwork.
Future Outlook
Ideally, as the Crypto Assets industry develops, the role of VCs may gradually diminish. A more decentralized ecosystem is the ultimate goal that the industry should pursue. However, before this goal is achieved, VCs will still play an important role in driving innovation and development in the industry.
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The Double-Edged Sword of Crypto Assets VC: Role Evolution and Industry Challenges
The Role and Challenges of Crypto Assets Venture Capital
Recently, venture capital (VC) in the field of Crypto Assets has become a hot topic of discussion. On one hand, the community has some criticisms regarding the so-called "VC coins"; on the other hand, media reports have highlighted numerous cases of VC rights protection and closures. In fact, the VC industry has always had a high elimination rate, which is not a phenomenon that has only emerged recently.
A Review of the VC Industry During the ICO Boom
During the ICO boom in 2017, the encryption currency VC industry experienced explosive growth. At that time, there were over 100 VC institutions in the Shanghai area alone, and there could be hundreds across the country. The threshold for establishing a VC was very low; all that was needed was an offshore entity, a signature and seal, and the ability to make external payments. However, this prosperity did not last long. Within just a few years, a large number of VC institutions exited the market, and the industry underwent a harsh reshuffling.
Common Misunderstandings About VC
The market's view of VC often exists at two extremes. When a popular project has VC involvement, people tend to believe that Crypto Assets VCs are all making profits. However, in reality, the failed projects in a VC's portfolio are often unknown. It is precisely because of the high failure rate that individual projects are required to have high return expectations.
On the other hand, when the projects invested by VC fail, the community may blame the VC for colluding with the project parties to "cut the leeks." However, people often overlook that the VC is also a victim, and their losses may be greater than those of retail investors.
Criteria for Evaluating VCs
To measure whether a VC is excellent, there are mainly two criteria:
Performance: The primary task of a VC is to generate returns for limited partners (LPs). Some large and well-known funds do not necessarily perform outstandingly.
Industry Contribution: In addition to financial returns, it is important to consider whether the VC investment projects have technological innovation and whether they promote industry development. Institutions that only invest in air projects or highly valued star projects are hard to be regarded as excellent.
Current Challenges Faced by Crypto Assets VC
Overvaluation: Some projects launched by financially strong institutions have inflated valuations, resulting in reduced opportunities for retail investors to enter and limited potential for price increases.
Adjustment of Investment Strategies: As the industry matures, simple cash-splashing strategies may become ineffective. VCs need to engage more deeply in project operations and co-create with the project parties.
Professionalization Demand: A solo-operated VC may struggle to cope with the complex market environment and needs to move towards specialization and teamwork.
Future Outlook
Ideally, as the Crypto Assets industry develops, the role of VCs may gradually diminish. A more decentralized ecosystem is the ultimate goal that the industry should pursue. However, before this goal is achieved, VCs will still play an important role in driving innovation and development in the industry.