The recent scandals in the cryptocurrency industry have caused a shift in the risk appetite of venture capitalist (VC) firms, with general VC firms reducing their investments in digital assets. However, crypto-specific VCs remain faithful to the cause, continuing to invest billions of dollars in the industry.
We had a lot of big named venture capitalists who are very established, they are known for investing in a broad array of tech companies, and they came into crypto, started backing companies like FTX, and now those generalist VCs are starting to pull back.Bloomberg reporter Hannah Miller.
Despite the scandals and general lull in price action, “crypto-native” VCs remain optimistic about the potential of blockchain technology. Miller explains, “People still see use cases for blockchain. They think that the full potential of this technology hasn’t been realized.”
Two years ago, during the peak of crypto mania, VC firms were quick to invest without proper due diligence, driven by fear of missing out (FOMO). However, the recent scandals have resulted in a more cautious investment approach, leading to a slowdown in the pace of deals completed.
The divide between general VCs and crypto-specific VCs highlights a change in mentality, with the latter staying committed to the potential of blockchain technology. As Bloomberg reporter Hannah Miller states, “There are still people who see potentiality with blockchain technology… this was unrepresentative of the industry as a whole.”
Despite the slowdown in investment from general VCs, crypto-specific VCs remain optimistic about the potential of blockchain technology. In fact, a number of high-profile VC firms, including Andreessen Horowitz and Union Square Ventures, have established dedicated crypto funds to invest specifically in the industry.
It’s important to note that the divide between general VCs and crypto-specific VCs does not necessarily reflect a negative outlook on the crypto industry as a whole. Instead, it highlights the diverse perspectives and risk appetites among VC firms and their approach to investing in the fast-evolving world of digital assets.
While general VCs have become more wary of the risks associated with digital asset investing, crypto-specific VCs remain optimistic and committed to the potential of blockchain technology. The shift in investment approach highlights a reset in the FOMO mentality, leading to a more prudent and cautious approach to investing in the crypto industry.