- The bear market is great as companies are focused on building and entrepreneurs are in it for the right reasons
- Top talent has come into and continues to come into the space
- This is a great time to invest because of favorable valuations. Structures include equity, equity-token hybrid, and discounted SAFTs
- Investors are going to find great value and long-term successful companies during this time
Two common questions that I have gotten recently are what I think about this bear market and how is it to invest in crypto at this time?
I think that the bear market is good for crypto as we are going to see significant company building and progress made during this time. Entrepreneurs that are building companies or are starting off right now are in the space for the right reasons and have a long term mentality.
In 2017, there have been reports that over 200 hedge funds emerged to invest in crypto. The most important thing that came out of this bubble was that top talent from Facebook (e.g. Bitwise
), Microsoft (e.g. Dirt Protocol
), Google (e.g. Origin Protocol
), Uber (e.g. Ampleforth
), etc have come to build in the space. In 2018, we have seen a tremendous decline in crypto prices likely due to a result of regulations and a massive shake out of non-legitimate projects. With this bear market, many crypto funds are running out of money, corporate development funds are not active, and individual investors have left the market.
For the last few months, I’ve heard entrepreneurs mentioning that it’s been tougher to find investors. While this is happening, top talent continues to see an opportunity to build important infrastructure in this space and are continuing to enter and build. It leaves long term investors an opportunity to invest into companies at favorable valuations at this time, especially for companies that depends upon transaction volume as the main business model. Capital is still available for entrepreneurs but the bar is higher. Entrepreneurs should try to raise a bit more to buffer for the winter while the longer the bear market lasts, the more favorable valuations and structures can be for investors.
Most rounds that are being closed right now are equity rounds, while even companies doing a token later on are considering doing equity rounds while they figure out their token strategy.