Navigating the Crypto Landscape
Navigating the Crypto Landscape
VeradiVerdict - Issue #299
Happy 4th of July!
Here’s a recent talk I gave at an event co-hosted by Bloomberg and SCB10x, enjoy.
“Navigating the Crypto Landscape” Panel
In May, I was fortunate to share the (virtual) stage with Haseeb Qureshi (Dragonfly Capital), Jason Choi (Tangent), and Jason Kam (Folius Ventures) for the "Navigating the Crypto Landscape" panel at the REDeFiNE TOMORROW 2024 summit.
In a conversation moderated by CJ Fong from GSR, I covered some of the most interesting trends that we’re observing at Pantera.
CJ Fong: Hello, everybody. Welcome. The panel I have before me, and it's an honor to moderate this panel, includes four giants of the space, the most prominent figures you'll come across. Today's topic, however broad, is called “Navigating the Crypto Space.” We're going to look to these crypto VCs and founders to find out their thoughts on the space—where we've come from, where we are now, and where we're going from here.
My name is CJ Fong. I'm with GSR, and I run the sales teams for APAC and ANZ. I'd love for each of the panelists here to please introduce yourselves and your funds. What I'd also love to hear is what you feel is a differentiating factor when it comes to your respective funds in terms of your approach. And, on a more personal note, I'd love to know how long you've been in crypto and how you actually got into space.
Paul Veradittakit: My name is Paul Veradittakit, and I'm the Managing Partner at Pantera Capital. Pantera Capital is one of the first institutional investors in crypto and blockchain. We manage about $5.5 billion, investing in both equity and tokens at early and later stages, including pre-TGE rounds.
Pantera was founded by Dan Morehead, who used to be the CFO and head of global macro trading at Tiger Management. He comes from the traditional global macro side of things. We've been investing in crypto since 2013 and launched the Bitcoin Fund that same year. Dan initially faced challenges buying a few million dollars of Bitcoin on Coinbase due to daily limits, which Olaf Carlson-Wee, then in customer support at Coinbase, helped resolve. This was back when Bitcoin was about $50. We now have over 200 investments worldwide.
My career has mostly been in venture capital, starting on the startup side with business development, followed by economic consulting, and then VC focused on mobile apps and infrastructure. I've been managing investments for Pantera for the last 10 years.
Regarding differentiation, when we started in 2014, there wasn't much of a platform in crypto; it was traditional VC activities like business development. Over time, we developed a platform to address the needs of crypto companies, including hiring, economic research, governance, and regulations. Pantera stands out with its cross-border global activities. We also have a long-short hedge fund, unlike many who only do privates, and a special opportunities fund targeting secondary markets during bear markets.
CJ Fong: VC investing in Web 3 has always involved hype, following trends, and analyzing cap tables. While established VCs like yourselves have mature processes, there's still a tendency for some to follow herd mentality. Do you feel that the industry is maturing beyond this? Without revealing too much of your internal strategies, what would you consider proper indicators for assessing investments now? Paul, could you start us off?
Paul Veradittakit: FOMO is always present, especially when a reputable team or space is involved. For us, we've become quite institutional in our due diligence. We have extensive memos and build models to underwrite deals, particularly in DeFi. For instance, Cosmo, who runs our liquid book, is a strong fundamental investor creating models for different protocols. In areas like GameFi, we use on-chain data to benchmark both liquid and private protocols to assess expected returns. Our strategy involves either investing very early on teams or later with substantial data to underwrite decisions, avoiding the middle ground.
CJ Fong: Paul, you touched on an important point. Do you think that being so old in the space plus the accessibility to alternative asset classes besides just crypto. Is that something that we're gonna see more of? And is that what the larger funds should be doing in your opinion? Diversification of risk to an extent?
Paul Veradittakit: Indeed, as Haseeb mentioned, I can't do $1 or $2 million checks anymore, which used to be the most fun, betting on visionary founders. And I think for me, I am a taker at a Series A sometimes, but nevertheless, I think there's still an opportunity to go out there and bet on founders that raise more sizable rounds.
Sometimes I make those rounds a little bit bigger so that I can get a little bit more of a check in there too. But I think there's a lot of opportunity at the earliest stages, and Jason and Jason can do very well there. I think Series A's and B's just get really competitive once you start getting a little bit of traction, and me and Haseeb fight each other for leads, and it's extremely competitive.
I do think beyond Series A's, Series B's and beyond get a little bit more difficult too, because once you actually do start having product market fit, the valuations just get fairly out of control because there are not too many of those companies that kind of reach that sort of stage.
CJ Fong: We have three minutes left. Any parting comments for the audience?
Paul Veradittakit: Domestically, we're focused on institutional on-ramping. If you're working in that area, let me know. In Asia, we’re seeking more consumer-related projects, even if they don't yet have massive daily active users. I know that it's not gonna get to like 10 billion daily active users yet. But even if it's like Farcaster at 80,000-something users, that's starting to get some traction where people can actually try out and learn about crypto and do so. Far-out consumer ideas, like tradable stickers on Telegram, are intriguing to us. I'm always interested in some far-out ideas on the consumer side of things.
Far-out consumer ideas, like tradable stickers on Telegram, are intriguing to us.
CJ Fong: Fantastic. Ladies and gentlemen, that's all we've got time for today. I'd like to thank our four panelists. It's been a real pleasure. This conversation has been thoroughly enjoyable.
- Paul Veradittakit
DIGESTS
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BUSINESS
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The Basel Committee's framework, based on responses to a December 2022 discussion paper, must be implemented by 2026.
REGULATION
Solana ETF Approval Odds Are Better Without Gensler at SEC, Says VanEck
The absence of a regulated Solana futures market is "Gensler Psyop," said Matthew Sigel, VanEck's head of digital assets research.
Ahead of the U.K. Election, Major Parties Remain Silent on Crypto Issues
The U.K. is set to hold its first election in five years on Thursday and crypto is not a campaign-trail issue.
NEW PRODUCTS AND HOT DEALS
Robinhood Snaps Up AI Firm Pluto to Boost Retail Trading Smarts
The acquisition will deliver insights from artificial intelligence to the trading giant's massive retail investor base.
LETS MEET UP
Walks and coffee meetings in San Francisco throughout the year!
ABOUT ME
Hi, I’m Paul Veradittakit, a Managing Partner at Pantera Capital, one of the oldest and largest institutional investors focused on investing in blockchain companies and cryptocurrencies. I’ve been in the industry since 2014, and the firm invests in equity, early stage token projects, and liquid cryptocurrencies on exchanges. I focus on early-stage investments and share my thoughts on what’s going on in the industry in this weekly newsletter.
If you have an projects that need funding, feel free to DM me on twitter.