The Alpha Factory (For Subscribers)

Venture funding in crypto absolutely bottomed a couple of quarters ago. Though most of the announcements referenced here happened a long time ago (in some cases over a year ago), deal flow is significantly stronger today than it has been since before ftx. VC in crypto is starting to show some of the same signs of previous bull markets. Quicker deals, lighter touch diligence, bidding wars, more focus on friendly governance terms, etc. Strongly believe the best performing funds will continue to be those who are able to be great partners to their portfolio companies without compromising on basic tenets of how to perform rigorous diligence, have understanding of valuations and return math, don't compromise on basic governance needs, and don't judge themselves or their partners on how "hot" of a deal they win. That said, in the day to day venture capitalists struggle with the same incentive misalignment that other investors do. Despite the job being inherently long term outcome oriented, feedback loops and cycles on things like compensation, promotions, capital raising, and just mind share of founders continues to reward shorter term thinkers who are often the underperformers. As an investor, having a long term, principled, partner oriented perspective will win over a 10 and 20 year period, but most professionals in venture don't feel like they have the luxury of that focus. That's what leads to these quick rising private asset bubbles in times of market mania. And it does feel like we are in the early innings of a new crypto (and venture) bull market.