Multicoin Capital Managing Partner Tushar Jain recently participated in a discussion with Fortune magazine reporter Leo Schwartz at the Mainnet conference hosted by Messari. He stated that the crypto venture capital sector has not fully recognized the real impacts brought about by the last market downturn.
According to a report by The Block, Tushar Jain mentioned on stage:
"I think the market still has a bit of a 'hangover' to digest. This is true across the entire venture capital space—not just in the cryptocurrency sector—there was a massive influx of capital into venture capital as an asset class in 2021 and 2022, and many people have yet to face reality and accept the current situation."
A report at the time indicated that investors poured $33 billion into cryptocurrency startups in 2021, accounting for 5% of venture capital across all sectors globally. During the peak of the bull market amid the pandemic, many cryptocurrency companies, such as the NFT platform OpenSea and the now-bankrupt lending company BlockFi, became "unicorns" with valuations exceeding $10 billion. However, Tushar Jain pointed out that the "paper valuations" of these companies have been inflated due to excess capital investment.
Nevertheless, Tushar Jain stated that despite changes in the market environment, many companies' valuations have not significantly declined or adjusted, but rather remain at previous high levels. This may suggest that the market's adjustment of these companies' valuations has not fully occurred. Additionally, this "hangover" phenomenon does not seem to be limited to the venture capital sector; Tushar Jain believes that many promises in the cryptocurrency industry have yet to be realized:
"There is a lot of hype and excitement. At the same time, we see prices stagnating, with the issuance values of many major tokens significantly declining over the past year, along with uncertainties regarding the current political situation."
Despite this, the long-time cryptocurrency investment expert has not completely lost confidence.
"I still firmly believe in the core principles that support this industry, and we have experienced these cycles before. This may be the most cyclical industry in the history of capitalism, and many times, people's emotions fluctuate with price changes."
In 2022, Multicoin completed a $430 million fundraising for "Venture Fund III." Tushar Jain stated that the company is still making investments. He noted that the company is not actively seeking additional fundraising at the moment but also acknowledged that they have made erroneous investments.
"We have made quite a few mistakes and will make mistakes in the future as well. In fact, I have a viewpoint: if your venture capital fund has no investments that have gone to zero, it means you are not taking enough risks."