I have met a number of accomplished crypto traders. In my opinion, there is a simple reason for the lack of success seen by a number of crypto funds.
Last month, Bloomberg reported that 9 funds have closed this year and reported losses of 43 percent across crypto fund portfolios in 2018. But the emergence of new funds hasn’t insulated them from recent troubles. Back in February, a summary of the ICO market listed 226 crypto funds, up from 110 in October 2017. The increasing number of ICOs has led to the emergence of ever more crypto funds. the massively oversubscribed Arweave pre-sale. Anecdotally ICOs seem up again more recently, see e.g. After a strong start to the year there was a dip that could have been further intensified due to Telegram’s foreseen withdrawal from their ICO. The money raised from ICOs dipped in March before April saw a drop off between 44 to 66%. The landscape has been rattled by various developments since then. This is already over half of what was raised in 2017. Building on this momentum, the trend spilled over into 2018 and earlier this year, ICOs raised more than $3 billion within the first two months alone.
But are ICOs and crypto funds really VC killers? Or can the two coexist? The State of Crypto in 2018Ģ017 was a hugely exciting year for ICOs, raising $3.8bn compared to $284m in 2016. As with all things that have such disruptive potential, the hype is huge. ICOs are new, exciting and pose a serious challenge to the traditional VC funding model: founders can reach a wide investor base at lightning speed, all the while retaining control and profiting from near-instant liquidity. The past 18 months have seen a massive increase in interest around ICOs, with some going so far as to boldly predict the imminent demise of VCs - a tech institution very close to my heart. Evaluating the impact of crypto funds and ICOs on the future of VCs
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