{"id":41770,"date":"2023-01-20T04:59:35","date_gmt":"2023-01-20T04:59:35","guid":{"rendered":"http:\/\/egrowonline.com\/?p=41770"},"modified":"2023-01-20T04:59:35","modified_gmt":"2023-01-20T04:59:35","slug":"crypto-could-solve-venture-capitals-due-diligence-problem-vc-exec","status":"publish","type":"post","link":"http:\/\/egrowonline.com\/?p=41770","title":{"rendered":"Crypto could solve venture capital’s due diligence problem \u2014 VC exec"},"content":{"rendered":"


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Venture capitalists battling with the difficulties of proper crypto firm due diligence should be looking at getting back to the basics \u2014 to “trust the chain,” a crypto-focused venture fund executive argues.\u00a0<\/p>\n

Speaking to Cointelegraph, John Lo, head of digital assets at Recharge Capital \u2014 a $6 billion fund with crypto and decentralized finance (DeFi) projects on its portfolio \u2014 said that FTX shook the “confidence in this industry.”<\/p>\n

“There will be a lot of soul-searching,” he said. According to Lo, due diligence has always been a problem in the venture space, even outside of crypto.<\/p>\n

He said the action plan taken by crypto venture capitalists in response to the FTX collapse will be a crucial deciding factor for either an effective recovery or a deepening of the industry crisis.<\/p>\n

However, Lo argues that the crypto industry provides the world with a step toward a solution, a public and immutable ledger, arguing:<\/p>\n

“Crypto VCs specifically need to go back to crypto principles – trust the chain. We’re going to see a lot more businesses operate on-chain, and VCs rely on on-chain data to perform more thorough diligence.”<\/p><\/blockquote>\n

“We’re going to see better tools to distill and track on-chain data, in fact, we may even see entire on-chain businesses wrapped into NFTs and sold, optimizing arduous M&A processes,” he added.\u00a0<\/p>\n

The total funding raised in the crypto venture capital last year exceeded 2021, with $30.3 billion secured by crypto projects, Cointelegraph Research\u2019s<\/a> VC Database shows.<\/p>\n

The last quarter of 2022 saw the lowest capital inflow to the industry in two years with only $2.8 billion allocated across 371 deals according to a Jan. 1 tweet from Alex Thorn, head of research at Galaxy Digital.<\/p>\n

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Q4 2022 was the slowest for crypto vc investing in 2 years, with only $2.8bn allocated across 371 deals. <\/p>\n

in total, 2022 saw $30.8bn invested by VCs, compared to $33bn in 2021. <\/p>\n

likely crypto vc will be muted for several quarters w\/ rates, macro, & cryptoasset price headwinds pic.twitter.com\/RaVGNBWzVa<\/a><\/p>\n

\u2014 Alex Thorn (@intangiblecoins) December 31, 2022<\/a><\/p><\/blockquote>\n

FTX’s meltdown caused a negative sentiment across the industry, but the funding decline also reflects the macroeconomic scenario, said Lo.<\/p>\n

“A high-interest environment does not bode well for risk-on industries. Venture usually lags, and we’re likely to see markdowns,” noted Lo. He believed as 2023 goes forward and the macroeconomic landscape stabilizes, the industry will regain stability as well.<\/p>\n

“It is probably a good thing bad actors and bad practices are shaken out earlier rather than later.”<\/p><\/blockquote>\n

As the year progresses, Lo predicted the industry will see more capital deployments than inflows with an emphasis on on-chain products and services rather than tokens.<\/p>\n

A number of challenges that surfaced during the bull market will likely be in the spotlight too, including user experience, wallets, user onboarding and compliance.<\/p>\n

“Key narratives are forming regarding blockchain scalability, liquid staking, real-world assets, decentralized exchanges and platforms,” Lo stated.<\/p>\n

“These optimizations after a frenzied period of experimentation will be key to growth, and as always, there are teams working in stealth on groundbreaking products yet to be seen,” he said, adding:<\/p>\n

“Crypto is alive and well.”<\/p><\/blockquote>\n<\/div>\n


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Venture capitalists battling with the difficulties of proper crypto firm due diligence should be looking at getting back to the basics \u2014 to “trust the chain,” a crypto-focused venture fund executive argues.\u00a0 Speaking to Cointelegraph, John Lo, head of digital assets at Recharge Capital \u2014 a $6 billion fund with crypto and decentralized finance (DeFi) […]<\/p>\n","protected":false},"author":1,"featured_media":41771,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":true,"jetpack_social_options":{"image_generator_settings":{"template":"highway","enabled":false}}},"categories":[38],"tags":[9886,62,13459,132,854,109,2752,1675],"class_list":["post-41770","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blockchain","tag-capitals","tag-crypto","tag-diligence","tag-due","tag-exec","tag-problem","tag-solve","tag-venture"],"jetpack_publicize_connections":[],"jetpack_sharing_enabled":true,"jetpack_featured_media_url":"http:\/\/egrowonline.com\/wp-content\/uploads\/2023\/01\/b1c245d4-484e-4749-a183-7b59d0634734.jpg","_links":{"self":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts\/41770","targetHints":{"allow":["GET"]}}],"collection":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=41770"}],"version-history":[{"count":1,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts\/41770\/revisions"}],"predecessor-version":[{"id":41772,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/posts\/41770\/revisions\/41772"}],"wp:featuredmedia":[{"embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=\/wp\/v2\/media\/41771"}],"wp:attachment":[{"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=41770"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=41770"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/egrowonline.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=41770"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}