Crypto token prices have been going down over the past year, with BTC and ETH both down more than 50% since last September. However, despite the decline in cryptocurrency prices, early-stage Web3 startups have shown remarkable resilience in their valuations, Seth Ginns, Managing Partner and Liquid Tokens at digital asset investment firm CoinFund told us on this Tuesday’s episode of the show. Chain reaction.
Startups weren’t entirely immune to the downturn — late-stage companies took the biggest valuation haircuts during the downturn, Ginns said. An investor at Ginns CoinFund has a broad understanding of various segments of the crypto market, from private investments such as start-ups and liquid investments in crypto tokens.
You can listen to the full episode with Guinness here:
“When liquid markets represent the best opportunity, we can lean more toward liquid markets, and when venture markets represent the best opportunity, we can lean more toward that,” Ginns said of CoinFund’s strategy. Although Ginns said that late-stage crypto startups have seen valuation haircuts in the past few months, the decline seems to have spared seed-stage companies to some extent, he observed.
“In the previous stage, you’re seeing a step up from where the assumptions were. [startups where] Either the team has just come together and done that real pre-seed type round or the next stage after that, if you’re not sure if it’s product market fit, but you have a good team and some good early. Momentum on the BD side, I’d say those first-out-of-the-door reviews are down a little bit,” Ginns said.
For early-stage startups, valuations are down 15-30%, Ginns estimates, a much smaller drop than we’ve seen in token prices and even in public tech stocks.
Early-stage crypto startup prices “are not at that level where traditional technology was two or three years ago. “They’re not where crypto was at that stage even two or three years ago, and I’m not sure they’ll get there,” Guinness said, adding that he doesn’t think the valuations for these early-stage companies are high. Lower lows as in previous market cycles.
So what causes this resilience?
I think one of the most exciting changes in crypto is that every cycle we see network evaluations of protocols increase exponentially, I don’t think every cycle will continue to be an order of magnitude, but they will take off. Big steps. And every time you take that step, you have confirmation of this new valuation range, which means you’re going to have people wondering how to value a startup in the first place, citing the latest signal you get in the last bull. market,” Ginns explained.
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