Why Part of Our Portfolio Firms Pause Their Token Launches – Crypto VCs
A growing number of venture capitalists in the crypto industry have disclosed that half of their portfolio enterprises have suspended their anticipated token launch with no date in sight. With a slew of regulatory scrutiny relating to exchange fees, it seems that the time for VCs to launch their tokens is still far away.
Industry Uncertainties
Venture capitalists in crypto have revealed that crypto projects’ development activities form the basis of their investments in such cryptos. Hence, they are likely to invest in crypto start-ups and projects that will release their tokens to the market soon.
However, many VCs disclosed that most of their portfolio projects had halted the launch of their tokens. The firms cited price instability, transaction fees, and increasing regulatory scrutiny.
For example, Spartan Group is the most active investor in the decentralized finance (DeFi) industry. According to a recent investment report, of the 108 projects with $110 million in funding, those listed on exchanges are less than 40%.
Commenting on the report, an executive at Spartan Labs, Kelvin Koh, revealed that the fund is for early-stage start-ups and projects with unrealized gains from their launched tokens. Oliver Blakey, the co-founder of Ascensive Assets, noted that about 60% of crypto projects are yet to launch their tokens due to the FTX contagion, with 3% on life support.
Furthermore, an experienced source with knowledge of the development disclosed that listing a token boosts its liquidity. Thus, early start-up investors can sell off some of their stakes or increase the valuation of their portfolios.
More importantly, the token listing also allows projects to develop a token economy and incorporate tokens into their products.
Going With The Wind
The risk appetite for token launches among founders and investors declined for most of last year. The May collapse of the Terra UST stablecoin has negatively impacted the industry.
The worst happened following the crash of the FTX crypto exchange and its sister firm, Alameda Research. However, the apparent retreat was triggered by a combination of factors within and outside the crypto ecosystem.
The troubling macroeconomic environment, which stripped the market of liquidity, and the increasing regulatory scrutiny all played a role. According to the Wall Street Journal, most early-stage token funds were down by over 90% as of September 2022, with Andreessen Horowitz seeing its flagship crypto asset fall by more than 40%.
The FTX’s collapse in November further worsened the issues, with many crypto exchanges on the defensive as they attempted to protect their liquidity by listing new tokens. However, despite the grim market conditions, experts believe some start-ups might still list their tokens.
Tokenhell produces content exposure for over 5,000 crypto companies and you can be one of them too! Contact at info@tokenhell.com if you have any questions. Cryptocurrencies are highly volatile, conduct your own research before making any investment decisions. Some of the posts on this website are guest posts or paid posts that are not written by Tokenhell authors (namely Crypto Cable , Sponsored Articles and Press Release content) and the views expressed in these types of posts do not reflect the views of this website. Tokenhell is not responsible for the content, accuracy, quality, advertising, products or any other content or banners (ad space) posted on the site. Read full terms and conditions / disclaimer.
