Multicoin Capital Managing Partner Tushar Jain recently participated in a discussion with Fortune magazine reporter Leo Schwartz at the Mainnet conference hosted by Messari, where he stated that the crypto venture capital space has not fully recognized the real impacts of the last market downturn.
According to a report by The Block, Tushar Jain stated 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 cryptocurrency—there was a massive influx of capital into this 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 decreased or adjusted but remain at previous high levels. This may suggest that the market's adjustment of these companies' valuations has not fully occurred. Furthermore, this "hangover" phenomenon does not seem to be limited to the venture capital space; Tushar Jain believes that many promises in the cryptocurrency industry have yet to be fulfilled:
"There has been 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," and Tushar Jain stated that the company is still making investments. He noted that the company is not actively seeking additional fundraising but also acknowledged that mistakes have been made in investments.
"We have made quite a few mistakes, and we will make mistakes in the future. In fact, I have a viewpoint: if your venture capital fund has no investments that go to zero, it means you are not taking enough risks."