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Digital assets investment giant Pantera Capital is increasing its venture capital (VC) reach to mid-stage crypto-centric companies, at a time when investors are interested in artificial intelligence (AI), particularly after the crypto market rout.
The plan is “probably the bigger change in our strategy,” said Pantera’s managing partner, Paul Veradittakit during the Token 2049 event in Singapore on Wednesday.
Data from research firm PitchBook said in June that VCs, who were once investing in crypto firms, are racing to grab AI-based companies. Another report from Crunchbase said, “Global venture funding in Q2 2023 fell … 49% compared to the second quarter of 2022 when startup investors spent $127 billion.”
The fundamental cause of this pivot is the radical rise in interest rates from near zero to 5.5%, which is considered high for investors making risky decisions.
Veradittakit noted that valuations for series B and C rounds have declined more steeply than early-stage investments. “A large part of our investible universe is outside the US right now.”
Fund flow to crypto projects that are in seed-phase are requested to remain low for the next year or so, he added.
Asia Offers “Regulatory Push and Positivity”
Veradittakit further said that Asia has become a hotbed for crypto businesses that have joined the brain drain from the United States, because of the crypto-friendly “regulatory push and positivity.”
“We think that, as the market picks up a little bit, as we start seeing a bit more scalability and interoperability, we are going to see a huge rush of entrepreneurs and applications coming from Asia.”
Pantera is trying to strengthen the relationships, making sure that the companies are well-established in Asia, so that it can be at the “forefront of funding those companies,” he told Bloomberg at the conference.
The United States has piled up unclear and unfriendly situations on cryptos, which doesn’t seem to navigate anytime soon. The Securities and Exchange Commission (SEC) under the leadership of Gary Gensler has been enforcing charges against numerous crypto businesses in the US.
“As an entrepreneur, you want to make sure you do what you can to do the right thing. Everybody in the industry in the US is really looking for some sort of clarity.”
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