Crypto token prices have been on a downward spiral over the past year, with both BTC and ETH down over 50% since last September. And even as cryptocurrency prices have fallen, early-stage Web3 startups have shown remarkable resilience in their valuations, Seth Ginns, managing partner and head of liquid tokens at digital asset investment firm CoinFund, told us on this Tuesday’s episode. A chain reaction.
Startups aren’t completely immune to downturns — Gins says late-stage companies take the biggest valuation haircuts during down markets. Gins has broad insight into various parts of the crypto market as an investor in CoinFund, which provides capital for private investments such as startups as well as liquid investments such as crypto tokens.
You can listen to the full episode with Guinness here:
“When the liquid markets represent the best opportunity, we can lean more into the liquid markets and when the venture markets represent the best opportunity we can lean more into it,” Ginns said of CoinFund’s strategy. While Gins said that late-stage crypto startups have faced valuation haircuts in the past few months, the downturn seems to have largely left seed-stage companies behind, he noted.
“I would say at an early stage, you are looking at a step down for valuations [startups where] The team is just coming together and starting a real pre-seed type round, or starting the next phase right after that, where you’re not sure if they have product-market fit yet, but there’s a great team and some early momentum towards BD, that early out-of- I would say the gate valuations are down a little bit,” Ginns said.
For early-stage startups, valuations have fallen by about 15-30%, Ginns predicts, a much smaller drop than we’ve seen in token prices and public tech stocks.
Early-stage crypto startup valuations “are not where traditional technology was at that stage two or three years ago. They’re not where crypto was at that stage two or three years ago, and I’m not sure they’ll get there,” Ginns said, explaining that he doesn’t think these early-stage companies will get valuations. have fallen as low as in previous market cycles.
So what is driving that resilience?
“One of the really interesting dynamics in crypto is that every cycle, we see network valuations for protocols increase by an order of magnitude, I don’t think it’s an order of magnitude every cycle, but they take big steps. And every time you take that step, you have validation of this new valuation range, which means you have people thinking about how to value their early-stage startup, referring to the latest mark you’re getting on the last bull. market,” Ginns explained.
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