Pantera Capital is more open to venture capital opportunities at mid-stage companies in the crypto sector, which is suffering from a slump in global funding levels as artificial intelligence startups take the spotlight.
(Bloomberg) — Pantera Capital is more open to venture capital opportunities at mid-stage companies in the crypto sector, which is suffering from a slump in global funding levels as artificial intelligence startups take the spotlight.
The greater willingness to evaluate mid-stage crypto businesses is “probably the bigger change in our strategy,” San Francisco-based Pantera’s Managing Partner Paul Veradittakit said in an interview in Singapore. The digital-asset industry is gathering in the city-state for a conference.
The valuation drop for series B and C funding rounds is larger than for early-stage investments, Veradittakit added. He also said that “a large part of our investible universe is outside the US right now.”
Crypto venture funding slid to the lowest since 2020 in the second quarter, PitchBook data show. The drop followed last year’s digital-asset rout and came amid an explosion of interest in artificial intelligence technology.
Valuations for crypto seed rounds were up 18.1% in April through June compared with full-year 2022 levels, but slipped 20.3% and 15.8% for early-stage and late-stage rounds respectively, according to PitchBook.
Fund flows outside of seed-stage projects are expected to remain slow for another year or so, Veradittakit said.
Crypto and blockchain specialist Pantera has $3.3 billion of assets under management and about 100 venture investments, with 47% of its invested capital outside the US, according to the company’s website. Some 40% of portfolio companies are non-US, and the number of such firms could climb, according to Veradittakit.
Digital-asset businesses are being drawn to Asia because of a big retail user base as well as “regulatory push and positivity,” Veradittakit said.
The crypto-sector collapse and bankruptcies such as the demise of the FTX exchange sparked a US regulatory clampdown that has led digital-asset outfits to explore overseas growth avenues.
The Securities and Exchange Commission under Chair Gary Gensler has been at the forefront of enforcement actions against crypto businesses in the US. Gensler argues most tokens are securities and the industry in the US has failed to meet regulatory obligations.
But contradictory court judgments and slow progress toward digital-asset legislation in Congress have muddied the picture.
“As an entrepreneur, you want to make sure you do what you can to do the right thing,” Veradittakit said in a Bloomberg Television interview. “Everybody in the industry in the US is really looking for some sort of clarity.”
Veradittakit said that over time he expects substantial growth in the number of entrepreneurs and applications coming from Asia as the needed infrastructure for crypto and blockchain technology is built out.
–With assistance from Hannah Miller, Annabelle Droulers and Joanne Wong.
(Updates with comments from Pantera’s Veradittakit from the penultimate paragraph.)
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