After the fall of FTX, some investors think it's time to pump the brakes on wild crypto investments.
In a recent CrunchBase article, writer Chris Metinko examined the rise and fall(out) of FTX, the latest cryptocurrency entity to experience a disastrous decline, through a VC lens. Reports of Sam Bankman-Fried (FTX’s founder and cryptobro poster child) grubby practice of using customer funds to back other investments aside, Metinko focused on conversations swirling in the VC community that basically boil down to, “Um, maybe we should all chill out a little.”
In the article, Tusk Venture Partners Co-founder and Managing Partner Bradley Tusk weighed in.
“There’s a fine line between betting on the future — even when it means investing in concepts that, at least today, don’t entirely add up — and just throwing money at a concept because everyone else is doing it,” Tusk said.
“Because everyone else is doing it” makes more sense when you see the numbers FTX posted earlier this year. According to Crunchbase, FTX raised $400 million (part of a reported $2 billion total) at a $32 billion valuation. That’s lot of people doing it, which makes the tanking of the platform sting even more. Sequoia Capital, for instance, recently told LPs it marked down its stake in FTX to zero after pumping in more than $200 million.
What does it all mean? A lot, and maybe not much. The entire Crunchbase article is worth a read (with some VCs adopting the commonsense approach for the future while others are adamant about sticking to current strategies), but we’re more curious about what you think.