Welcome again to Chain Response, a podcast that unpacks and dives deep into the most recent developments, drama and information in crypto with a number of the largest names within the trade to interrupt issues down block by block for the crypto curious.
For this week’s episode, Jacquelyn interviewed Maria Shen, a basic companion on the funding group at Electrical Capital, an early-stage enterprise agency targeted on crypto, blockchain, fintech and marketplaces.
Earlier than Electrical Capital, Shen was the CTO and co-founder of Bambify, which helped small to medium-sized companies create extra environment friendly provide chains with producers globally. Previous to that, she labored at Microsoft.
In March 2022, the agency introduced that it closed $1 billion for a pair of crypto funds: a $400 million car for making fairness investments in startups, and a $600 million fund supposed to speculate immediately in crypto tokens. Its web site at present showcases a portfolio with about 75 investments with crypto startups, together with Magic Eden, ConsenSys and Bitwise, to call just a few.
Earlier this yr, Electrical Capital put out a report indicating that the variety of blockchain builders within the U.S. has declined yearly since 2017, dropping to 29% final yr from 40% in 2017. We dove into what that report actually means and the way it will have an effect on the expansion of builders domestically and internationally.
“Loads of founders have already moved out of the USA or want to transfer out of the USA,” Shen mentioned. “That additionally means once we’re taking a look at investing we’re more and more wanting exterior the USA for alternatives and attention-grabbing founders.”
We additionally mentioned what crypto sectors she’s expecting investments, why she’s betting large on NFTs and the overall enterprise capital market sentiment amid a shaky crypto market. She thinks the continued bear market is “going to final some time and goes to be more and more troublesome for firms to fundraise.”
As for VCs, the macro surroundings has “shifted a lot” and companies “are elevating much less capital and deploying much less capital. Loads of companies are nearly on the finish of their fund lifetimes.”
General, Shen mentioned the crypto fundraising surroundings will in all probability develop into worse going into subsequent yr. However on a optimistic observe, she sees the present bear market in a greater mild in comparison with the earlier one in 2018 when “costs had been falling off a cliff.” This market cycle feels “fully completely different,” she mentioned. “Loads of the issues we had been actually dreaming about and speaking about theoretically have been shipped now.”
At the moment, the crypto ecosystem has Ethereum-focused scaling options, extra stablecoin choices, decentralized finance, onchain governance and NFTs, Shen famous. “This stuff didn’t exist in 2018, 2019, so it’s attention-grabbing to see the market maturing past transmitting tokens or cash to at least one one other.”
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