Pantera Capital expands VC reach to mid-stage crypto firms.

Pantera Capital expands VC reach to mid-stage crypto firms.

The Rise of Mid-Stage Crypto Ventures in the Blockchain Industry

Digital assets investment giant Pantera Capital is expanding its venture capital (VC) reach to mid-stage crypto-centric companies. This strategic move comes at a time when investors are showing a renewed interest in artificial intelligence (AI), particularly after the recent volatility in the crypto market.

Paul Veradittakit, Pantera’s managing partner, highlighted this shift in strategy during the Token 2049 event in Singapore. He described it as “probably the bigger change in our strategy.” Research firm PitchBook reported in June that VC investors, who were previously focused on investing in crypto firms, are now racing to invest in AI-based companies. Global venture funding in the second quarter of 2023 fell by 49% compared to the same period in 2022, indicating a shift in investor preferences.

The primary reason behind this pivot is the significant increase in interest rates from near zero to 5.5%. Investors are becoming more cautious and looking for less risky opportunities. Consequently, valuations for series B and C rounds have declined more steeply compared to early-stage investments. To counter this, Pantera is actively seeking opportunities outside the US, expanding its investible universe beyond national borders.

According to Veradittakit, the flow of funds to seed-phase crypto projects is expected to remain low for the next year or so. This reveals a cautious approach by investors who are waiting for more clarity and stability in the market before committing significant capital to early-stage projects.

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Asia Offers “Regulatory Push and Positivity”

Asia has emerged as a fertile ground for crypto businesses as they look for friendly regulatory environments beyond the United States. Veradittakit highlighted the “regulatory push and positivity” in the region, which has attracted companies seeking greater opportunities and reduced regulatory uncertainty. He anticipates a surge in Asian entrepreneurs and applications as market conditions improve and scalability and interoperability become more prominent.

Pantera aims to strengthen its relationships with well-established companies in Asia to remain at the forefront of funding these ventures. Veradittakit emphasized the importance of being proactive and staying ahead of the competition. The United States, on the other hand, presents a challenging landscape with unclear regulations and an unfriendly environment for crypto businesses. The Securities and Exchange Commission (SEC), under the leadership of Gary Gensler, has been actively pursuing charges against numerous crypto firms in the US.

The lack of clarity and the unfavorable regulatory environment in the US have left entrepreneurs searching for answers. Veradittakit stressed the need for clear regulations, stating, “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.”

Overall, Pantera Capital’s shift towards mid-stage crypto ventures reflects the changing tide in the blockchain industry. Investors are diversifying their interests beyond early-stage investments and looking for opportunities in other emerging sectors, such as AI. Asia’s regulatory infrastructure and positive sentiment make it an attractive destination for crypto businesses seeking growth and stability. As the industry evolves and market conditions improve, we can expect to see more innovative startups emerge from the Asian market.

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