Crypto Venture State at the Emergence Conference

Discussing the state of crypto venture at the Emergence conference in Prague on Thursday, VCs noted that it was still early in the bull cycle and retail participation had not yet reached 2021 levels.

With the crypto market heating up and Bitcoin trading at all-time highs above $100,000, Viktor Fischer, Managing Partner at digital assets investment and engineering firm Rockaway X, asked the panel about their exit strategies for this cycle.

> “It’s a very personal question,” Matthew Graham, Ryze Labs founder and Managing Partner, stated. “Americans always want to use these dumb baseball analogies, but I don’t think it’s the seventh, eighth, or certainly not the ninth inning of this cycle yet. I think it’s more like four, five, or six.”

Despite some positive signs in the market, Fischer remarked, “However, I don’t really see retail in yet. In 2021, my friends were calling me about Cardano. We are not there yet.”

Charlie Sandor, Investment Partner CMT Digital, echoed that it was still early in the cycle. He emphasized the importance for venture firms to stay informed as a significant portion of their portfolio relies on token outcomes.

US Regulatory Bottleneck Loosening

Sandor reflected on the challenges founders faced while building blockchain-based companies in the U.S. in recent years, suggesting the regulatory bottleneck has now opened after the presidential elections. “I think you’re going to see some amazing innovation and broader adoption now that there’s less pressure on the regulatory side,” he stated.

Graham discussed their approach to the evolving regulatory landscape, emphasizing a risk mitigation strategy. “It can certainly be extremely tricky, but I would advocate for a safety-first approach.”

Fischer pointed out that U.S. and Europe are the two jurisdictions that matter most regarding regulations. He suggested reforming the banking system and establishing clearer rules for crypto are top priorities.

AI Agents as a Major Trend

The VCs at the conference were also focused on the impact of AI agents in the industry. Graham noted an “overwhelming percentage” of Ryze Labs’ time is spent on AI developments. They recently partnered with memefund ai16z on a $5 million program to support the growth of the ai16z ecosystem.

“I think it’s the most important thing in the industry since DeFi,” Graham stated.

Fischer anticipated AI agents would have a similarly profound significance to proof-of-stake blockchains in 2018 and the DeFi summer of 2020.

Navigating Risks and Valuations

With heightened risks in the crypto market compared to traditional finance, Graham highlighted two key factors: founder/team risk and the market cycle’s influence on exit timing.

Regarding project valuations, the VCs mentioned a need to focus on metrics as companies reach Series A rounds, although many aspects remain narrative-driven.

Fischer cautioned U.S. colleagues against inflated valuations, emphasizing patience and strategic purchasing in subsequent bear markets.

Adding Value in Venture Capital

Graham discussed the importance of focusing on specific areas of expertise, which can provide a competitive edge in the market. Fischer added that their firms aim to ease the burdens on portfolio founders and facilitate networking opportunities.

> “Being a CEO is a very lonely job. Just be there when the CEO needs you,” Fischer advised, highlighting the value of support and connections.