Multicoin Capital's Tushar Jain on Crypto Market

Multicoin Capital Managing Partner Tushar Jain expressed concerns regarding the crypto venture capital sector during a fireside chat at Messari’s Mainnet conference with Fortune’s Leo Schwartz.

"I would say the market still has a bit of a hangover to work through," said Jain, who has been with Multicoin since 2017. "This is true across all of venture — it's not just crypto — there was a lot of money pumped into the venture asset class in 2021 and 2022, and a lot of people don't want to take their medicine yet."

A report from 2021 indicated that investors invested $33 billion into crypto startups, comprising 5% of global venture funding. During the pandemic bull run, several crypto firms, including NFT platform OpenSea and the now-bankrupt BlockFi, reached unicorn status. Jain suggested that many of these inflated valuations may not hold true.

"We are not seeing that many down rounds," Jain noted, referring to situations where private firms raise capital at lower valuations.

He also highlighted a broader stagnation in the crypto sector. "There's so much hype, so much excitement. At the same time, we've seen really a stagnation of prices. Major token launches over the past year have plunged in value, and there’s uncertainty around current political situations," Jain explained.

'We've been through these cycles before'

Despite these challenges, Jain remains optimistic about the future. "I still fundamentally believe in the core principles that underlie the industry, and we've been through these cycles before," he asserted. "This is possibly the most cyclical industry in the history of capitalism, and often, people's emotions follow the price."

In 2022, Multicoin raised its $430 million Venture Fund III, which Jain mentioned is still being deployed. He clarified that the firm is not actively seeking to raise additional funds and acknowledged potential missteps in past investments.

"We've made plenty of mistakes, and we'll make mistakes in the future, too," Jain admitted. "One view I have is if your venture fund doesn't have any zeros in it, then you're not taking enough risk."