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Inflated crypto valuations have made it more difficult for small investors to participate in the ongoing innovation.
As cryptocurrency continues to take over mainstream finance, previously cautious investors around the world are reconsidering their stance that crypto is a bad investment. Due to increased funding from goliath investors, this change of heart has resulted in a higher market valuation of crypto businesses.
Citing this trend, PricewaterhouseCoopers crypto leader Henri Arslanian claimed that larger players from venture capital, private equity and pension funds are outplaying smaller boutique firms and family offices from participating in the latest innovations around crypto.
Arslanian sided with smaller VC firms as he shared an example stating that a deal worth $10 million is now seeing “large VCs come in and put a bid in for a higher valuation.” He opined:
“This is happening a lot with very early-stage companies, say, $5 million to $20 million — the prices are being inflated.”
Arslanian highlighted the recently doubled volume of crypto mergers and acquisitions as the crypto ecosystem continues to redefine the asset class’s future. He emphasised how, in just three months this year, crypto businesses were able to raise 2020’s M&A value of $3 billion.
“If your minimum ticket size is around $50 million, there aren’t that many companies that have that status yet,” Arslanian explained, continuing, “If you’re a large pension fund and you decided to make a crypto allocation, there are no more than two dozen companies around the world that are investable, looking for capital and could absorb $100 million.”
Along similar lines, ot was reported on FTX’s recent record-breaking funding round of $900 million. Large VC firms such as Softbank, Sequoia Capital, Coinbase Ventures, Multicoin, VanEck, and Paul Tudor Jones participated in the funding, which increased FTX’s valuation from $1.2 billion to $18 billion.
As previously reported, Multiverse Labs, a company founded to fund early-stage blockchain and AI initiatives, has received investments from some of blockchain’s most prominent venture capitalists. Samsung Next, Huobi Ventures, and Arrington XRP Capital are among the notable investors.
As a result, Multiverse’s valuation increased to $250 million, with a greater emphasis on engineering, research, and marketing, as well as expansion across Europe and Southeast Asia.