Large VCs are sidelining smaller crypto investors, PwC crypto lead says

Published at: July 30, 2021

As cryptocurrency continues to take over mainstream finance, formerly cautious investors across the globe are rethinking their stance of counting crypto as a bad investment. This change of heart has led to a higher market valuation of crypto businesses due to increased funding from goliath investors.

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.”

As the crypto ecosystem continues to redefine the future of the asset class, Arslanian highlighted the recently doubled volume of crypto mergers and acquisitions. He underscored how this year, crypto businesses were able to raise 2020’s M&A value of $3 billion in just three months.

“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, Cointelegraph reported on FTX’s recent record-breaking funding round of $900 million. The funding, which resulted in FTX’s valuation growing from $1.2 billion to $18 billion, saw the involvement of large VC firms including Softbank, Sequoia Capital, Coinbase Ventures, Multicoin, VanEck and Paul Tudor Jones.

Cointelegraph also reported on investments from some of blockchain’s biggest VCs toward Multiverse Labs, a company built to fund early-stage blockchain and AI initiatives. Some of the prominent investors include Samsung Next, Huobi Ventures and Arrington XRP Capital.

The resultant valuation for Multiverse grew to $250 million, with a greater focus on engineering, research and marketing in addition to expansion across Europe and Southeast Asia.