Other investors are diving into cryptocurrency in a big way.
Forbes published a piece this week highlighting 15 new crypto hedge funds that are launching between this summer and the end of the year. On Wednesday, Ari Paul, who previously managed money for the University of Chicago and regularly blogs and tweets about crypto, said on Twitter that he’s getting ready to launch a new hedge fund called BlockTower Capital.
Ari Paul tweet
And some of the companies involved are raising IPO-sized rounds even as their technologies or networks are still in the early stages of development. In the past month, crypto projects Tezos, EOS, Bancor and Status have raised over $660 million combined, according to Smith + Crown, a blockchain research, data and consulting group. By way of comparison, ICOs brought in $101 million in all of 2016.
That kind of growth is hard to ignore. But traditional VCs are split over whether crypto is worth the risk.
Like Union Square, Andreessen Horowitz has invested in Polychain after backing Coinbase, and Bessemer Venture Partners has spent this year studying the market, putting money into some funds and exploring potential coin investments.
Ethan Kurzweil, a partner in Bessemer’s Silicon Valley office, is working with his New York-based colleague Alex Ferrara to develop the firm’s roadmap.
“Our goal is to invest in emerging technologies as early as we can,” Kurzweil said. “This started out as a topic in January and February, and we’re at a point where we can invest equity in tokens.”
Other venture investors don’t want to touch this stuff. David Golden, a partner at Revolution Ventures in San Francisco, referred to the ICO phenomenon as a “house of cards” and said there’s a “Las Vegas speculative run” taking place.
Roger Lee of Battery Ventures is highly skeptical of ICOs because “there’s not a lot of disclosure or regulation around these offerings right now,” he said.
In other words, they look a lot like securities but they’re not registered with the SEC.
Source : CNBC