This generation of VCs in the cryptocurrency circle has already started to defend their rights
"I talked with some colleagues these days, and this round of VC in the cryptocurrency circle is basically dead. Fortunately, we did not invest much in the primary market, but turned to the secondary market."
“I talked to a market maker, and he felt very sorry for us VCs. In the first year after the project went online, VCs couldn’t get the coins. Only market makers, projects andexchangeThere are coins, but the VCs are to blame for the price drop, and they are even ridiculed as VC coins.”
At the Hong Kong cryptocurrency event, LD Capital founder Yi Lihua spoke up for the cryptocurrency VCs. In his opinion,VCs are the biggest scapegoats in this round of the cryptocurrency cycle. Not only do they lose money, they also get scolded by others..
Entering 2024, many senior crypto VC practitioners have left their jobs and joined project parties or the secondary market. There is only one reason:Nomake money.
Nowadays, VCs in the cryptocurrency circle are facing multiple difficulties: they cannot find suitable investment projects, and the valuations of the projects they are interested in are extremely high; it is difficult to exit old projects, and the entire secondary market of altcoins is seriously lacking in liquidity. Some investment projects immediately suffered a book loss of 50%-90% as soon as they were launched; even if they are lucky enough to invest in a good project and extend the token lock-up for many years, everything is unknown at that time...
Many VCs in the cryptocurrency industry rely on external LPs for funding and need “brand packaging”.Even if the body is already half cold, but still pretend to be alive and well.
When the project party cannot obtain liquidity from the secondary market, VC becomes the exit liquidity.
This generation of VCs in the cryptocurrency circle are already on the road to defending their rights.
VC rights protection in progress
“Do you know what despair is? It was the day when ZKX was launched,” said investor DAVID, expressing his shame for having participated in such a project.
The investment cost of ZKX Token is $1.exchangeOn the first day, the opening price dropped from $0.6 to $0.2.Xiaobai NavigationYuan, a direct book loss of 80%, but this was not the end. After that, ZKX continued to fall, once falling to 0.000618, almost zero.
A few months ago, ZKX was a relatively well-known star project, StarkNet’s leading derivatives platform, and had obtained GCR, Amber Group, Crypto.com, Hashkey, StarkWare, and Orange.DAOIt has received investments from well-known institutions such as Alibaba and Tencent, with a total financing amount of US$7.6 million.
On July 31, ZKX founder Eduard directly announced,Because no viable economic path could be found, the platform was shut down.
All investors were struck by a bolt from the blue and were caught off guard.
Perlone Capital partner Jin Kang denounced ZKX as a scam on X.
The team closed the project 6 weeks after TGE; the project was suddenly modified during TGETokenUnlocking plan; actual circulation at TGETokenBeyond the official documentation… Jin Kang said, “If this isn’t a scam, then what is?”
At Jin Kang’s call, many ZKX investors decided to work together to defend their rights. So far, the rights protection group has gathered 42 relevant personnel, and everyone has offered suggestions.
Some investors are well aware that under the current SAFT agreement framework, it is difficult for investors to get their funds back.So they proposed to put pressure on the Starknet Foundation, hoping to give investors subsidies..
During the rights protection process, an external team also contacted investors, expressing their desire to take over and restart the ZKX platform to provide a new platform for the existing ZKX CommunityProvide new trading methods.
ZKX is just one of the many VC rights protection cases at present. Some investors told Coderworld that they have currently suspended primary investment and shifted their focus to "post-investment management", inquiring about the development status of invested projects, and conducting "rights protection" for projects that have no operational progress, applying for the return of investment funds. Most of them are old projects that participated in the investment in 2022, including investments from well-known institutions such as Coinbase Ventures. Under the banner of concepts such as the Metaverse, they have now lost their popularity, and social media has also stopped operating...
However, defending rights is not easy...
It is difficult to protect rights in the cryptocurrency circle
Protecting rights in the cryptocurrency circle is extremely difficult.
Yi Lihua, who has many years of experience in cryptocurrency rights protection, also said,I have defended rights in many projects in the cryptocurrency circle, but rarely succeeded..
Investing in the primary market requires a willingness to accept defeatMoreover, most of the primary investments in Crypto are based on SAFT/SAFE contracts, and the main investors are offshore organizations such as BVI, which have legal flaws. Investment institutions are spread across various countries, and it is very difficult to rely on legal means to protect rights. For VCs, protecting rights often involves concentrated actions, and they join forces with other investors to put pressure on the project party, appealing to their emotions and reasoning with them, but the initiative is still in the hands of the project party.
Yi Lihua said that in most cases of rights protection, the project founders will simply ignore you and there is nothing you can do about it. Some founders are more respectful and willing to give up half, which is already very good.
A VC partner who participated in the ZKX rights protection movement admitted that even though they had a common need for rights protection, the interests and demands of different institutions were too dispersed, and some VC investments were not particularly large, so they would not "all in" and try their best to do this.
Another reason is that most VCs want to maintain basic decency, so they are unwilling to break off relations with the project parties unless it is absolutely necessary.
On the contrary, individual investors who can cast aside the constraints of face, defend their rights boldly and persevere have a higher success rate in defending their rights. The rights protection in the cryptocurrency circle has evolved from a game of who is more reasonable at the beginning to a game of "who is more shameless and who can persist longer" in the end.
Not only VCs, but many cryptocurrency KOLs are also on the road to protecting their rights.
ALEX, a practitioner in the crypto industry, once joined forces with multiple KOLs to participate in the KOL round of a crypto project.
When ALEX finds the project, he will express his wish for a refund, otherwise he will mobilize KOLs to FUD you.The project owner happily expressed that they welcome the cooperation with KOLs to FUD the project, which can bring attention and popularity to the project..
Cryptocurrency VCs, a vulnerable group?
Leo Tolstoy said,Happy families are all alike; every unhappy family is unhappy in its own way.
In the crypto industry,Happy VCs are almost the same, but unlucky VCs have their own ways of losing money.
According to the descriptions of some VC practitioners, the projects to be protected can be classified into three major factions.
Projects like ZKX that broke the IPO price immediately after going online and then officially announced the cessation of operations are "Rug School”.
The second category is "The bad school”, that is, the listing is regarded as the end point, and then the price of the currency is allowed to plummet, breaking through the center of the earth, and investors have not yet received anyToken, has already suffered a book loss of more than 90%.
At this time, the project party often claims that "the market is not good, but we are still working on it." Investors want to protect their rights but cannot find a suitable "reason" and are left with nothing to cry about.
The third category,Zombie Pie"After raising funds, the project team chose to retreat for a long time, going through rounds of bull and bear markets, and remained silent, which makes people wonder whether the project team just wants to come to the crypto industry to witness history.
Although some of these projects will continue to update and operate on social media to tell everyone that they are still alive, they are like zombies in terms of narrative, operation, and technological development. Although they still have a breath, they are no different from being dead.
Whether it is traditional VC or crypto VC, they all follow the 80/20 rule. A large number of projects will fail and need to rely on 20%'s successful projects to cover costs and gain profits.
However, in the cryptocurrency world, even if VCs invest in “good projects”, they are not as profitable as everyone imagines.make money.
A VC partner said that he had invested in a gaming project in the seed round, which had a good development momentum and was later launched on the T1 trading platform. Unexpectedly, before the Token was launched, the project party requested to modify the contract, claiming that it would extend the token lock-up period in order to meet the requirements of the exchange.
Although the current book value is still in a profit, it cannot withstand the decline of the copycat. It has fallen by more than 80% from the highest point since its launch. When the tokens are unlocked in the future, what will the market look like is still unknown, the partner complained.VC lock-up is now even stricter than A-shares and US stocks..
LD Capital partner LI XI also said in July, “The portfolios that LD Capital has launched this year are all profitable on paper, but they are all Paper Value with 0 unlocking.Stop talking about VCs making money. All the money is taken away by the project owners and exchanges.. Apart from the VCs who organized the event, most of the VCs are just big investors. The primary market in this cycle is already in hell.”
Not only will the lock-up conditions be modified, some project parties will also modify the cost price of VC investment tokens, forcibly increasing the cost; some project parties will repurchase the previous quota midway. If it is to exit according to the latest round of valuation, it is conscientious, and some will require a discount repurchase...
Therefore, in the eyes of many VC practitioners, they are the disadvantaged group in this industry. To use a more pretentious term,In the four-party game between project owners, VCs, exchanges, and retail investors, VCs lack a "handle" and have no say, so they can only passively compromise..
For retail investors, VC coin has now become a derogatory term, and investors' attitude towards VC has changed from following to disenchantment and even disgust.
According to a previous survey conducted by Xiaobai Navigation Coderworld, the influence of "well-known VC endorsement" in investment decisions only accounts for 31%, even lower than KOL recommendations.
For project owners, most VCs lack unique value added, and even lack the ability to make independent decisions. They dare not lead the investment, but only ask "Which other institutions have invested in you? If xx has invested, then we will also participate a little."
This year, the primary market is in a hellish state of difficulty. Many crypto VCs have begun to transform: some try to deeply participate in the incubation and construction of a project, increase their voice in the project, and become a VC that jumps into the market; some VCs simply give up the primary market and turn to the secondary market...
But all the complaints can perhaps be attributed to one thing:The market is not good, a big bull market can solve most of the contradictions.
The market needs a "copycat season" to save the VCs in the cryptocurrency circle who are trapped.
It’s good to come, but what if you don’t come?
The crypto market is changing rapidly, and in addition to project owners, perhaps also VCs in the cryptocurrency circle need to actively seek change.
The article comes from the Internet:This generation of VCs in the cryptocurrency circle has already started to defend their rights
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