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The role of a VC in crypto. What have we been jerking off to in 2017–2018?

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There is already another good article on this, have a look at it. I will restate some of the misconceptions and hopium doses people usually take when they see big VCs.

First of all, let’s understand what a VC is. A high-risk investment arm investing in risky startups to find the next gem and profit from that. Out of 10 investments 7 will die, 2 will stay ok-stable, and 1 will outperform everything. Their model is to give money to teams and make them burn-burn-burn to exhaust themselves completely. For VCs that is normal: they have LPs, they need to make money. Don’t confuse yourselves. Again: they need to MAKE MONEY. Don’t go against nature and call an apple - a pear. It’s what they do.

Crypto VCs are different. First of all, they are not being managed by really experienced people. It’s because being experienced in blockchain is hardly possible, it started not long time ago. These people just mooned on some coins and decided they know evetything. Ask any project how VC calls go: those guys never did anything around IT probably, complete misunderstading. ‘What is your TPS’ - is a normal question there. Any developer would fok you in the eye if he heard such a thing. But the most important thing is the time to liquidity. You don’t have to wait 5 years to IPO, you wait just 1 month. You don’t need to work with the project and bring adoption there. You unlock and sell. Because again… VCs are here to MAKE MONEY.

So the usual VC approach of ‘extract all potential asap’ in a normal world, which is already very toxic - gets multiplied by the low time to liquidity. So here is what you end up with.

(fak this is already getting too long sorry)

VCs make pools and kill investment interest
VCs manage big money, if they make even 20% it’s already good. They just resell allocations to hedge their risks. A reputable top-3 Asian fund literally said ”We get in at seed for 2 million, how do you think we can liquidiate that on the open market?! We give allocations with a fee to our friends at private sale rates”. This kills investment interest on the secondary market because everyone who wanted to get in - already holds a bag. Polychain is no exception. I guess only A16z does not OTC, but maybe even that is wrong. If you see a pool, it’s not the project’s fault, but it’s the OG crypto VC.

So what can a VC potentially help with?
No1: resell your bags to lower food chain VCs -> so there are more big names => pump it
No2: make crypto events (those are 99% of the time useless, because nothing happens at events - except No1) -> so there are more hamsters => pump it
No3: introduce to exchanges (this is pointless - an intro cna be made by anybody, good exchanges cannot list 10 projects those vcs invest in monthly) => pump it
No4: introduce to influencers (by giving them a part of their bags) -> so there are more hamsters => pump it

There are some legit VCs though, but very few. Most are US based. CoinFund does cool research: like what a VC can do that is helpful to projects: that is generalized mining, for instance, but that might not be possible actually. Anyway, the interests of someone who believes in the project or who does not want to flip, probably do not align with the interests of a typical crypto VC. It also depends on WHY they back up a project: if they would not want to get in with no bonus or a longer lock-up, then they are backing it up just to flip and not because they actually believe in a project’s growth.

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