Venture capitalists favor crypto projects because they enable significantly faster risk offloading compared to traditional investments, where 7-10 year holding periods are standard.
With crypto, the VCs can sell the majority of their tokens after brief lockup period, capitalizing on purely narrative-driven speculative valuations that almost always disconnect from the actual reality, let alone fundamentals.
Crypto VC perfectly embodies the Greater Fool Theory. The VCs profit by selling to later buyers motivated more by speculative momentum than intrinsic value. The joke being that VC involvement in a project is often the only thing even driving that momentum.
This combination of compressed liquidity timelines, minimal regulatory oversight, and a glut of retail investors who have FOMO from seeing their friends 100x or even 1000x, creates an ideal environment for VCs to systematically transfer risk to less sophisticated market participants at often insane valuations.
With crypto, the VCs can sell the majority of their tokens after brief lockup period, capitalizing on purely narrative-driven speculative valuations that almost always disconnect from the actual reality, let alone fundamentals.
Crypto VC perfectly embodies the Greater Fool Theory. The VCs profit by selling to later buyers motivated more by speculative momentum than intrinsic value. The joke being that VC involvement in a project is often the only thing even driving that momentum.
This combination of compressed liquidity timelines, minimal regulatory oversight, and a glut of retail investors who have FOMO from seeing their friends 100x or even 1000x, creates an ideal environment for VCs to systematically transfer risk to less sophisticated market participants at often insane valuations.