Bitcoin’s Surge…Spark Capital in the VC Directory…Tech-Backed Moderates Win Big in SF
Plus, Miles Grimshaw leaves Benchmark and returns to Thrive Capital
Hey, it’s Madeline. Let’s get into it.
The Main Item
Bitcoin is Surging, But Crypto Investors Are Staying Cautious
With Bitcoin’s rally to an all-time high this week, are VCs rushing back into the space that was the New New Thing just a few years ago?
Not yet.
Bitcoin may be matching its 2021 bubble price, but the surge is mostly driven by an influx into newly-approved Bitcoin ETFs. For now at least, the forever debate about whether crypto is an alternative currency and payment infrastructure, or whether it is a store of value, like gold, has been resolved fairly decisively to the latter. A new currency system requires all kinds of innovation, and thus offers plenty of opportunities for startups, but as a store of value Bitcoin doesn’t obviously need a lot of things except a place to store it and trade it.
“It’s clear that the ETF is driving a significant amount of interest in the market,” said Latif Peracha, a general partner at M13.
In short, the new crypto boom is not looking like the old one.
One indicator of that is that downloads of the fintech apps that drove a lot of the trading last time around are far below what they were at the earlier peak. We reached out to Apptopia to track historic downloads for crypto trading apps and wallets from platforms like Binance or Coinbase, going back to 2016.
The simple takeaway would be that if you can buy Bitcoin via an ETF from BlackRock or Fidelity, there is less need for a dedicated app. Coinbase, whose share price has surged along with Bitcoin, could be the exception to the rule: a company that rode the crypto bubble but managed to build a brand and run the company well enough to survive the crypto winter—and is now well-positioned to serve Bitcoin as a store of value.
Where does this leave all the blockchain companies and NFT promoters and would-be builders of a new payment system? Not very far from where they were a year or two years ago for the most part, though again there are exceptions, such as Ripple, that might prove the rule.
For venture investors that have stuck with web3 startups throughout the downturn, a new gold rush isn’t exactly imminent either. “I think you would have had to continue to build during crypto winter to have your time to shine now,” said Blossom Capital’s Ophelia Brown.
There is, however, one group of investors who are emerging as winners from the latest boom even if they aren’t holding any BTC: those who held accounts at bankrupt crypto exchange FTX. The coins held by the bankrupt estate have rocketed in value, and those who lost their money are also set to benefit from a giant stroke of fortune: some of their funds were invested in red-hot AI startup Anthropic, and the bankruptcy court last month cleared the way for the sale of that stake, which is worth billions.
FTX investors stand to get all their “money” back—though that’s based on the value of their crypto at the time of the bankruptcy, rather than what it would be worth now.
Prospective bidders for FTX’s shares in Anthropic have made their offers, according to The Information, with the auction expected to close at the end of this week.
The sale is being run by Perella Weinberg Partners, and the team there asked bidders to submit offers at $30 per share or higher, a price that would yield nearly $1.2 billion.
Lots of entrepreneurs and VCs went all in on crypto during the bull run of 2021 only to then “pivot to AI” quickly after. Cashing in on AI via the Anthropic stake surely wasn’t the pivot that FTX customers had in mind, but they’ll take it.