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Crypto-focused VC on the FTX fallout: ‘I’m worried about the overall lack of LP appetite going forward.’

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Summary

Crypto-focused venture capitalists are worried about the fallout from the recent FTX collapse, and the potential impact it will have on their investment strategies moving forward. Double Down founder and general partner Magdalena Kala and Dragonfly general partner Tom Schmidt shared their views at TechCrunch’s crypto conference in Miami on Thursday on what’s next in crypto in the wake of the FTX drama. Luckily, the pair each closed their respective funds this year, but they are proceeding cautiously in deploying their capital. Schmidt said he is concerned about “contagion risk and for the other shoes to drop,” while Kala said she is worried about “builders not entering the space, builders leaving the space and the overall lack of LP appetite going forward.”

Q&As

What are VCs navigating in the wake of the FTX collapse?
VCs are navigating a bearish crypto market and the fallout of the FTX collapse.

How will the FTX collapse impact VC investment strategies?
The FTX collapse will impact VC investment strategies by causing them to proceed more cautiously in deploying their capital.

What is Double Down founder and general partner Magdalena “Mags” Kala's view on the current crypto environment?
Kala views the current crypto environment as one where there is a potential for contagion risk and for more shoes to drop.

What is Dragonfly general partner Tom Schmidt's view on the current crypto environment?
Schmidt views the current crypto environment as one where there is a need to reevaluate what will be done in the coming year.

What are Schmidt's and Kala's thoughts on the FTX collapse?
Schmidt and Kala both believe that the FTX collapse highlights that decentralization is actually needed.

AI Comments

👍 Kala and Schmidt make valid points about the current state of the crypto industry and the FTX situation. They provide helpful insights about what investors should be cautious of and what the future may hold for the industry.

👎 The article does not provide enough information about what Kala and Schmidt are doing to help the current situation.

AI Discussion

Me: It's about how VCs are worried about the potential fallout from the FTX collapse and the impact it will have on their investment strategies.

Friend: That makes sense. I'm sure they're worried about the potential contagion risk and all the other shoes that could drop.

Me: Yeah. Magdalena Kala and Tom Schmidt both say they're being more cautious now with deploying their capital. Schmidt even said he's "very slowly" deploying out of his firm's third fund.

Friend: It's definitely a tough time to be a VC right now. I'm sure they're all reevaluating their strategies.

Action items

Do your own research: don't rely on others to do your due diligence for you.
Be cautious when deploying capital: the current macro environment is uncertain.
Look for companies that fit your thesis: don't invest just because a company is popular.

Technical terms

VC: Venture Capitalist. An investor who provides capital to early-stage companies in exchange for equity.
FTX: A cryptocurrency exchange that recently collapsed after allegedly mismanaging customer funds.
LP: Limited Partner. An investor in a venture capital fund who does not take an active role in the management of the fund.
Dragonfly: A venture capital firm that invests in early-stage companies.
Double Down: A venture capital firm that invests in early-stage companies.