Welcome again to Chain Response, a podcast that unpacks and dives deep into the newest tendencies, drama and information in crypto with a number of the largest names within the trade to interrupt issues down block by block for the crypto curious.
For this week’s episode, Jacquelyn interviewed Maria Shen, a normal associate on the funding workforce at Electrical Capital, an early stage enterprise agency targeted on crypto, blockchain, fintech and marketplaces.
Earlier than Electrical Capital, Shen was the CTO and co-founder of Bambify, which helped small to medium-sized companies create extra environment friendly provide chains with producers globally. Previous to that, she labored at Microsoft.
In March 2022, the agency introduced that it closed $1 billion for a pair of crypto funds: a $400 million automobile for making fairness investments in startups, and a $600 million fund supposed to speculate instantly in crypto tokens. Its web site at the moment showcases a portfolio with about 75 investments with crypto startups together with Magic Eden, ConsenSys and Bitwise, to call just a few.
Earlier this yr, Electrical Capital put out a report indicating that the variety of blockchain builders within the U.S. has declined yearly since 2017, dropping to 29% final yr from 40% in 2017. We dove into what that report actually means and the way it will have an effect on the expansion of builders domestically and internationally.
“Lots of founders have already moved out of the USA or want to transfer out of the USA,” Shen mentioned. “That additionally means after we’re taking a look at investing we’re more and more trying outdoors the USA for alternatives and fascinating founders.”
We additionally mentioned what crypto sectors she’s waiting for investments, why she’s betting massive on NFTs, and the final enterprise capital market sentiment amid a shaky crypto market. She thinks the continuing bear market is “going to final some time and goes to be more and more troublesome for corporations to fundraise.”
As for VCs, the macro setting has “shifted a lot” and companies “are elevating much less capital and deploying much less capital. Lots of companies are virtually on the finish of their fund lifetimes.”
General, Shen mentioned the crypto fundraising setting will in all probability develop into worse going into subsequent yr. However on a optimistic be aware, she sees the present bear market in a greater gentle in comparison with the earlier one in 2018 when “costs had been falling off a cliff.” This market cycle feels “fully totally different,” she mentioned. “Lots of the issues we had been actually dreaming about and speaking about theoretically have been shipped now.”
At this time, the crypto ecosystem has Ethereum-focused scaling options, extra stablecoin choices, decentralized finance, onchain governance and NFTs, Shen famous. “These items didn’t exist in 2018, 2019, so it’s fascinating to see the market maturing past transmitting tokens or cash to at least one one other.”
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