Due to the erratic market, cryptocurrency creators have withdrawn deals.
2 min read
Entrepreneurs in the cryptocurrency sector are finding it difficult to retain investors as they try to reduce their risk by pulling out of funding rounds as the market continues to decline.
For the first time since January 2021, the value of the global cryptocurrency market went below $1 trillion this past week. Crypto company creators are still attempting to raise money in the midst of the market upheaval as many businesses get ready for a future recession.
A number of investors told TechCrunch earlier this month that a valuation reset was taking place and that the market was shifting to a more VC-friendly environment, making this the “time to buy.” But now that investors are back in charge, not every founder is content with how they are being handled.
Imran Khan, a key contributor to the DAO and web3 accelerator Alliance, tweeted, “Won’t mention names, but there are a number of VC firms playing games with entrepreneurs when it comes to fundraising. It appears that investors are disappearing or pressuring founders to give more. It should not be viewed as a sales pitch when founders extend an invitation to investors.
Under the condition of anonymity, two web3 business founders told TechCrunch that the failure of VC companies to follow through on their promises has cost them time, money, and other resources.
“No one is getting a value over $30 million right now unless your [crypto] project is having good momentum,” creator of a web-based game website
The founder of a firm with an NFT focus stated, “We started financing approximately two and a half months ago, when markets were rosy and everything was going well. “We had promises, and after the Terra/LUNA crisis, the market certainly plummeted dramatically.”
In order to convince him to let him participate in the company’s investment round, the founder claimed one traditional VC investor offered him a fancy beachfront lunch during the Bitcoin Miami conference in April. “After lunch, he made a commitment to contribute $250,000, then after learning about the other investors [in the round], he increased to $500,000. After the UST Terra crash, he later had second thoughts.”At that point, I began to consider what, if anything, commitment even meant to them. The founder added, “If you’re devoted, you realize you’re in both the good and the bad times.
“That’s when I started thinking, what does commitment even mean to them? If you’re committed, you understand you’re in the hard times and the good times,” the founder said.
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