According to Dan Tapeiro, CEO of 10T Holdings, inflated valuations in crypto startups are driving away venture capitalists.
The Issue of Overpricing
Dan Tapeiro noted that many founders aim for valuations that exceed 50-80 times their revenue. This creates challenges for venture investors in achieving returns for their liquidity partners.
10T Holdings' Experience
10T Holdings has passed on over 200 companies for similar reasons, including prominent firms like FTX and BlockFi. The company looks for projects with valuations between $400 million and $500 million and valuation-to-revenue ratios of 10x or less.
Recommendations from Venture Capitalists
Dan Morehead from Pantera Capital emphasized that venture capitalists should consider mixed investments in private equity and tokens. He also pointed out that investing across a wide spectrum of tokens and ventures can provide higher returns.
The high valuations of cryptocurrency startups pose a threat to their ability to attract venture funding, highlighting the importance of realistic valuations in achieving market success.
