A crypto VC believes it’s the ‘best time’ to invest despite industry turmoil

The recent collapses of Signature Bank, Silvergate Bank, and Silicon Valley Bank dealt a blow to the broader startup ecosystem, and especially to crypto startups that have struggled with the challenges of finding a new, crypto-friendly banking partner. But they are now also facing a more hostile environment in the US towards crypto following recent moves by the SEC and other regulators.

There’s “never a dull moment,” David Pakman, managing partner at crypto-focused VC firm CoinFund, told me with a laugh last Friday.

The first recent jolt to the industry followed the collapse of SVB and pro-crypto Signature Bank last month, as Pakman says he and other VCs have had to “get down to business” to provide their crypto portfolio companies with lists of willing banking options. to work with crypto companies. “This is the part that’s really scary,” he says, adding separately that while there are certainly alternatives, “we’ve heard of a number of banks … that don’t want to bank a company that has anything to do with crypto .” The second blow came when the SEC sent stalwart crypto exchange Coinbase a Wells notice on March 22, indicating the firm would face imminent legal action and alleging it could list unregistered securities — one of a series of regulatory actions in recent months, including a CFTC lawsuit against Binance, to crack down on the digital asset class and its players.

The implications of the increased US regulatory environment can be significant, and are being felt. “It’s already having an effect on the US crypto-technology market,” says Pakman. He laments that the latest regulatory maneuvers are pushing opportunities and developers outside of the US, and says that this latest development is “absolutely” making CoinFund look beyond the US more than they would have a few months ago. (As it happens, Pakman was in Switzerland when we chatted last week.)

“Is it disappointing to see so many setbacks happen in a short period of time? Yes it is. But … they are not technological setbacks” for crypto, says Pakman. In fact, he is surprisingly bullish: “This [is] the absolute best time to invest, says Pakman. It’s “because it’s difficult, and because it scares a lot of people away, and because it’s uncertain, and because there’s less capital coming in,” all of which means it could be good timing because he believes it will build long-term corporate value .

He says hard times like these burn entrepreneurs who are “attracted to hard problems.” And from a venture point of view, investors can get better deal terms and there is less competition. When I asked about pace and how many term sheets they’ve written in recent weeks, Pakman said they don’t “pre-announce” deals, but that they’re “as busy and focused as we’ve ever been.” He told me over text yesterday that they have “several deals working through our pipeline.”

You have to hand it to the crypto community – despite the countless blows to the industry over the past 12 months or so, from the implosion of FTX to now increased SEC scrutiny and banking troubles, they always seem to get back up to fight. another day. At least for now.

What escalating tensions between China and the US could mean for technology: Consumer Technology Association (CTA) President and CEO Gary Shapiro recently spoke with FortuneMichal Lev-Ram for the Fortune Global Tech Forum on the current state of the tech industry in North America in light of the economic downturn and the fallout from Silicon Valley Bank, plus how geopolitical tensions could affect global manufacturing and innovation going forward. You can watch the interview here.

A little comment from me: I’m going on vacation next week (luckily a warm and sunny place: Spain!), so I won’t be checking email. Unless you have a can’t-miss tapas recommendation, please contact Jessica and, as always, send offers to the wonderful Jackson Fordyce.

Have a nice weekend,

Anne Sraders
Twitter: @AnneSraders
Email: [email protected]
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Jackson Fordyce curated the offers section of today’s newsletter.

VENTURE OFFER

– Honeycomba San Francisco-based cloud application behavior observation platform, raised $50 million in Series D funding. Heading led the round and was joined by Insight Partners and Scale Venture Partners.

– Verifieda Stockholm-based B2B SaaS company, raised €31 million ($33.9 million) in funding from Worlds. The company also acquired Consent, a Stockholm-based company for e-signature and e-ID solutions. Financial terms for the acquisition were not made public.

– Chromaa San Francisco-based open source embedding database provider for generative AI, raised $18 million in seed funding led by Quiet capital.

– Real anomalya Centennial, Colo.-based space safety and sustainability company, raised $17 million in Series A funding. Eclipse led the round and was joined by Riot Ventures, Champion Hill Ventures, Space.VCand Narya.

– Gaea Stara San Francisco and Berlin-based disposable clay cup company, raised $6.5 million in seed funding. Morningside Technology Ventures, At Inc. Ventures, Dart Labs Ventures, Sand Hill Angels, VSC Venturesand Climate Capital Ventures invested in the round.

– Carbon wavea Carolina, Puerto Rico-based seaweed biomaterials developer, raised $5 million in funding. Mirova led the round and was joined by Viridio’s capital, Popular Impact Fundand Catapult Sea.

– JigSpacea Melbourne, Australia-based 3D and augmented reality platform, has raised $US5.2 million ($3.47 million) in funding led by Ramper sand, Investableand Vulpes.

– LALAa remote-based digital collectors marketplace, raised $3 million in seed funding led by Seven Seven Six.

PRIVATE EQUITY

– Great Range Capital acquired Roofed Right America, a Milwaukee-based commercial roofing contractor. Financial terms were not disclosed.

– Road-safe traffic systemsa Trilantic North America and Investcorp portfolio company, acquired Highway supply, an Albuquerque-based provider of traffic control products and services. Financial terms were not disclosed.

OTHER

– Caliber companies took over a majority share in Innovative laboratory services, a Granville, Ohio-based provider of preventive maintenance and repair services for analytical laboratory instruments. Financial terms were not disclosed.

FUNDS + FUNDS OF FUND

– S2G Venturesa Chicago-based investment firm, raised $300 million for a fund focused on socially and environmentally conscious companies.

HUMAN BEINGS

– Morrison & Coa Wellington, New Zealand-based investment firm, employed Melissa Richards as partner and manager of strategy, product and growth. Earlier she was involved Brookfield Oaktree Wealth Solutions.