‘Huge time’ to start a blockchain company, says Pantera general partner

by · February 9, 2023

Despite depressed crypto prices and recent company collapses, one of the key investors behind crypto hedge fund Pantera Capital believes there has never been a better time to start a blockchain company.

As part of a January 23 post about the year ahead, written by a number of executives at Pantera Capital, general partner Paul Veradittakit explained that “on average,” people working in the crypto space are more educated and passionate about crypto than in the past. cycles.

Overall, he said, “we’re seeing a higher percentage of startups coming to market with strong teams — founders coming out of established crypto startups like Coinbase, larger tech companies like Facebook, Uber and Square, and legacy financial institutions like JP Morgan and Goldman Sachs .”

The market remains very bearish, with some companies falling and prices regaining lost ground, but Veradittakit believes it is still a worthwhile time to be in the space, citing the billions invested by venture capital firms in the first half of 2022. He added:

“In our experience, bear markets typically represent a time when there is less noise and distraction from construction.”

“Additionally, we have observed that institutions and businesses are more open than ever before to working with blockchain companies to improve their business,” Veradittakit said.

The general partner said he has also observed volume shifting toward highly regulated exchanges and decentralized finance-based decentralized exchanges as people try to protect their assets from bad actors, which could inspire the next generation to enter the crypto space.

Decentralized exchange volume in the last 12 months. There was a large increase in trading volume in November, the month when FTX collapsed. Source: DeFiLlama

“With more scrutiny around trust and security, we think there are opportunities for startups in areas like self-storage, security, insurance and identity,” he said.

Meanwhile, Pantera Capital CEO Dan Morehead expressed a similarly bullish view on the crypto space, arguing:

“Despite lower prices, I think the space is clearly in a much better position than ever.”

According to Morehead, since 2017, developer infrastructure, which was “[p]virtually non-existent back then,” has improved dramatically.

“It’s just so much easier to write smart contract-based systems now than in the last cycle,” he said.

“Every other area of ​​the stack has improved, whether test suites or automated tools to catch common errors in smart contracts, to have IDE [integrated development environments] support for Solidity,” Morehead added.

Related: Pantera plans to raise $1.25 billion for other blockchain funds: Report

Morehead also points to scalability solutions that enable lower transaction fees as a big leap forward for the space, as “decentralized exchanges cannot compete with centralized exchanges if fees are too high.”

There is still a lot of fear, uncertainty and doubt (FUD) floating around in the wake of FTX’s collapse and the resulting contagion in 2022, but Morehead believes the industry is still alive.

“People said ‘crypto is dead,’ but I think it was one of the best times to get into the space, start building serious things, and a great time to deploy capital to crypto.” It really is darkest before dawn, he said.