Shaun Maguire, a crypto partner of Sequoia Capital, one of the venture capital firms most active when it comes to investments in the cryptocurrency space, issued its opinion on the future of many VCs investing in crypto. To him, many of the companies that are now experimenting with crypto investments will “pull back” due to market conditions and a misunderstanding of crypto as an investment.
Shaun Maguire, a cryptocurrency partner in Sequoia Capital, one of the most active VC firms in the crypto sector, is not very optimistic about the future of other venture capital companies in the area. Maguire, who specializes in companies in the tech and crypto sectors that are either in seed or early investing stages, stated in a recent podcast that other firms that are now entering the crypto space are going to “pull back” on these investments when the markets get less frothy.
However, he stated that Sequoia will not fall in this category due to the way in which these investments are made in the firm. According to Maguire, the company has “permanent intentions” when it comes to its investments in the sector. Maguire explained:
Sequoia is very deliberate with everything we do and we spend huge amounts of time debating every strategy change, everything, we debate every seed investment to sometimes excruciating detail, but it helps us make really good decisions and make decisions as a team rather than as individuals.
The firm, which has already invested in several companies in the sector like Polygon, launched a $500- $600 million fund in February to invest in “liquid” crypto assets as a complement to its other investments to “participate more actively in protocols” and “better support token-only projects.”
This abandonment of crypto investments will also be caused by other elements. According to Maguire, there is a fundamental misunderstanding of what crypto and Web3 might offer as new technologies, with some investors touting decentralization as a ”silver bullet.” Maguire declared:
Decentralization is not a silver bullet that just solves all problems and is better for everything. You know for the vast majority of compute, you want it to be centralized.
The influx that blockchain-based companies have gotten from venture capital funds has been massive, being fueled by the interest that the market has developed by NFTs, Web3, and metaverse as trends this year. Just in Q1, $30 billion were invested in fintech and crypto startups by VC companies.
What do you think about Sean Maguire’s take on the future of some VC investments in crypto? Tell us in the comments section below.