Venture capital (VC) firms are now significantly more discerning regarding the crypto projects they choose to fund, indicating a change from previous cycles as the market matures, according to Eva Oberholzer, the chief investment officer at VC firm Ajna Capital.
“It’s more challenging now because we have entered a different phase in crypto, resembling previous cycles with other technologies,” Oberholzer stated to Cointelegraph.
She noted that market maturation has impeded pre-seed investments, as VCs shift their focus to established projects with well-defined business models. Oberholzer remarked:
“It’s centered on predictable revenue models, institutional reliance, and irreversible adoption. Currently, crypto is not driven by memecoin trends or other fads; rather, it’s focused on institutional acceptance.”
The alteration in VC activities reflects the wider trend towards institutional crypto investment, emphasizing revenue-generating digital asset enterprises rather than the price speculation that fueled investment during earlier crypto cycles, including the 2021 bull market.
Related: VC Roundup: Bitcoin DeFi surges, but tokenization and stablecoins gain steam
The traditional financial world demands yield and revenue-producing crypto businesses
Traditional financial investors, such as Wall Street firms, venture capitalists, and institutional funds, are increasingly seeking crypto projects that offer established, reliable revenue streams.
Oberholzer mentioned that VC firms are focusing on stablecoin projects and investing in various payment infrastructures capable of generating fees.
Real-world asset tokenization (RWA) platforms are also attracting the attention of VC firms due to the revenue models associated with the minting and management of tokenized RWAs on-chain.
Matt Hougan, the chief investment officer (CIO) at Bitwise, recently shared with Cointelegraph that the drive for yield is propelling Wall Street investment in Ether (ETH).
“If you take $1 billion of ETH and invest it in a company and stake it, you begin generating earnings. Investors are accustomed to companies that produce earnings,” Hougan explained.
The smart contract layer-1 blockchain supports the bulk of the stablecoin, RWA market, and decentralized finance (DeFi) activities that produce stable revenues through fees and various financial rents for its stakeholders.
Magazine: TradFi is building Ethereum L2s to tokenize trillions in RWAs: Inside story
