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Crypto Investors Unfazed by Low Exits in the Venture Capital Market

Jonathan Wong

Jonathan Wong

16 February 2024

The global venture capital market is enduring a long period of limited exits. Startups are staying private longer, M&A is quiet in part due to sharpened regulatory oversight, and the IPO market remains frozen. This means many historical venture deals are slowly rotting on the vine, in IRR terms.

The lack of crypto startup exit volume — and value — can be linked to a related decline in total venture investment into upstart web3 companies; when liquidity is light, investment return prospects can darken.

More deal value despite limited exits does imply a level of optimism among crypto investors that we might consider to be surprising. But with crypto prices rising, key regulatory hurdles cleared, and other positive signals casting a bit of warm light on web3 more generally, more investment doesn’t shock us.

Equity vs. tokenomics. In equity terms, then, there has been a single venture-backed crypto exit of note in recent years (Coinbase), while all other web3 exits measured in a traditional manner are a rounding error at most.