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The best ideas can come from anyone.
Crypto Craze of 2021
In 2020-2021, investors were rushing to pour money into crypto companies at a rate that, especially in hindsight, can only be described as a craze. We felt deeply insecure at the time, because even though many investors we admired were going “all in” on crypto – even changing their Twitter bios to .eth and making their profile pictures NFTs – we did not see the durability in many of the companies we met with. They felt like solutions in search of problems.
What were we missing? The rest of the industry was moving so fast to invest in these companies, we knew we needed to figure it out.
One company we decided to explore was a cryptocurrency-powered fantasy sports league that raised a $680M Series B in September 2021. As part of our diligence, our Data team used Etherscan and Dune Analytics to gather a host of outside-in insights to supplement the company’s narrative across deposits, withdrawals, user concentration, new vs. repeat user trends, and retention.
The company indeed had some very positive indicators: steady growth in monthly volume deposited and depositing users, growth in average deposit amount, and strong customer loyalty. We also noticed that withdrawals were growing faster than deposits, even though deposited volume remained net positive, and users were depositing less frequently. Most notably, although the concentration was decreasing, approximately 75% of all deposit volume was attributable to the top 100 users.
In the end, we did not participate in the round and we didn’t make any other major crypto investments during this period. By the end of 2022, the crypto bubble had popped, prices had crashed, and many investors were walking away even after dedicating entire funds, manifestos, and thought leadership to crypto.
This isn’t to say that we’ll never invest in crypto in the future or that we’re better than anyone else who came to a different conclusion. But our independent thinking, research capabilities, patience, and healthy skepticism kept us from taking a leap that we would have regretted in the long run.
Overall, at a time when many of our peers were doubling down, our own analysis led us to return 66% of all called-capital across our main funds back to our Limited Partners. We maintain independent thought in everything that we do.
°F
New York City, NY
Select a value
We maintain independent thought in everything we do.
The best ideas can come from anyone.
Crypto Craze of 2021
In 2020-2021, investors were rushing to pour money into crypto companies at a rate that, especially in hindsight, can only be described as a craze. We felt deeply insecure at the time, because even though many investors we admired were going “all in” on crypto – even changing their Twitter bios to .eth and making their profile pictures NFTs – we did not see the durability in many of the companies we met with. They felt like solutions in search of problems.
What were we missing? The rest of the industry was moving so fast to invest in these companies, we knew we needed to figure it out.
One company we decided to explore was a cryptocurrency-powered fantasy sports league that raised a $680M Series B in September 2021. As part of our diligence, our Data team used Etherscan and Dune Analytics to gather a host of outside-in insights to supplement the company’s narrative across deposits, withdrawals, user concentration, new vs. repeat user trends, and retention.
The company indeed had some very positive indicators: steady growth in monthly volume deposited and depositing users, growth in average deposit amount, and strong customer loyalty. We also noticed that withdrawals were growing faster than deposits, even though deposited volume remained net positive, and users were depositing less frequently. Most notably, although the concentration was decreasing, approximately 75% of all deposit volume was attributable to the top 100 users.
In the end, we did not participate in the round and we didn’t make any other major crypto investments during this period. By the end of 2022, the crypto bubble had popped, prices had crashed, and many investors were walking away even after dedicating entire funds, manifestos, and thought leadership to crypto.
This isn’t to say that we’ll never invest in crypto in the future or that we’re better than anyone else who came to a different conclusion. But our independent thinking, research capabilities, patience, and healthy skepticism kept us from taking a leap that we would have regretted in the long run.
Overall, at a time when many of our peers were doubling down, our own analysis led us to return 66% of all called-capital across our main funds back to our Limited Partners. We maintain independent thought in everything that we do.