VC Response to "Paper Hands" Remarks: Reasons Behind Our Exit Investment
Original compilation: TechFlow intern
Original compilation: TechFlow intern
Public opinion on Web3/Crypto VC is increasingly polarized.Crypto investors on Twitter always say VCs are evil, but the reality is often more nuanced. So I list our reasons for exiting the investment to dispel all these doubts once and for all.
First, an overview of what we believe to be the main responsibilities of a VC.
1) Commit to Portfolio - Work with teams to help them achieve product-market fit and growth.At the end of the day, our success as a VC is largely dependent on the success of our portfolio.
2) Stay on top of industry/market trends - refine our articles and market views and allocate funds + time where they are most suitable.
In DeFi, ourThe guiding principle of investing is to combine fundamental theory with an active participatory approach.Therefore, our default position is to hold our investments after a liquidity event, and we will actively work with the team as long as the original view remains unchanged.
There are many assets, despite the lock-up period, we still maintain Diamond hands (Diamond hands), even if the decline from the highest point to the lowest point is more than 90%.Examples include, but are not limited to, $AAVE, $JOE, $LDO, $BNT, $MC. We work closely with these teams and are actively involved in governance.
We will not sell the unlocked tokens due to market conditions, as long as we believe that the original view has not changed, and this investment still has a high chance of delivery in the future.
Does that mean we never sell?
no.
We always invest with intentions, hoping that our views will be verified, and Tokens can accumulate long-term value for us, allowing us to continue to hold. That said, we are constantly adjusting our views by actively monitoring fundamentals, and when we exit an investment (primary or secondary), reasons typically include:
1) Valuation reaches our estimated fair value – ie target price reached.
2) Portfolio rebalancing – eg, liquidity management, managing overweight positions.
However, we must make difficult decisions when:
3) Viewpoint is invalid. Verticals, for example, proved unviable.
4) The fundamentals of the project deteriorate.
For example, #1 lack of product-market fit; #2 team stopped building or was poorly managed, etc.
These are very common in the startup world, butWeb3/Crypto VC will not increase the success rate of your startup.
We evaluate deals primarily by looking at fundamental metrics (team, technology, product, valuation, TAM, etc.), not based on how early we got in or how quickly we were able to get out.
We never recommend/share any project that we are no longer bullish on and exit liquidity.In fact, we encourage many of our portfolio companies to lower their public sale valuations to levels similar to their last private round to reward early participation from retail investors.
We hope this article shows us more clearlyWays of thinking and working as a VC, and shedding light on the nuances behind exiting investments. It is very incomplete to label any investment institution as a "paper hand" based on a single action.Honestly, this shows how ignorant one can be.
We remain optimistic about the future of Web3/Crypto, and we look forward to continuing to play a role in building that future with the great team.
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