Show Me the Money - The Daily Gwei #458
Money doesn't grow on trees - or does it?
It seems like just yesterday that ConsenSys was laying off a large chunk of its workforce due to funding issues but it has in fact been 2-3 years since those times. Now, ConsenSys is an absolute powerhouse with products like MetaMask and Infura under its belt which is making it very easy to raise money at massive valuations with their latest $450 million raise valuing the company at a whopping $7 billion.
It really is astounding how far this industry has come in just 2-3 years when it comes to funding. We went from a handful of big-name investors with relatively small check books to lots of VCs/funds that are happy to write giant checks out of their billion dollar funds. Of course, this has lead to some very high valuations for questionable projects and for projects that don’t even have a product, but I think this is very on brand trend for crypto since this industry loves taking everything to the absolute extreme.
It’s not just new projects getting funding though - I also wrote about how layer 2’s are seeing massive amounts of funding lately and there’s also been a big push to fund Ethereum core developers in a sustainable way (namely the client incentive program). And again, if you had told me in 2019 that these things would be happening in 2022 at this scale I probably would’ve laughed at you - that’s how dry the funding landscape was in 2019. The second-order effects here are that people feel much more confident in this industry than they did in 2019 which acts as a flywheel for more people to feel confident and so on.
I do sometimes wonder if we’ll ever go back to those very dry years of 2018, 2019 and even parts of 2020 or if crypto is now big enough that we’ll have a constant stream of new funding for decades to come. I mean, the industry has been in a “bear market” since November but the funding isn’t slowing down at all - in fact, it’s picking up very strongly. Though there are other extra-crypto factors at play here such as inflation, low interest rates and more opportunists in the crypto industry, but I think this is all a completely natural (and necessary) thing.
I’m obviously very bullish on the future of this industry and particularly Ethereum - a lot of it just makes so much sense to me. In saying that, 90% of businesses fail and once you dig underneath all the crypto jargon you’ll find that all the products/services are really just businesses at the end of the day - and most of them will fail with some going on to become industry titans.
Have a great day everyone,
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All information presented above is for educational purposes only and should not be taken as investment advice.