A Downturn in Digital Currency Values Affects Other Venture Products
Scroll DownOn February 11, Jalak Jobanputra, who is a partner in Future Perfect Ventures, said that the current downturn in the digital currency market had dramatically affected venture capital valuations of companies operating in that space. She made the comments during an interview about the current state of the venture capital market for cryptocurrency companies. Jobanputra's company has invested in a number of companies that are involved with both cryptocurrencies and blockchain technology, including Blockstream and Civic. She further has a seat on the board of BitPesa, which is a digital foreign exchange. She believes that the valuations of some startups, specifically in the secondary markets, have been reduced due to the market performance of cryptocurrencies. An example of this is the cryptocurrency finance firm Circle, whose shares on secondary markets have fallen 75%. Jobanputra is particularly dismissive of initial coin offerings (ICOs), which her company refuses to invest in. She says that many such offerings have failed because of the current downturn in the digital currency market as well as because of technological reasons. She went on to say that her experience of investing in startups during the dot com bubble led her to stay clear of ICOs. In the recent past, the majority of venture capital companies avoided investing in the cryptocurrency market. But Jobanputra says that cryptocurrency startups were becoming more active players in venture capital financing. She says that such financing has increasingly become necessary for cryptocurrency companies due to current market conditions. Jobanputra found Future Perfect Ventures in New York back in 2014. Her company focuses on making what are called early stage investments. It does this mainly for technology firms. This includes companies involved with blockchain technology, data analytics and machine learning. A recent report from Bloomberg indicated that, despite the downturn in digital currency prices last year, the number of new cryptocurrency-related venture capital firms was larger than the number of new cryptocurrency-related hedge funds. Bloomberg noted that this was the first time that this has ever happened. In 2018, 125 new cryptocurrency-related venture capital firms launched, while only 115 cryptocurrency-related hedge funds launched.
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