Several crypto businesses that got money from venture capitalists (VCs) are now trading at market capitalisations that are far lower than the values they were given in their last private funding rounds.
Several blockchain businesses that were formerly worth close to $1 billion now have market caps that are only a small part of those numbers. This is because tighter liquidity makes valuations reset.
The market cap of Humanity Protocol, which was worth around $1 billion when it was a startup, is currently about $285 million. Fuel Network, which was once worth around $1 billion, is now worth approximately $11 million. Bubblemaps, which was formerly worth about the same amount in venture capital (VC), is now worth about $6 million.
During bull runs and narrative hype, VCs tend to overprice projects and give them high valuations, Fundraising Digest, CryptoRank’s venture deals tracker. But once the hype dies down or the story stops being popular, most projects get a reality check and the market resets those happy numbers.
The recent drop in the crypto market has shown how much higher venture capital valuations were than public market prices. This shows how aggressively projects were valued during the past bull cycle.
Lower liquidity and fewer deals prolong VC funding slump
The disparity stays the same for initiatives that have lesser valuations. Plasma used to be worth roughly $500 million to venture investors, but now it is worth about $224 million. ICNT’s value as a VC went from $470 million to a market cap of about $247 million. DoubleZero was worth over $400 million in its last financing, but now it’s at just $373 million.
Other projects have much bigger gaps. The market values of Camp Network and Treehouse, which were each worth approximately $400 million before, are now about $15 million and $16 million, respectively. Everlyn, which used to be worth approximately $250 million, is now worth only $26 million. SoSoValue, on the other hand, has dropped from $200 million to roughly $152 million.
It’s important to keep a cool head and think about the risks of different outcomes before you invest. Revolut’s $1 billion round and Kraken’s $800 million round before its planned initial public offering (IPO) are examples of high-profile investments that have hidden a general decline in early- and mid-stage investment.