Crypto VC is only struggling in North America, according to Animoca Brands CEO.
The crypto space has been experiencing different conditions worldwide, with Web3 startups thriving in the Middle East and Asia, while crypto entrepreneurs in North America face challenges due to macroeconomic and regulatory factors, according to Yat Siu, the CEO of Animoca Brands.
Speaking at the Collision conference in Toronto, Siu pointed out the main differences in the global environment for crypto businesses, emphasizing that it is not as negative as it may seem.
According to Siu, Web3 startups can still secure funding from venture firms, but current conditions such as higher interest rates worldwide and a decline in crypto asset prices have raised the bar for newcomers.
“Valuations have decreased, of course, but the number of builders entering the space, the deployment of smart contracts, and the number of people involved are still increasing. Overall, we are very optimistic,” he noted, mentioning that Animoca has made nearly 60 investments in the past few months.
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Despite remaining active, the crypto space is not as robust as it used to be. According to a recent PitchBook Crypto Report for the first quarter of 2023, crypto companies raised $2.6 billion through 353 investment rounds. Deal values decreased by 11% quarter-over-quarter, and total deal value decreased by 12.2%.
Siu’s comments come after significant developments that have impacted the crypto space since FTX’s dramatic collapse in November 2022. In the United States, for example, the Securities and Exchange Commission has launched a crackdown on crypto firms to regulate the industry through enforcement actions.
In contrast, Hong Kong has implemented a licensing system for crypto businesses to mitigate risks in the digital asset markets. The United Kingdom has taken a similar approach by approving legislation that empowers regulators to introduce and enforce regulations for crypto businesses.
“If you look at it from a North American perspective [regarding crypto venture capital], it may sound negative. But when you look at the Middle East, Asia, it’s actually very vibrant,” Siu noted. According to the CEO, the regulatory aspect has been a “hammer” on Web3 companies, creating fear due to the uncertainty.
The experienced crypto entrepreneur believes that the different approaches taken by countries in the industry are not coincidental. For Siu, the favorable environments in Asian nations and the hostile movements in the U.S. are part of each country’s agenda for emerging technology.
“Promoting Web3 as a narrative is also about national interest beyond just the end-user interest for self-sovereign identity. And the U.S. is doing everyone a favor. Unfortunately, because the U.S. is important in this field, […] due to political reasons, they are leaving it in the hands of other places around the world to take the lead. However, the exciting aspect is that it allows ecosystems to flourish that previously couldn’t,” he explained.
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