Venture capitalists battling with the difficulties of proper crypto firm due diligence should be looking at getting back to the basics — to "trust the chain," a crypto-focused venture fund executive argues.
Speaking to Cointelegraph, John Lo, head of digital assets at Recharge Capital — a $6 billion fund with crypto and decentralized finance (DeFi) projects on its portfolio — said that FTX shook the "confidence in this industry.""There will be a lot of soul-searching," he said.
According to Lo, due diligence has always been a problem in the venture space, even outside of crypto.He said the action plan taken by crypto venture capitalists in response to the FTX collapse will be a crucial deciding factor for either an effective recovery or a deepening of the industry crisis.However, Lo argues that the crypto industry provides the world with a step toward a solution, a public and immutable ledger, arguing:"We're going to see better tools to distill and track on-chain data, in fact, we may even see entire on-chain businesses wrapped into NFTs and sold, optimizing arduous M&A processes," he added.
The total funding raised in the crypto venture capital last year exceeded 2021, with $30.3 billion secured by crypto projects, Cointelegraph Research’s VC Database shows.The last quarter of 2022 saw the lowest capital inflow to the industry in two years with only $2.8 billion allocated across 371 deals according to a Jan.Read more on cointelegraph.com