It has been pointed out that cryptocurrency venture capitalists (VCs) are paradoxically increasing market risk by flocking to the same safe choices to avoid risk. Varun Datta, a columnist for CoinDesk, noted that 57% of crypto VC funds executed in the first quarter were concentrated in later-stage deals with already proven sales and performance. Ultra-early funding for idea-stage projects accounted for only 19%, indicating that funding for new innovative projects is drying up. He explained that as all funds pursue the same later-stage companies, valuations are unnecessarily inflated, and investment returns are decreasing.
