Crypto News: Crypto startups are still cashing checks

Hello, it's Hannah Miller in San Francisco. Crypto prices are tanking. That hasn't stopped VCs from writing checks. But first…

Today's must-reads:

• Salesforce reports big demand for business software
• IBM has to pay $1.6 billion for poaching an account
• Meta is changing its ticker from FB to META

Venture capitalists' appetite for crypto is still strong, despite slumping digital currency prices.

Andreessen Horowitz broke records last week when it raised a $4.5 billion fund dedicated to crypto. Startups Babel Finance and StarkWare just scored multibillion-dollar valuations in their latest fundraises. And Lightspark, a startup focused on Bitcoin payments, came out of stealth with $175 million in funding last month.

Meanwhile, cryptocurrency prices have been in a state of chaos following the implosion of the TerraUSD stablecoin. The price of Bitcoin continues to bounce around the $30,000 mark, worth less than half of its all-time high in November. And other digital currencies like Ethereum and Solana's SOL token have been battered as well.

At first glance it looks like investors may be charging ahead oblivious to the downturn. But a few things are already changing in the world of VC-backed startups. For starters, some portfolio companies are facing headwinds, and investors who bet on even the most prized nonfungible tokens could see price reductions. Bored Ape Yacht Club, one of the most recognizable NFT collections, has seen its trading volume and floor price cut nearly in half over the past 30 days, according to blockchain data tracker DappRadar. Yuga Labs, the maker of the colorful cartoon primates, previously raised $450 million from investors that included Andreessen Horowitz.

And venture capital investing in crypto overall appears to be slowing slightly, according to data from research firm PitchBook. In the first quarter of this year, global VC investments in crypto startups totaled $9.7 billion. So far, two-thirds of the way into the second quarter, startups have raised $5.3 billion, on track for a small dip.

Then there's the chatter among venture capitalists themselves. Some have already seen deals collapse and valuations get slashed. Later-stage startups that have a closer proximity to floundering public markets have been the worst-hit. There's concern that these trends will trickle down to early-stage projects vying for vital funding.

Of course, a lot of crypto venture capitalists remain convinced that the crypto winter is just part of the industry's broader volatility. They see these price declines and deal meltdowns as speedbumps, rather than roadblocks.

Ken Li, an executive director at Binance Labs, the venture arm of Binance Holdings Ltd., the world's largest crypto exchange, said in an interview that when his team looks at the progress of the industry and its relationship to the market, they think of a man walking a dog. The dog in this scenario is the price of cryptocurrencies.

"Sometimes the dog goes ahead of the man or behind the man, but there's always a man who's walking forward," he said. —Hannah Miller

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