Mainstream European venture capitalists (VC) are making inroads into the digital currency scene. Some of the largest venture capital firms on the continent are making big moves in the crypto market, buying up new cryptocurreny and investing in ICOs. Many of these firms are also asking their investors to allow them more room to maneuver with the funds at their disposal, concerning cryptocurrency investments.
Investing in ICOs and Established Crypto/Blockchain Projects
Smaller firms like BlueYard Capital and Fabric Ventures as well as behemoths like the Zurich-based Lakestar have been making considerable investments in crypto and blockchain-related enterprises since 2017. Lakestar, run by Klaus Hummels, has invested in four of such enterprises including ShapeShift (a crypto exchange platform) and Blockchain (a crypto wallet provider). Many of the smaller firms focus their investments on blockchain startups.
Crypto and Blockchain Will Revolutionize the Market
Blockchain technology has been described as having the potential to revolutionize the world. Many of its proponents believe that it will disrupt many aspects of the business process, from logistics to finance. HV Holtzbrinck Ventures based in Germany is another venture capital firm looking to enter the market. The firm is reportedly discussing with its investors about investing in crypto tokens. In a statement made by Jan Miczaika, a partner at the firm, he said:
“The [blockchain] technology is very exciting. 95 percent of the tokens will go to zero. On the other hand, the other five percent are very interesting and could go on to revolutionize the market.”
Picking and Choosing with Care
Miczaika is not the only one who believes that despite the potential of cryptos and blockchain technology, many of the projects around today will fail. According to Nicolas Brand, a partner at Lakestar, the current crypto craze is akin to the internet boom of the 1990s and 2000s. As such, investors have to experiment but do so with a degree of agility and cautiousness.
Suranga Chandratillake, a partner at Balderton Capital, a London-based VC believes that ICOs are not a threat and that institutional investors need to pay more attention to the crypto market.
Despite the buzz and excitement in the market, there are still many risks associated with ICOs and the crypto market in general. Hacks are common in the digital space, and VC firms are looking to invest in the market are taking steps to prevent such from happening. Many are employing multi-sig authentication protocols in addition to cold storage of cryptocurrency tokens.
There are also regulatory and legal concerns over ICOs in general. For example, there are indications that many big European VCs are avoiding the Telegram ICO, the most successful ICO in history. The regulatory and legal concerns over the amount raised by the project vis-à-vis the available information about what the project hopes to achieve.