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It’s a little hard to sit down and jot down some offhand notes about the current state of the tech startup market when the news has just broken that Russia should invade Ukraine in a short time. If you’re a proponent of democracy rather than autocracy, it’s a pretty bleak day. And the geopolitical clouds on our very near time horizon promise more bad news.
And yet, the news engine is progressing, and we need to do something with this space, so let’s talk about recycling capital into the crypto market to keep busy.
It’s spinning around
One result of the accelerating pace of innovation in the tech world is that corporate venture capital work – both defensive and offensive – seems to start earlier and earlier in the lives of companies. businesses.
OpenSea is the latest example of the trend. The company announced earlier today that it will be launching OpenSea Ventures and a program it calls “Ecosystem Grants”, which “both aim to support creators, teams and emerging technologies to advance the global growth of the web3 and NFTs”.
Companies that take capital from OpenSea will have access to “OpenSea leadership” and OpenSea investors, including a16z, naturally.
As The Block notes, “OpenSea joins a number of crypto startups that have launched their own venture capital units, including unicorns Alchemy and FTX.” All of them, I point out, are private companies. It is therefore common for fast-growing blockchain companies with additional cash to start reinvesting that capital into other groups.
Gone are the days when Intel Capital was the paradigm for negotiating corporate venture capital deals; Coinbase is probably the most respected corporate investment team these days, but its rivals are looking to take it on.
Where are they? There is a strange nuance to all this:
- Coinbase was backed while private by a16z
- Marc Andreessen remains on Coinbase’s board, along with Katie Haun, who recently launched her own crypto fund
- Coinbase Ventures supports OpenSea
- a16z also supports OpenSea
- OpenSea is now making its own investments, in theory working with a16z to some degree, given its promise
It’s a whole canvas. a16z is also an investor in Alchemy, which makes its own investments. OpenSea uses Alchemy technology, everything is very integrated. (Whether this level of centralization and family fraternization is the exact opposite of decentralization, or democratization, goes without saying.)
At what point does this capital-hunting-crypto-hunting-capital whirlwind begin to defuse and become more internally competitive? If Coinbase is going to launch its own NFT product as it promised, how long will OpenSea want to stay close to its mutual investor? What if Coinbase wants to sell infra and enters the Alchemy space? How could Coinbase not want to do this, frankly, given the activity of the latter company?
Today, it’s fanciful that OpenSea would recycle capital into other businesses before finding its own way out; but the pace of change in the broader crypto market seems to have made even companies with simple business models speculators, if not the majority, at least to a more than modest extent. Savage! And weird!
I try to keep an eye on the closed network of major crypto players and their financial sponsors. To me, it’s even more centralized than most VC categories, which is a little weird. I can’t get the bitter taste of bullshit when i keep reading about people pushing decentralized autonomous organizations, zero trust setups and the like when it appears the same people who made a huge chunk of the money from web 2.0 seem poised to reap most of the rewards for everything Web3 becomes.
Alright, I’m gonna fuck off now and worry about free society now and the fate of democracy. Let’s hope that by Monday Russia will not have invaded Ukraine. — alexander