Utility over speculation
Financial markets, including crypto, have experienced a significant downturn. Especially in turbulent times, the focus must be on long-term innovation, and those blockchain startups that put utility over speculation will prevail.
The world is in turmoil: the war in Ukraine, the tangible effects of climate change, and rising inflation are unsettling. In addition, downbeat financial markets affecting all asset classes, including the technology sector and digital assets, are rattling investors. However, experience shows that there have always been corrections, and speculative bubbles have burst. There is no difference between the ICOs (Initial Coin Offerings) four years ago and the dot-com bubble over 20 years ago. New technologies and their enormous opportunities always attract impostors who try to lure investors with sophisticated marketing campaigns and dubious or non-existent projects. Once the correction has washed away those projects, those with substance and a long-term vision remain. Let’s remind ourselves: The major technology companies of today only took off after the dot-com crash on the stock markets to change the world for good. We at CV VC draw three positive lessons from the current correction in the crypto market:
1. Blockchain is here to stay.
Now that the smoke of cryptocurrency speculation has somewhat cleared, attention is shifting to the true use cases of blockchain. Some journalists still confuse cryptocurrencies with the technology behind them and proclaim blockchain’s end with the supposed end of the crypto boom. This is entirely wrong! Blockchain is the backbone of the fourth industrial revolution, built on decentralization, and enables business models that were previously unfeasible. Billions in venture capital continue to flow into blockchain-based projects, despite hangovers in the tech markets. This capital, coupled with the best talent working in the field, is more than a bet on the future. They are a promise. Testimony to this development at CV VC is our Africa Initiative, which we launched with the Swiss government (SECO), corporates and universities. The need for alternatives for the unbanked is immense – in Africa, up to two-thirds of the population are excluded from the financial system. Thanks to blockchain, new ideas are emerging. Companies are developing smartphone apps for previously unreached people.
2. Utility over speculation.
The crash of cryptocurrencies was one of the big topics at the first Point Zero Forum in Zurich, organized by the governments of Switzerland and Singapore. Representatives of the blockchain space, central banks, regulators and the financial community emphasized that the time for speculation is over. This is in line with CV VC’s investment thesis. Since venture capital differs from financial markets, our investment horizon is longer, and we aim for a return after eight years. We invest in founders with a sustainable vision whose potential is defined for the long term. This is reflected in our current deal flow, where quality and numbers remain high because good projects find money even in bear markets.
3. Blockchain is more than tech.
«We invest in blockchain because it is more than technology. It changes the way the world works, interacts and transacts.» Today, as we see that Web3 is not only playing a central role at the World Economic Forum, but is being welcomed with open arms as part of our activities in Africa and Southeast Asia, we see our vision confirmed. Our portfolio includes over 50 investments from all four continents and more than 20 countries. All these soulful entrepreneurs are changing the world with their ideas and projects. Watching them closely, supporting them and helping them succeed gives us at CV VC the utmost satisfaction.