Watch the full video of this panel discussion on Gamma Prime’s YouTube channel
Panel discussion with Thomas Dunleavy (Head of Venture Capital at MV Global), Sam Hallene (Investor at CMT Digital), Aly Madhavji (Managing Partner at Blockchain Founders Fund), Juan C. Lopez (Partner at VanEck Ventures), Omar Kanji (Partner at Dragonfly), and Joshua Solesbury (Vice President, Investment Team at ParaFi Capital)
In this engaging panel discussion, experts from venture funds dive deep into the crypto investment landscape. Topics covered include the current state of late-stage crypto markets, the rise and implications of stablecoins, institutional involvement, and the prospects of decentralized applications. Panelists also share their outlook on Series A investments, exit strategies, and the debate between tokens versus equity, providing valuable insights for investors and founders alike.
Thomas (MV Global)
Good afternoon, everybody. This is the biggest panel I’ve ever seen personally, so hopefully everyone’s ready for some big insights here. My name is Tom Dunleavy. I’m a partner at MV Global. We’ve been investing in crypto since 2019 — 300 investments in the early stage. Why don’t we do a brief round of introductions for the panelists, then we’ll hop in with a few questions and kickoff.
Aly (Blockchain Founders Fund)
All right, welcome everyone. Aly Madhavji here, managing partner at Blockchain Founders Fund. We invest in and help venture build top-tier startups in the space. We have over 200 portfolio companies now and have been doing it since 2017.
Omar (Dragonfly)
Hey everyone, my name is Omar Kanji. I’m an investor at Dragonfly. We’re a global cross-border crypto fund and we invest all across stages throughout the industry.
Juan (VanEck Ventures)
I’m Juan, one of the partners at VanEck Ventures. We just recently announced our seed-stage focused fund back in November. It’s a $40 million vehicle, and we’re part of the broader asset management umbrella at Bannock.
Josh (ParaFi Capital)
I’m Josh, investor at PariFi. We’re a multi-strat firm investing all across the space. Excited to be here.
Sam (CMT Digital)
Thanks for having me, thanks to the Gamma Prime team.
I’m Sam Haleen. I’m an investor at CMT Digital. CMT Digital is an early-stage focused blockchain and digital assets venture fund, been around since 2017. We’re a subsidiary of a 30-year trading investment firm by background.
Thomas
Thank you. So this panel will be talking about scaling innovation, particularly in the later stages of crypto. Why don’t we start with a high-level view of where we think the later-stage market’s at? Fundraising has been down since 2021. The number of projects has been falling. What’s the view of the current stage? The market, valuations, number of opportunities, maturity of projects — any color you want to give the audience on where we think the market is today in Series A and beyond? Sam, why don’t we start with you?
Sam
Happy to. You can bifurcate the market in a couple of ways — there’s tokens and there’s equity. It’s kind of a different story for both. You’ve seen some major rounds get done on the token side, and I think that’s been a breath of fresh air for a lot of crypto market participants. On the equity side it’s gotten a little harder, but I think it’s actually pretty interesting. The amount of companies that are profitable is really interesting. They were forced to get lean through the last couple years when growth markets were really dead, and so there are some pretty interesting businesses out there that have different risk drivers, different geographic focuses, demographic focuses that we’re pretty excited about.
Josh
Maybe I’ll add on that second point. On the equity side, the capital markets discipline has improved tremendously. From public markets all the way down, the emphasis has shifted toward profitability over pure revenue growth. You have this interesting conundrum where a lot of companies raised pretty large prep stacks or built business models that weren’t that profitable, just pure growth. At the right size of business as well as capital structure, this leads to interesting pay-to-play financing or recapitalization of some degree. That’s made for an attractive market for specific investors, especially if you find ways to structure. I think that’s changed the game versus where we were in 2021.
Juan
Like Sam mentioned, breaking out equity versus tokens — on the token side it seems like there will be pretty attractive opportunities. Most of the later-stage companies we’re tracking have liquid tokens, are starting to show pretty reasonable metrics, and become attractive specifically from a liquid fund perspective. In terms of use cases, exchanges have product-market fit, stablecoins have product-market fit, and that’s attracting new builders and founders to come into the space to try to play in some angle of that. Overall, I’m pretty excited about what the early stage and seed-stage ecosystem looks like given some of the builders we’re seeing.
Omar
Maybe just on the growth side for equity — I think it’s like a tale of two markets. Similar to what was mentioned earlier, there are a number of companies underwater on their valuations from 2021 and 2022. They’re struggling to raise capital or grow into their valuations. We’ve seen some resets with creative capital structures. On the other side, we’re starting to see bigger rounds get done. I’m sure you saw via Wise today, and then Block it the other day. We’re seeing these $30, $40, $50, $70 million rounds get done on the equity side, which really hasn’t been a thing over the last couple years. Nice to see all the capital getting back into it. On the token side, we’re seeing Treasury deals where projects with liquid tokens are raising capital to fund their ecosystems. That environment hasn’t really been around in a while, so it’s nice to see those types of deals again.
Aly
What’s been interesting, and I think it’s been true in web2 as well, is that there hasn’t been a lot of priced rounds for a couple of years outside of AI. Right now you’re starting to see that pick up again significantly. Companies have been raising a lot on SAFEs year after year. Two or three years ago, you didn’t really see people raising more than $2 million on SAFEs. Now you can raise $10 million on a SAFE, which creates governance issues. Now we’re seeing some of that sorted out with priced rounds coming in, resetting things. Companies are getting profitable, which is great. We’re seeing more discussions around companies considering going public in traditional markets, which is also very interesting.
On the token side, there’s been a weirdly high weighting on liquidity premiums for tokens. I’d actually say we’ve got a negative liquidity premium right now. The faster you launch a token, the worse it is. That’s been an interesting thing from our side. We actually see a lot of these tokens as being grossly overpriced given where things are launching.
Thomas
So we hit on a few different verticals that you all individually invest in. I’d love to dive deeper into the verticals you’re most excited about in the later stages. Feel free to mention any specific projects you’re excited about in particular. What verticals are really emerging that you’re excited to allocate capital to?
Josh
I can start with the most obvious answer, and partially why we’re all here today. The best product-market fit we’ve seen is in tokenized US dollar stablecoins. The beauty of this is it’s a fundamental concept embraced by a very large population of individuals and businesses, often without them even knowing it’s crypto.
Regionally, we’ve seen a lot of growth in volume and adoption, mainly in C2C remittance use cases in LATAM and Southeast Asia. You’re seeing businesses with $30–50 million run rates at the consumer level, facilitating cross-border payments, domestic payments, saving and spending in dollars. This is being reflected in later-stage growth companies, one of which will be going public soon, where stablecoin businesses themselves are monetizing in the billions.
This is real dollars coming in. Most of these businesses are profitable, to Sam’s earlier point. Why are we excited? If you just look at B2B cross-border alone, it’s a $150 trillion volume opportunity. The average payment takes 2–5 days to settle and costs 4–6% in fees. Here you have a technology with the right on-off ramping partnerships that enables instant settlement at very low cost. Its accessibility through internet-based APIs broadens the reach of financial transactions.
It’s a space we’re excited about. I know many of my peers here have already invested in it. You don’t have to squint to see how this becomes a trillion-dollar sector, especially with stablecoin legislation on the horizon and more banking partners in Mexico, Brazil, or the United States embracing the technology.
Juan
I would add a couple things to that. I think what we’re seeing on our side is that there are specific corridors where there could be certain regulatory or economic arbitrage. A sender in a given currency can get their currency across fiat and fiat — what they call a stablecoin sandwich — is starting to present pretty attractive revenues for some of these players, particularly like Josh mentioned, in the Latin America to APAC corridor or even to Africa. What’s super interesting is that it’s starting to sort of battle test some of the ideas: can these business models be defensible beyond just net interest margin into monetizing real transaction flow sustainably over time?
A big question we’re asking across the board is, beyond cross-border remittance and general end-to-end payments, what other services could these providers — the bridges and rails of the world — start to offer on top? That’s a unique space that we’re digging into.
Sam
I agree wholeheartedly. Stablecoins are really the canary in the coal mine for most financial assets we know are coming on chain. If you think about it, it’s the perfect prototype: a very boring asset, the US dollar, paired with a very novel and perceived-to-be-risky technology, and it’s had tremendous success.
A lot of the founders and references in our portfolio have deeply integrated stablecoins into their flows in a variety of demographics and countries. Then you hear later-stage disruptors — the Stripes and the Gladstone from Robinhood of the world — talking about how they’re using stablecoins in their flows. There’s tremendous demand per dollar. You familiarize people with this technology, and because dollars are the flow asset into everything else, eventually the rails are going to be unified, and you’ll just see financial assets settle on blockchain rails. That’s really exciting from a variety of perspectives.
Stablecoins are extremely exciting, and then the businesses that are custom-built to support the innovation — the differentiators of blockchain technology natively with the technology in mind — are also exciting. Compliance, but purpose-built for an asset that can be transferred anywhere in the world nearly instantaneously, built natively on-chain. Those are the opportunities I’m quite excited about. It’s kind of like second-order derivatives off of stablecoins directly.
Omar
Not to beat a dead horse, of course, stablecoins are important. Just quickly, the Bridge-Stripe deal is one of the big indicators that gave a lot of people comfort there was an exit market for these equity businesses. That’s driven a lot of the financing activity we’ve seen over the last couple of months.
Similar to earlier points, stablecoins are a $200 billion asset class in the US dollar, and the view is that stablecoin flows will continue to increase. More currencies will be on-chain, and there will be a whole host of other types of transactions. People, ourselves included, have made bets across the stack — neobank players, on-ramp/off-ramp players, institutional layers on the on-chain payment side. People are expressing a number of different theses about how this space will evolve.
It’s a $200 billion asset class today, and it’s not hard to see it becoming a trillion-dollar asset class, especially when you include a host of other currencies over the next five years. That’s the stablecoin side. Most people are investing in that as they should, because it takes the friction out of traditional infrastructure and improves it.
Other topics for growth rounds include institutional infrastructure: custodian deals, institutional exchange venues, trading infrastructure, and listed products. There are also a number of different tokenizing verticals.
Aly
On the consumer side, stablecoins are interesting. We back companies like Credit, helping with commitments between Africa and the US and on the loan side as well; and Hi-Fi, similar for the US. These companies have been doing very well — strong growth, large raises.
On the earlier side, we’ve also been very interested in AI, though skeptical of what we’re seeing in crypto AI. A lot of it isn’t where AI is today; it’s more like five to six years off, basically using machine learning. That’s been a challenge, but we’re starting to see that change with the types of teams coming in now.
We’re also interested in less “sexy” areas. For example, decentralized insurance — given recent buybacks by BitHot and others — is still a largely untapped market. You can’t have an extended bull market without insurance being solved in a decentralized way in this space.
Thomas
The panel seems very excited about stablecoins and a number of other verticals, which is exciting for the industry with real tangible use cases. In terms of non-consensus takes, we sometimes put them on Twitter but mostly keep them to ourselves. I’d love for each panelist to discuss one contrarian or non-consensus take that goes against the grain.
Aly
I just mentioned decentralized insurance — definitely not sexy. But I expect it to do really well this cycle. Underutilized resources and the ability to monetize them — for example, making $20–50 a month using GPUs, storage, or other computer resources — is a very interesting opportunity. Aggregate layers built on top make it easy for consumers: install one thing, and it automatically determines the best way to use your resources. Companies like Tableau are doing this, which is really cool. This makes it easy for consumers to enter crypto and leverage resources they already have.
Omar
On the flip side, I’d say most of DeFi is going to zero. Obviously there are exceptions, but most projects don’t provide a better good or service than their counterpart. They largely use token incentives as a shroud and aren’t sustainable businesses. They hemorrhage cash subsidizing consumers. There are some examples, but generally, most of DeFi, which many are excited about, isn’t that exciting — that’s my contrarian take.
Juan
I share some of that sentiment. I would position the use of incentives and giving real ownership to users as a key differentiator in this space. My take: once businesses focus on generating real revenue and traction, they should launch a token and align incentives, getting skin in the game from the community and stakeholders as soon as possible, rather than deferring to a future state which might be negative. There’s definitely a world where incentives can be used to lower CAC or bring real ownership to users and communities — something we haven’t really seen before, and it’s a real opportunity.
Sam
I’ll take things in a very different direction. I believe that we’re going to see an exponential increase in the interplay between public equity markets and crypto assets. This convergence can only be tapped by a few sets of players because the skill set is very different from what a lot of folks in our industry are used to, and the fundamentals of these markets and the players are different.
Why do I think this? If you just look at the prolific way MicroStrategy and Sailor have been able to monetize volatility, the interest in the convert markets for Bitcoin miners, trade replays, all these types of folks — there’s a palpable demand. When you talk about a space where, in large parts, token markets have an exhausted marginal buyer, people are looking toward public markets.
Obviously, the last two days haven’t been that pretty, but in general, embracing crypto companies going public or vehicles picking up tokens themselves is a new frontier. It will command a new set of investor skills and form new opportunities to capture alpha, as well as a new set of buyers who had previously been excluded due to regulatory or distribution constraints.
Sam
I somehow agree with every take, including Omar and Aly. My contrarian take is kind of macro — maybe not so contrarian for this room. I’ve been investing personally for eight years in crypto and professionally for seven. Right now is the most interesting time I’ve ever had to invest, just from a broad asymmetry standpoint.
There are so many things making it possible to build very meaningful businesses in this asset class. Number one is technology. You can choose whatever trade-off you want, whether it’s Solana or Ethereum, and build a robust business on-chain. That hasn’t been broadly possible for a while beyond some basic financial privileges.
From a regulatory standpoint, there’s a commitment that the US government will at least explore a strategic national Bitcoin reserve — whatever that could be, it’s a super out-of-the-money option, but there’s still value in that option. It’s incredible. You’re probably going to get a market structure bill this year, a stablecoin bill as well. But what overshadows that is the very real desire to embrace technological innovation in the United States. We’ve never really had that. At first, it was ignored, derided, and there was an effort to offshore the industry, and now it’s all coming back to the US, the most robust capital market in the world. To the point that Josh was making, I think we’re going to see a lot more interaction and disruption in our capital markets in the next one to two years. Extremely exciting time to be in this space.
Thomas
For our next question: institutions are coming, and they’re mostly coming by our bags. That was a subtext earlier, but now it seems clear. We saw it through the Bitcoin ETF, and now they’re launching products on-chain and leveraging the technology.
So let’s start with this: in what ways are you seeing institutions get more involved? What’s the trajectory of institutions on-chain? Where are you most excited, particularly at later stages? Are they co-investors, partners, or older institutions doing it?
Juan
A couple points there. First, most institutions we’re familiar with haven’t seen this sort of foundational shift: what infrastructure do you leverage to issue an asset, manage it, and service a new investor base? It’s a radical idea that makes most people scratch their heads. It requires a few visionaries to move their pieces first, and then the rest of the industry coalesces.
Distribution is king. What most asset issuers are thinking about is how to reach a previously untapped user base, whether in the US or abroad, and how to remove friction points for distributing an asset. That could be unique to their firm or bootstrap liquidity for assets that previously didn’t have a path to distribution.
We’re seeing two foundational value props: a unique asset class that can find distribution, and net new assets that didn’t previously have interconnected nodes and stablecoin distribution. You can’t just build a business case without it. Athena’s a sample of something that makes institutions think, “I could launch something and reach billions under management through these new form factors.”
What we’re seeing is largely institutions building stuff first, then the industry comes. There’s little actual walking-through of business cases with institutions yet. It’ll take time, but there’s been a lot of progress.
Thomas
Any other thoughts on institutions and crypto from the other panelists?
Omar
Broadly, I’d say both distribution activities and new banks are notable. BlackRock and ETF infidelity, and then new banks are offering stablecoin products to users through existing platforms. A few years ago, that was taboo. Today, it gives credibility that hasn’t existed for a long time.
We’re also seeing retail distribution with tokenization: people tokenizing portions of funds, certain assets, or bonds on-chain. The industry is moving toward more issuance in different form factors, facilitating distribution to additional counterparties, creating markets analogous between traditional equity markets and crypto markets, and allowing them to interoperate.
Aly
There are two markets that will revolve: an institutionalized, regulated side, and a very healthy non-regulated side, which aligns with the crypto ethos. Many products, particularly for emerging markets — banking, lending, savings — will likely remain unregulated or locally regulated, especially for regions with over a billion people without identity or traditional banking access. Crypto is solving these problems and making a dent in Latin America and Sub-Saharan Africa.
The future will likely have both regulated and unregulated spaces, creating interesting investment opportunities.
Thomas
So we’ve talked a lot about the number of interesting verticals and who might be participating in which of these individual verticals. We haven’t really talked about the number of aggregate companies that you guys have the choice to invest in across the board. You’ve invested in hundreds of companies, but when you get to that Series A+ stage, some of those investments are follow-ons from previous investments or new investments in companies.
As later-stage investors, how do you think about the criteria for following on to an individual company? You’ve already allocated capital — what are some of the things you think about, some of the check marks you look for? Why don’t we start with you?
Omar
I would say that ideally, for a Series A stage investment, especially on the equity side — because the token side is different — ideally they have a single product that has achieved some form of product-market fit or early signs of that. In the sense that their customers, when you call them, view it as a product they don’t want to live without. If you were to remove it, they would be upset.
If you put capital into this machine and allow them to grow and scale, they will be able to access a broader market. Ideally, for most Series A companies, you want to have a line of sight into other products, services, or geographies they can scale into.
In terms of general heuristics, that’s probably what you’re looking at, as opposed to tangible financial metrics or benchmarks that dictate an investment. It’s similar to the traditional Series A world: you want products people crave, and if you provide funding, they’ll be able to grow and scale.
Aly
Just to add to that, we want to see strong growth rates. Typically, if we can see 30–35 percent growth across users or revenues, that’s great, even if it’s on a smaller base. What matters is consistent improvement and trending in the right direction.
Josh
I’ll add from a different angle because you mentioned follow-ons. As a follow-on investor, you’re in one of the best seats to identify if this is a worthwhile investment candidate. Through high-quality portfolio support, spending time with founders, rolling up your sleeves, and being in the business, you can see it in the numbers, but you almost feel when the momentum is there.
It’s sometimes hard to quantify that feeling, but you can grasp it. It’s our job to preempt rounds as well because we can dictate better terms and more of the process. Being there with your founder day in and day out, feeling the momentum, is one of the best opportunities to invest on optimal terms for both sides, especially for your firm.
Sam
Not much to add. Pre-seed or seed is like making the sausage, and then after Series A, you see how many people want to consume it. With Series A, maybe you get a thousand true fans, and then you look into those fans: can you replicate them, or find another 10x to 1,000x of those types of people?
For follow-ons, we want to see if any assumptions around end-stage monopoly have been violated, and if so, whether that’s okay or not. We underwrite follow-on investments as net new investments, evaluating on a risk-adjusted basis and looking for a high degree of asymmetry.
Juan
Agree with everything mentioned. We haven’t done too much Series A growth investing, but in companies we’ve invested in that raise long capital, some trends stand out. How clearly and consistently teams communicate with their own team and investors, and on social media, how they rebuild a brand for themselves, almost like a public company.
Giving continuous community and investor updates, polishing data rooms, and thinking of themselves as always fundraising — being on the road, talking to new investors, building a pipeline — is essential. Many teams just focus on product, but understanding the need to constantly fill the investor pipeline over five to ten years is key for growth.
Thomas
Thinking about the last stage of the market: exits. LPs eventually have to return capital. Not much DPI has been generated in recent years, a broader problem in venture. How do you think about the exit path as you reach the end of your time with companies? What does it look like for the industry in terms of IPOs or sales?
Aly
We’re early-stage investors, so a couple of factors matter. We’re a 10-year fund, giving us time. We look at secondaries in positions within Series B, which can happen more at Series B than Series A.
We’re seeing more companies considering going public, probably picking up over the next year. Two major catalysts, like Circle or others going public, could drive a wave. For token companies, audits have been challenging, especially with tens or hundreds of millions of transactions on-chain.
Omar
We invest in companies that, if equity-based, ideally don’t face heavy regulatory risk, which hampers exit. Regulatory risk should ideally be de-risked over time and be amenable to buyers or the public markets via IPO. IPOs are challenging today; many companies could potentially go public, but meeting public investor criteria is tough.
Exits often require long-term views — 10, 15, 20 years — including acquisitions or dividends as a form of capital return. We consider businesses that generate cash flow at growth-stage valuations, allowing returns to LPs over time. The DPI point is just that these are early stories that take time to play out.
Juan
It’s also a question of when to launch a first fund and its size, given the stage at which narratives develop. We’re a relatively small fund within a larger asset manager. Monitoring product-market fit across use cases helps M&A opportunities and brings in institutional capital as marginal buyers on the liquid token side. Portfolio construction is key to this.
Sam
One more point: blockchain and digital assets have produced more DPI than many other sectors over recent years. There are two sides: underwriting a business for 50–60 percent IRR over years versus token models, which can be short-term. Many raises generate quick liquidity or hype cycles.
It’s important to ask foundational questions: does a token help the business? Is there value created through its issuance? Both approaches exist, but a long-term view aligns with venture-style investment strategy.
Thomas
So last question: particularly in the later stages, the dynamics between token and equity become a bit challenging. Naturally, value seems to accrue to one versus the other. How do you advise projects on thinking about their token strategy versus their equity strategy? Should they do one, should they do both? Is there a happy medium or mix to figure out? We’re still figuring these things out. Any advice for founders out there?
Sam
I can jump in there real quick. I’m pretty dogmatically against a bifurcated structure. I think you need to choose one and go with it. If you choose the token, it should be because your business is better off issuing a token — because it’s integral to your business model.
I think it’s profoundly impactful to create community ownership and have the community as some of the largest evangelists for your project. We’ve seen that go very right, and we’ve seen it go very wrong. If you’re thinking about investing on a power-law distribution, tokens as community ownership are incredible vehicles by which you can get your story or company out and create almost zealots for your project.
So I really like tokens, but the gating question is: why?
Aly
Yeah, and actually a few points I think people don’t often say: going with one, not both, is generally better. But from an investor standpoint, we generally prefer to have at least some exposure to both, like via a token warrant, because we don’t actually know what will play out.
We don’t know if a company says they’re focusing on tokens today, in six months or a year, whether they’ll still focus on tokens. We want to make sure we’re on the right instrument. We’ve been burned on that in the past. So for us, one part is making the right bet, but we try to take out the risk of the wrong instrument.
Josh
I think whatever puts the business in the best position for the long term is the right choice. One thing I’ll add is that I believe you’ll see a convergence as well. Whether it’s a safe harbor the SEC is drawing up, more regulation, or higher expectations from capital markets and investors, I think tokens will start to look more like some type of equity — with fundamental distribution of value or association with fundamentals.
As that robustness comes in from the investor and regulatory side, maybe it won’t really be a question in the long term of which one to do, because it converges to a new capital markets instrument.
Omar
Yeah, I think the only thing I’d add is that there have been models in the industry where a dual structure works — exchange tokens are probably the best example. You’ve seen that with PMP, GP, FCT, and in other examples.
We’re generally okay with it, but as everyone mentioned, we want to make sure that if you do do that, as an investor you have exposure to both and upside wherever the value is going to accrue. The worst thing you can do in our seats is obviously miss more of those names.
We’re not as dogmatic, but we do have the view that over time these types of securities will ultimately convert, with buyback and burn models and actual distributions. We’re very much looking forward to that. It’ll be a lot better for entrepreneurs and investors.
Thomas
Thank you to our fantastic panels.
