VC Landscape in 2025 Perspectives From Emerging Managers | Mickey, Alexander, Sunny, Casey, Catrina

[Music] hello everybody Welcome to The Ether night stage at ethereum Denver 2025 super excited about our panels today I'm Lauren Hallstead your MC for the day um as soon as everybody's ready and settled in the back would love to bring out our first panel but in the meantime we'll we'll say a second all right so to start off the day we have the VC landscape in 2025 perspectives from Emerging Markets I'm handing over to Mickey Graham our moderator for the panel Mickey you like to come up you're welcome excited to see you old friend from uh chain link Labs awesome well can we uh get the rest of the panelists up here and then we'll get started yeah you're all the mics work we good check one two one2 awesome well hello everyone uh really excited to be here my name is Mickey Graham I'm the co-founder and GP of a new Venture Capital firm metaler Ventures we are a $25 million fund rating 500,000 to $1 million checks in preed and Seed stage protocols and businesses um so with me today up here I have four really great emerging managers before we jump into the conversation though I want to kind of set the stage for where we are today the crypto Venture Capital ecosystem is undergoing one of the most dramatic shifts in recent memory just 3 years ago in 2022 the industry was flush with capital um according to Galaxy digital in 2022 there were over 300 funds announced that raised just about 35 billion I'm fast forward to today just two years later last year 2024 those numbers had cratered there were just 79 funds announced last year um that raised just over 5ish billion I'm so combined that's a 74% drop in fund count and an 86% decline in Venture Capital um dollars raised yet despite this the funds represented on the stage today have successfully raised a fund one or fund two and are actively deploying into and supporting the early stage ecosystem each of these funds was able to raise in this environment because they had a compelling value proposition Andor a thematic differentiation often in an under-allocated area we'll get into this as well but I think emerging managers like the ones on the stage today play a critical role in the ecosystem helping entrepreneurs take bigger risks providing the First Institutional check when larger funds won't and having the ability to bet on the next wave of crypto Innovation um so with that I'd love to kind of just jump in let's spend 30 seconds on intros if the four of you can just kind of introduce your firm your check size and some of the your focus areas all right thanks Mickey um hi everyone I'm Alex Lynn I am uh one of the uh founding partners of reforge we are an early stage fund really focusing on um the intersection of of web 2 and web 3 in the sense that we spend a lot of time looking at web 2 companies and engaging with uh Founders that are really focusing on um addressing a lot of coordination problems and bottlenecks that exist within their respective Industries so this is everything from Logistics and supply chain uh companies and startups to healthcare to obviously finance and uh identifying um uh crypto and distributed networks as a mechanism to essentially be the substrate for unlocking um the solution space for those coordination problems uh and so um for for us you know we are typically writing the First Institutional check into these companies and really kind of Bridging the Gap with uh with with um helping them you know introduce uh crypto in a way that uh really kind of changes the game so we're really flipping the script and so uh I guess not specifically looking at just crypto uh but spending a lot of time in the web 2 side um our check size has ranged from 250 all the way up to 2 mil um and those conversations have been really great because a lot of times the uh the answers that we're getting from Founders is hey we do not care about crypto and we don't think Distributing networks is a great mechanism to enhance our business and so then we ask why and so a lot of the uh a lot a lot of the answers um are around the infrastructure not being uh mature enough and so we also spend a lot of time incubating companies that address these infrastructure problems um from from the crypto side so that we're kind of like a two two uh two-part fund and um and my partner and I are joined by a third partner that we've built an agentic partner called Ava and she helps with essentially everything um around sourcing and and helping us with diligence and and building out um our operations great um hey everyone my name is sunny Peri um I'm one of the co-founders uh and managing partner atlex Ventures uh we me and my partner we were previously at point72 ventures and come from a very traditional Finance background um what we invest in how we think about the space out to three way three kind of uh main areas one we think the last 10 years and the next 10 years of crypto are going to be quite different um two I think to make progress in the space we're going to have to go beyond the casino and actually invest in real stuff and three as a builder investor you'll have to figure out a unique kind of go to market or or your unique value prop to kind of create value um so the way we think about that is you know this like this kind of meme game or the broader game of just kind of token High FV uh kind of the gamification is not going to be sustainable and so you have to move beyond that to go move beyond the casino you're going to have to actually solve real problems and create value uh and we're Builders and Founders understand what the pain points are and think about leveraging blockchain or crypto to reduce the tax on trust and reduce kind of the intermediaries that is what's going to be sustainable and in 10 years we want to be investing in companies or we want to have been invested in companies that build real solutions that are kind of the next generation of companies leveraging blockchain awesome I'm Katrina I'm a general partner of portal Ventures what you need to know about us is very simple uh we only lead or co-lead we um backed preat stage you know very first believer uh we were building and uh we back one per category uh which entails every quarter we really do our homework and you know dive into the area where we have a right to win and understand the sector and um yeah we pick a winner there and go from there so easy um my name is Casey I'm the founding and GP of a fund called topology Ventures which is actually a Frontier Tech fund so we do do crypto but we also go outside of crypto so things like Ai and neurotech and more like on the Robotics and Hardware side as well and yeah before this I was an investment partner at Paradigm and before that I was an engineer at Google awesome well thank you so much for the intros so we have 22 minutes let's kind of jump into the heart of it I know this room is probably mostly full of entrepreneurs and Founders um so for Founders who are raising this year how would you describe this environment specifically compared to the markets of yester year 2021 and 2022 or 2023 to 2024 what's the environment entrepreneurs are going out in in 2025 who wants to take it sure I'll start um you know I'll I'll FR from the ones that we look at uh companies Investments there's plenty of capital for interesting entrepreneurs Building Solutions that creating value in a sustainable way um I think too often unfortunately Founders are building or pitching thinking about Venture investors as their end customer and so Founders thinking about actual real customers and users and building a real business there's plenty of capital sources for that and real you know funds that are doing that so I think it can be easy sometimes when you're trying to raise money to kind of say what the Venture investors want and whether it's a token or this uh but if you actually I think are building something sustainable can talk through what is problem you're solving how you're going to Market to do that and how your solution is actually creating that value and solving that in a unique way and what your expertise is there's countless funds and if you're doing something like that I'm happy to talk to you as well yeah anyone else want to take this I'm curious specifically compared to kind of 2022 and previous boom Cycles we've seen how do you think the current market compares to that I think that because we're at a crypto conference I'll say this just like the number of tokens has just exploded over the last few years somebody told me this yesterday I think it's true there's more tokens than there are users in the space and so we recently did a huge analysis we're like a really engineering first fund just given my background my first hire was a developer I met as an a non on the internet and then he doxed as a citadel Quant and we poached him and we just did this massive analysis on Resistance levels in crypto in terms of like what ftvs projects can reach and then sustain and I think I don't know if we're going to open source this but basically I think that the market has changed so much with the proliferation of tokens and there are these natural resistance levels of where retail is willing to support tokens and so I think that's the biggest change I think it really changes monetization I think it really changes upside I think it really changes the entry prices we need to be getting in and the amount of ownership you need to own and then the last thing I'll say on this is like the tokenomics have really shifted because because of this because there's so many tokens there's like a totally different playbook for exchanges and how the tokens need a flow in order to optimize the probability of success um yeah yeah quickly to duvail on the exchange side I recently came back from Hong Kong where you do a lot of research on what's what it takes to reach the distribution platform and the number of token getting listed collectively across the top three exchange it's actually about 10 to 15% of the last cycle and exchanges maybe it's from yeah maybe it's from the regulatory pressure maybe it's from um the fact that they already have too many alt tokens uh it's getting a lot more astringent which you know just you know another way of saying you know the Playbook might be different this wait what do you mean by can I ask a question what do you mean by the reg wouldn't you think it's more less conservative now than before or like so why would regulatory be a reason that there's less listings oh as in up until this point before Trump oh before yeah I see so 15% it's about yeah it's 5,000 tokens being listed last cycle and maybe less than 15% is like 100 collectively so 7 percentage Yeah it's pretty insane yeah I'm I'm also really curious to hear Alex's thoughts on this um these guys are some of the best infrastructure investors that I know especially coming from Shima and you guys have invested in a lot of the you know most seminal infrastructure projects over the past call it couple of Cycles how do you feel about the current landscape on the infrastructure side um yeah I I think um it's it's starting to shift in favor of so so there's just a lot of noise and I think we can all agree with that not just from the token side but I think a lot of noise with respect to uh building projects because vitalic posted something 3 years ago um and you just want to you know essentially raise capital from investors that uh want to support that Vision uh but then at the end of the day not you know that infrastructure uh component may not actually be tangible for anything or for other developers to then build upon and so I think on the infrastructure side I it's easier to stand out um with with quality uh and especially you know how you attract developers in terms of if you are you know going further down the stack uh maybe if you're building a new uh L1 or uh and you're focusing on uh you know security versus uh high high performance um then I I think it's I think it's easier to stand out and uh and and I think um people also have to understand this isn't an overnight thing I think a lot of uh infrastructure Investments have had quick turnarounds because their product is the token um and at the end of the day you know they aren't attracting the right developers and and nothing gets done so um I think nothing has really shifted honestly uh relative to previous Cycles I think um people are just starting to get more jaded and and the filter um the the filter for uh quality has just uh increased awesome so looking ahead to 2025 what are some of the sectors you're most excited about I think you know in 2024 we saw the rise of the intersection of AI and blockchain Casey I know you've spent a lot of time thinking about this um you know we've seen some great infrastructure and scaling Solutions emerge over the past year I think sunny on the consumer and kind of like U more consumer application side I think you guys have been doing a lot of great work there what are you really kind of looking forward to in 2025 yeah I can start there um listen there's a lot of Builders building really interesting Solutions whether it's consumer Enterprise where crypto is is abstracted away um like for instance one of our most recent companies is um a ticketing company and uh there's probably you know uh a lot of trauma in the crypto world with lots of people trying ticketing and and the challenge is the fact it's not that ticketing can't work and blockchain can't solve kind of the trust tax that most these large players charge it's the go to market so most people try doing it in primary it's really hard because the market is very complex in the primary but secondary markets are very interesting and easy to easier to navigate um so we we have a company called XP um that's a ticketing marketplace where it's the cheapest place to buy a ticket in the secondary Market um cheaper than StubHub cheaper than any of the others just because they don't charge a fee just what the way Robin Hood reduced the trading fees from $8 $10 a trade to zero these guys are doing that and figuring out other ways to monetize so I think it's being creative and Innovative and understanding where crypto and blockchain can solve that problem but doesn't need to be the product itself and the maturation of the space requires us to move from the the technology being the product to technology being enabling and and building a lot of interesting products uh it's been hard because you know as Casey mentioned all these tokens and it's an easy way to kind of make a quick Buck for a lot of people and so it's it's distracting uh the casino is um but really building long-term Solutions is where we see the path forward um and there's tons of entrepreneurs doing that and we've invested in companies doing that in payments and doing that in supply chain and and so solving problems where they have millions in revenue from real customers large Enterprises luxury uh designers and so on so it's it's that's the opportunity um and there's a whole h of other companies but I'll let the others share as well I um I recently backed the crypto Quantum company that took me six months to find uh because the intersection the vein diagram of someone who's been thinking about Quantum cryptographer for a long time and understanding crypto plus being commercial enough to make this into a product is really hard to find but um I think the narrative and I mean if you think about crypto people feed on two things it's greed and the fear uh we literally have the greed fear Index right um and so far with the mean coin craze we see the greed Factor uh coming into play whereas fear I think by bit it's just impactful timing um for going forward when people you know capitalize on all of these trading like how can they perpetuate their um gain I do think the quantum uh so effectively what this protocol does is um without bridging without changing a public the secret uh Public Work secret key uh it's a smart contract that's postquantum locked so any protocol wallet DS even institutions they can um eff use them and become Quantum postquantum um so that's something I think a security space um with the protocol business model because the equity this is a whole different kind of worm of equity business model versus a protocol but the intersection of protocol and security could be quite interesting uh I I just think two things uh that excites me I think one is uh obviously the the AI stuff um but I think I think it's really kind of the the consequence of what we're seeing with the development of um of of essentially moving from attention the attention economy to intention economy and so being able to uh be proactive with how people essentially engage with um agents to uh derive intent from existing data or previous intents um and so this is you know you know not intense in this in the sense of crypto but uh actions right and so I think um doing that in a decentralized substrate such as on crypto rails I think is a really fascinating thing to explore the second is uh security so uh you know we're not seeing a reduction uh in hacks uh by by amount um obviously with the bybit stuff uh as mentioned um so I think with security uh I you know I've always been very bearish on auditing firms I think you know I think generally we all agree it's a very reactive approach um to to solving uh uh onchain security and so you know security not in the sense of Economic Security but I think um you know building out solutions that are similar to uh Aeros space so you know the reason why you're you know a plane doesn't fall out of the sky if there's an error within the operating system or within the distributed system is because there are um uh essentially hooks mechanisms that prevent um you know one area from failing and then and then covering out with another part of the distributed system and so I think that that is one very fundamental uh implementation that I don't think um we've really thought very deeply about um when it comes to uh Network design and so I think that's starting to change and and so that's another area that I'm really excited for okay I'm going to try to say some things that just to not repeat um yeah we were we were really early To Dai like even in 2022 my Twitter buyo was crypto Ai and everyone was like that's never going to happen and now it's just it's just funny that like it's a it's such a thing and it's it's been a thing and now it's not a thing thing again so I I still am really excited about some things in decentralized AI I think a lot a lot of it as noise um so I don't know I guess that's not a contrary intake I think probably the that I spend my most most time on that is like the lowest overlap of other people is the intersection of nuro and crypto I think that neural data is the most valuable data set that we don't have access to yet in the entire world I think it's getting unlocked with like a really interesting technology called trans cranial Focus ultrasound and I I suspect that we're not going to want Elon to have access to our brains and so I I do actually think and this isn't like a bit like I really do think having ownership ship over our neural data is going to be really really important for society developing and so I don't know if it's going to be like fully decentralized but I think at least at a minimum the ethos of this industry will get into neurotech I'm curious a quick follow question if I may yeah go for it is there a dependency on heartware and heptic to collect those data yeah yeah I don't know how much I can share about our thesis but we think that so like basically historically The neurot Tech Community has relied on EEG but EEG doesn't have well good enough spatial resolution which means like it doesn't have enough like spe specific places of the brain to actually use that data so now we have this like new modality that I'm really really excited about and yes there's like a dependency there's what needs to happen is a wearable company if anyone knows if any text me we need a wearable company that is using like VMS to take in your world and then pair it with better data with high spatial res and from that we can build like a really really good model around what our brains are actually doing which is like a total uh like black box today does that answer your question yeah super cool one one more thing I may I'll just add on the contrarian side is you know one space we've been spending a little bit of time on U we think about like where are there incentives that are the most misaligned and one of those spaces is Healthcare um you know we have a Healthcare System that's the it's you know it's a fifth of our budget and uh it's partly because incentives are misaligned and so if you can figure out uh an interesting mechanic where crypto's magic power is incentive alignment and figure out who owns that risk uh and how they can incentivize the right behaviors to reduce overall costs and drive kind of aligned behavior um there's a massive opportunity to kind of do that whether it's a direct consumer solution or enabling a lot of these players um so we've T we've seen a few hundreds obviously there's some regulatory challenges and so on but in general uh like if someone cracks that and is is is building that um we think it's a very interesting space uh it's it's not crypto the product doesn't be crypto but crypto rails can solve a lot of this in a pretty interesting way awesome thank you I love it so we have uh consumer neuro uh really spanning the gamut here um really exciting areas so let's talk about the distinction between emerging managers and mega VC funds I think a lot of us on this stage came from larger platforms um Casey was at Paradigm Sunny was at 72 I was at two Sigma kind of how should entrepreneurs and Founders think about working with smaller funds what is the advantage to being a smaller and more Nimble organization I know you have some thoughts on this yeah yeah I I mean uh C capital is abundant and so we really think about um as investors where else can we provide value but also at the same time you know we are investors at the end of the day and so I don't expect uh to to to know more about a company or uh a particular product than the founder and so uh when it comes to uh I guess value ad um I thinking more about um kind of point of absolute maximum um versus area under the curve right like I can introduce the you know Founders to other VCS I can uh you know make introductions help with marketing be a thought leader uh with whatever they're building but I think for us uh given uh my background with my partner um is to really kind of focus more on the technical architecture um and then being very lean right I think other larger firms have uh technical teams uh that do provide that similar support but I think um you know I'm I'm whiteboarding with Founders on uh on the first pitch call before um before we even make an investment and so I think those conversations are incredibly valuable that I think um you know at a larger firm maybe an analyst is getting on instead of the partners and so you know for us we're very boots on the ground and I think being lean and being more personable has uh reaped a very special relationship because at the end of the day it's a marriage and getting in at the earliest stage not just with cap but intellectual capital is incredibly important for Founders solving incredibly difficult problems yeah listen I agree with u what Alex said I think what I'll add is you know relationship between an investor and a Founder it's it's a marriage right and so it's a personal relationship of is this someone I want to work with is this someone that's going to be there uh I just understand and can they actually help um at the earliest stages you want someone that's a little more Hands-On where that Capital means something to them and that's going to keep them up at night just like it keeps you up at night to kind of help build drive that um as you grow there's different needs and different different funds so there's not like a one one one size fits all it depends on where you are in the kind of growth curve um I think on and then you know from an early stage fund investor it's finding the ones that can solve the needs solve kind of the needs you'll have over the next 12 months next 18 months and get you get you to those Milestones so it's it's a very personal decision but I think as at the earliest stages um you know early stage funds have Unique Kind of product Market fit there and that matter matters to them every investment we make we're in touch with regularly it matters and moves a needle while larger funds you can kind of get lost in kind of this whole machine that is about collecting AUM and and and and management fees from that yeah for us we we are quite specialized we we lead or co-lead and we are first day backers so really there's nothing too early for us I I'm sure if there are founders out there they've heard uh the feedback from larger firms of oh it's a little early for us I mean nothing is too early for us and um have to come a week back don't even have a white paper I'll you know Hands-On quite um help them basically the storytelling something that's really missing from a lot of technical um capable teams and you know from my background I did um probably a little too long State Management Consulting but I did that for you the five six years and storytelling is all I do this is why that's one of the areas work very very closely with the founders and also just um um once you have a lead you start having momentum and that's the hardest thing to find and that's kind of where we play and um and also being collaborative with many many other funds uh to do the same anything else Casey you were that I think they did a good job great awesome well we have four minutes left I think Katrina that's a great segue to this last topic which is tactical advice for entrepreneurs in the room um you know they are trying to get checks they're trying to raise rounds what is the best way to do that what is the advice you would give the people here who are trying to raise from you I have some advice here's my advice I think that the fact that AI is making software commoditized in the end because it's all automated and so we'll have this software on the Fly this is not a unique opinion anymore so I feel like most people in the audience will say yes but I think what isn't understood is the downstream effects of that one being that you just do need less Capital like you're just going to be able to build more with less and what that means is going and getting money from a multi-stage fund is just like actually not intelligent because for them a call option for them to do a bigger check later on but you're never going to need that check potentially potentially and so then you're not getting the support you need for the brand for the option for them to invest in something that you don't need their money for because you have ai to do all the things that you used to need to hire for and so it's like actually a really interesting time for EMS because you definitely should be partnering with people who as everyone said on this panel like are staying up with you at night are pulling all nighters like tomorrow I fly back to go literally Le in a basement with one of my Founders that we just L the preed of and we're just going to like take a Sprint week and get this up and going very few multi-stage funds will do that for you because their incentives just aren't aligned and so to me like my advice is like really really think critically about how much Capital you need to build the business you want to build and considering how fast AI is moving and then pick the partner that you really need to get you fully there because I think it's radically changing um totally agree I I think um two other things I would say is is um it's sometimes it feels comforting to reach out to a lot of funds um there's a balance between kind of quantity and quality and so understanding kind of who your target market just like you would for your customers who the right funds are um and focusing on those with some personalization doing research to see what kind of companies they've invested in talking through with them why it's a fit understanding their thesis the companies that come and talk to us have read our thesis looked our portfolio super impressive already shows kind of you're prepared uh and then as you're messaging having a clear view on what the product is what the go to market is how much you're raising you know you're not just saying I'm raising 5 million because this like what is the money going to go what the use of proceeds are what Milestone and value is going to unlock for the next round and kind of being very thoughtful and methodical in that that shows a very prepared mind that's coming there and that first impression having done that just speaks volumes um so yeah I agree with all of those points and I think I'll just add that um uh just just humanize the Rel just humaniz experience I think I I I think I speak on behalf of everyone up here that we are investing especially with the early stage mentality in the founder in you guys um and so um you know for us we want to invest in uh unkillable Founders because unkillable Founders create unkillable companies and so really let investors know who you are as a person um and and I think that you know and I think it's obvious but uh I don't I don't see it enough and a lot of times I have to draw it out of them uh in calls and so I think if you if you make that effort um and being able to display you know why why you're doing what you're doing um and and and and you know why you're equipped to do so but doing it in a way and that really kind of uh illustrates who you are as a person um it makes our lives easier and and also at the at the end of the day it kind of brings out the most important thing um when it comes to diligence is uh is how do you uh minimize execution risk associated to the founder U you know being able to overcome challenges I'll just take real quick unkillable Founders I like that uh when you have three projects you're working on you're pitching her fourth that's not very appealing so it's like knowing that this is the main thing you're going be working on and you're committed for the long term awesome well I think with that let's go ahead and end it it looks like we're at time so can I get a round of applause for our four lovely panel okay thank you so much thanks