As the crypto winter sets in, some VCs are taking the long view

June 22, 2022, 12:48 PM UTC

Good morning. Kevin Kelleher here, filling in for Jessica who is on vacation this week. 

If you’ve been reading anything about crypto this year, you’ve heard talk about a crypto winter. In fact, a scan of news headlines this month alone might lead one to think this snowstorm might become like the legendary winter of 1880/81: A long, hard spell of historically brutal blizzards that left many stranded in the cold. 

On Friday, Bitcoin slid as low as $17,601, a nearly 75% collapse from the $68,990 peak it reached only nine months earlier. Bitcoin miners are feeling the pain, while BlockFi,, and Gemini Trust are laying off staff and Coinbase announced a hiring freeze. Others like Terra and Celsius are facing full-blown crises. Wall Street titans are full of schadenfreude: Warren Buffett said he wouldn’t buy all the world’s Bitcoin for $25 and hedge-fund giant Jim Chanos called crypto a “predatory junkyard.”

Amid all this turmoil, however, VCs focused on crypto investments are maintaining an eerily calm demeanor. After all, the DNA of any venture capitalist tends to favor a years-long or even decade-long perspective over daily headlines and quarterly outlooks. Andreessen Horowitz doubled down with a $4.5 billion new crypto fund in May, following Sequoia’s launch of a $500 million crypto-token fund in February. And Stillmark, a crypto-focused VC firm, says it’s fielding interest from investors for its second Bitcoin-focused fund.

Blizzards be damned—what matters to VCs in the end is planning for a crypto spring.

“I understand why people in traditional finance are saying skeptical things, but we keep hearing the opposite,” Alyse Killeen, a founder and general partner at crypto-focused VC firm Stillmark, told me. “I think the tide has already turned to the point where many people think of Bitcoin as a long-term tech and a long-term financial asset.”

Killeen draws a parallel to the housing crisis of 2008 that culminated in the Great Recession. The Nasdaq Composite fell 55% from peak to trough, but innovation in cloud and mobile technologies pushed many startups to growth and success in the following years. 

Or recall the dot-com bust of 2000, when the Nasdaq took a heart-stopping 78% dive. Yes,, eToys, Webvan and countless now-forgotten startups were casualties of the market crash, but Amazon, PayPal, eBay and others endured to become foundational tech companies. As a similar shakeout happens today, consider that during the dot-com boom infrastructure companies built out broadband and developers created a few promising web sites. These were vital to building up a critical mass of users that led to the rise of the Internet as we know it today.

So while Wall Street veterans are painting all things crypto with the same “Ponzinomics” paintbrush, many VCs maintain that there’s enough talent from outside the crypto ecosystem still hungry to get in. FTX, Binance and OpenSea are among crypto startups still hiring. Stillmark recently hired a communications chief who previously worked at Starbucks and Nike.

Marc Andreessen made a similarly bullish argument about crypto’s long-term prospects on the Bankless podcast earlier this month. Citing a parallel with the early days of the web, the Netscape founder turned VC sees crypto’s current problems as opportunities that, far from repelling skilled workers, often appear as attractive challenges worth solving. 

“When you get something like this that has this sort of collective effect and has a movement behind it and is attracting many of the world’s smartest people to work on it, basically the criticisms play out differently than the critics think,” Andreessen said. “The critics make a long list of all the problems, but you’re getting these genius engineers and entrepreneurs who flood into the space. They look at that list of problems as a list of opportunities.”

Unlike dot-com entrepreneurs, however, many founders of Bitcoin startups are used to riding a bucking bull. In early 2014, after notching a peak above $1,000, Bitcoin fell 89% in a matter of weeks. Nearly four years later, after reaching $19,345 in December 2017, the cryptocurrency tumbled 83% over the next year. Veterans who have weathered those downturns have learned to build protections against volatility into their business models.

“Bitcoin companies are prepared for war at all times. Historically, they’ve developed a mindset from an early age that it’s not going to be easy to raise, that they shouldn’t expect to necessarily raise again,” Killeen says. “So Bitcoin companies are generally operating to preserve at least a year to 18 months of runway. Our advice to companies now is to extend that to two to three years.”

Killeen began investing in Bitcoin startups in 2014 as a part of investment teams at Clearstone and other venture firms. She founded Stillmark in 2019 after the rollout of the Lightning Network, a payment protocol designed to address Bitcoin’s scalability challenges. Lightening sits on top of Bitcoin to handle multiple transactions at lower cost and in seconds

It’s the kind of innovation that can kickstart more mainstream adoption of cryptocurrency payments the way that broadband connections did for the Internet two decades ago. If Bitcoin seems to many like an opaque and high-risk technology now, new protocols like Lightning can help it to become a seamless, utility-like service like Internet connections or electricity have become, Killeen says. “If you can send fraction-of-a-penny payments without needing to have a credit card, you’re going to see this technology fade into the background of our experience, hopefully in a way that makes each online experience more pleasant,” she says.

Attaining that vision may take several years, depending on how mainstream users respond to these new technologies. Startups typically take six to seven years to mature from initial investment to exit, and with IPO markets having grinded to a near standstill in 2022, the wait could be even longer for emerging technologies like Bitcoin. While crypto spring may be coming, startups in the ecosystem, as well as their investors, may want to stockpile a good amount of patience alongside their cash.

Kevin Kelleher
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- Wingcopter, a Weiterstadt, Germany-based delivery drone manufacturer and service provider, raised $42 million in Series A extension funding. REWE Group, Salvia, XAI technologies, ITOCHU, Futury Capital, Xplorer Capital invested in the round. 

- Lightning AI (formerly, a New York-based machine learning platform, raised $40 million in Series B funding. Coatue led the round and was joined by investors including Index, Bain, First Minute Capital, and Mantis VC

- Carbon Biosciences, a Lexington, Mass.-based parvovirus-derived gene therapies developer, raised $38 million in Series A funding. Agent Capital led the round and was joined by investors including Longwood Fund, Astellas Venture Management, the Cystic Fibrosis Foundation, Solasta Ventures, University of Tokyo Innovation Platform, and Camford Capital

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-, a San Francisco-based automation platform, raised $15.3 million in Series A funding. Insight Partners led the round and was joined by investors including 468 Capital, FirstMark Capital, and other angels.

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-, a San Jose-based customer and field service software company, raised $10 million in Series A funding led by Battery Ventures and Nexus Venture Partners

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- Parallelz, a Toronto-based software platform developing mobile apps to web apps, raised $3 million in pre-seed funding. AnyQuestion founder and CEO Ed Baker, Product Hunt founder Ryan Hoover, Maple VC general partner Andre Charoo, King and Lab, and others invested in the round.

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- Align Capital Partners recapitalized Schneider Geospatial, an Indianapolis-based SaaS provider of public access land management software and support services to state and local governments. Financial terms were not disclosed. 

- Linden Capital Partners agreed to acquire a majority stake in Aspirion, a Colombus, Ga.-based healthcare revenue cycle management platform, from Aquiline Capital Partners. Aquiline will remain an investor in the company. Financial terms were not disclosed. 

- Thoma Bravo acquired a majority stake in Grayshift, an Atlanta-based digital forensics solutions provider. Financial terms were not disclosed. 

- Vitesse Systems, backed by Trive Capital, acquired Custom Microwaves, a Longmont, Colo.-based antennas provider for space and ground applications. Financial terms were not disclosed. 


- Ardian acquired a majority stake in Aire Networks, an Alicante, Spain-based telecommunications services company, from Magnum Capital. Financial terms were not disclosed. 


- Echobot, a Karlsruhe, Germany-based sales intelligence platform, and Leadfeeder, a Helsinki-based web visitor intelligence platform, agreed to a merger. Per terms of the deal, Great Hill Partners invested €180 million ($190.1 million) to support the merger.

- Compliancy Services, a London-based compliance consultancy, and Portman Compliance, a London-based compliance consultancy, have completed a merger. Financial terms were not disclosed. 

- Productsup acquired World of Content, a 's-Hertogenbosch, Netherlands-based content management service company. Financial terms were not disclosed. 

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- Prime Infrastructure Holdings, a Pasay, Philippines-based sustainable infrastructure firm,   filed for an initial public offering in Manila and plans to raise as much as 25.64 billion pesos ($472 million). 

- Ximalaya, a Shanghai-based podcasting startup, is delaying the launch of its up to $100 million initial public offering in Hong Kong due to market volatility, according to Bloomberg. The company plans to hold off plans for a public offering until September of this year. Tencent Holdings, Baidu, and Sony Music Entertainment back the company.


- Roxe Holding, a New York-based blockchain-based payments company, agreed to go public via a merger with Goldenstone Acquisition Limited, a SPAC. A deal is valued at $3.65 billion. 

- Human Longevity, a San Diego-based genome sequencing company, agreed to go public via a merger with Freedom Acquisition I Corp., a SPAC. A deal values the company at about $1 billion. 


- Phoenix Court Group, formerly LocalGlobe, a London-based venture capital firm, raised $500 million for four funds focused on investing in companies from seed to pre-IPO stages.

- Kiko Ventures, the London-based venture capital firm by IP Group, launched a $450 million investment platform for cleantech companies. 


- a16z hired Joe Morrissey as a general partner. Formerly, he was with Segment

- Clayton, Dubilier & Rice, a London and New York-based private equity firm, hired David Taylor as a senior operating advisor to CD&R-managed funds. Formerly, he was with Procter & Gamble.

- Great Hill Partners, a Boston-based private equity firm, hired Jason Hogg as an executive-in-residence. Formerly, he was with Acima.  

- KKR, a New York-based investment firm, hired Andy Silvernail as an executive advisor. Formerly, he was with IDEX Corporation

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