Interview: Venture capitalism and crypto

I’ve always thought venture capitalism is an interesting field. Throw crypto into the mix and it goes to a whole new level.

I sat down on the CoinJournal podcast with longtime VC David Siemer, CEO of crypto-focused Wave Financial.

David first got involved with crypto “by chance” in 2010, gifted 50 bitcoins by a friend. Given Satoshi only launched Bitcoin in January 2009, that is seriously early. David also bought the ICO of Ethereum, so I think it’s fair to say he has been around the space a while.

With his VC career also spanning both the dot com bubble shortly after the turn of the century and the Great Financial Crash in 2008, I was particularly interested to pick his brain on what he thinks of the current bear market.

It’s vitally important to note that this is the first bear turn in crypto while the wider macro climate is also taking a bath – Satoshi Nakamoto only emerged in 2009 after the banks had crashed and the bubble burst. We really haven’t been in a situation like this in crypto before, therefore, as the S&P 500 has pared 25% this year. So what does David make of all this?

We also touched on the inefficiency of crypto markets, noting the contango risk premium in the Bitcoin future/spot market and the historic Kimchi premium, where South Korean crypto markets have traded at prices significantly north of elsewhere. How much easier is it to generate alpha through active management in the crypto market as opposed to traditional markets?

It’s easy to forget how new crypto is, so it’s interesting to speak with somebody who cut his teeth in the traditional markets before carrying that same business – VC – over to crypto.

David is “a risk-taker by nature – I’m a VC” but his outlook has clearly been cultivated from his trad-fi background. The meshing of these two areas has really occurred at a mainstream level over the last couple of years, and is so exciting going forward – it would have been bizarre to imagine interviewing a crypto VC even a few years ago (despite the fact Wave has been around for quite a while now).

I enjoyed getting a view from the VC side about what is happening right now. We chatted about his different funds, the relative performance compared to the stock market, and even the dark side of crypto – did someone say “exit liquidity?”.

David and I are relatively aligned in our macro views – we both expect a fair bit more pain to come. As for the long-term? I’ll leave David’s thoughts there for the end of the podcast (but like I said, he is a risk-taker by nature…).

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