According to Bloomberg, cryptocurrency startups have taken a fresh strategy by using classic venture capital models for open-ended or “rolling” fundraising rounds. Companies can use this unique strategy to acquire cash continuously and swiftly inflate valuations by deploying a conveyor belt of new investor money.
Some claim that so-called “fluid valuations” lack solid underpinnings, while others believe that traditional venture capital is not suited to the rapid pace at which digital asset enterprises operate.
Evolving Capital Formation Strategies
The emergence of these rolling rounds reflects two factors: cryptocurrencycurrency’s comeback from the bear market that occurred in 2018, and VC funds’ aim to liquidate their cash reserves as quickly as feasible. Early investors benefit greatly as valuations rise with each late-stage backer’s fresh commitment.
“Capital formation in cryptocurrencycurrency is always evolving,” said Matt Luongo of Thesis Ventures. He said that governance, liquidity, and other critical principles are frequently different from what happens in typical businesses.
Also read: Crypto Venture Capital (VC) Investment Spikes 52% to $1.16 Billion
