1/ New post: A crypto acquisition spree: The Rise of CFBLs (Cash-Flush Business-Light). Linked here and summarized in the thread below medium.com/@Bitcom21/a-cr…
2/ First, CFBLs are entities whose primary cash flow generation has been from the sale of an inventory of tokens.
3/ As token inventory of CFBLs diminishes, incentives suggest that these entities will leverage their cash positions to acquire companies in order to help fulfill their objectives of building a functioning network with community traction and real-world use-cases.
4/ There’s several incentives at play that will drive this trend including a very favorable cost-benefit relationship and a competitive/regulatory landscape that favors “buy” over “build”. A closer look…
5/ Acquisition cost is low for CFBLs: These entities sit on a large amt of cash (to fund acquisitions) and often have an inventory of tokens that could increase in value with announcement news (partially or fully offsetting the cost of the acquisition)
6/ The benefit is huge: acquisitions offer CFBLs a quick way to acquire manpower and revenue lines, and to drive community signaling
7/ Also, organic growth is hard (“buy vs. build”): Building is particularly hard in an industry with a talent scarcity and a rapidly shifting competitive and regulatory landscape. This increased risk to building pushes the incentives toward “buy” (acquire).
8/ Lastly, given the cost-benefit dynamics above, CFBLs will likely be the least price-sensitive buyers in the market and therefore will have a high success rate in acquisition attempts (CFBLs are likely willing to pay higher valuations than other potential buyers).
