1/x
Lots of confusion on a #VC vs HF, especially now with rumours of #3AC blowing up. Quick thread on key differences and why VCs shouldn’t be getting a bad name for this (albeit lots of garbage VCs in this space too)
Lots of confusion on a #VC vs HF, especially now with rumours of #3AC blowing up. Quick thread on key differences and why VCs shouldn’t be getting a bad name for this (albeit lots of garbage VCs in this space too)
2/x
Venture capital funds (VCs) make early stage investments in illiquid assets: historically equity, now tokens. The idea is that they back founders at the earliest stages, sometimes pre-product with just an idea. The expectation is that most of the projects they back fail…
Venture capital funds (VCs) make early stage investments in illiquid assets: historically equity, now tokens. The idea is that they back founders at the earliest stages, sometimes pre-product with just an idea. The expectation is that most of the projects they back fail…
3/x
..but that the 1/10 make most of the $$. In Tradfi, the equity stakes are just held. VCs are the ultimate HODLERs. Crypto is a little different since tokens are liquid quickly, but the idea is to #HODL
..but that the 1/10 make most of the $$. In Tradfi, the equity stakes are just held. VCs are the ultimate HODLERs. Crypto is a little different since tokens are liquid quickly, but the idea is to #HODL
4/x
So as a company grows and generates $, you’ll have another type of investor come in, the growth equity (GE) fund. Historically, these guys are also considered VCs. Whereas the early stage firms backed the idea, these guys are backing a company looking to ramp up revenue.
So as a company grows and generates $, you’ll have another type of investor come in, the growth equity (GE) fund. Historically, these guys are also considered VCs. Whereas the early stage firms backed the idea, these guys are backing a company looking to ramp up revenue.
5/x
When a company is ready to be taken public, the cross-over guys come in for one last private round before the IPO. These cross over investors invest in both private and public equities and tend to be hedge funds (HF)
When a company is ready to be taken public, the cross-over guys come in for one last private round before the IPO. These cross over investors invest in both private and public equities and tend to be hedge funds (HF)
6/x
At its core, a HF is supposed to hedge their liquid/public bets so that downside is limited. Today, instead of hedging, some HF just go full degen. Tiger is one in Tradfi. In crypto, 3AC probably falls into that.
At its core, a HF is supposed to hedge their liquid/public bets so that downside is limited. Today, instead of hedging, some HF just go full degen. Tiger is one in Tradfi. In crypto, 3AC probably falls into that.
7/x
Ok, so what does 3AC fall into if they invest in both liquid and illiquid assets? I’d consider them more a HF than a VC. While they do invest in early stage protocols/ companies, their strategy isn’t to just buy and HODL, but to look for other opportunities
Ok, so what does 3AC fall into if they invest in both liquid and illiquid assets? I’d consider them more a HF than a VC. While they do invest in early stage protocols/ companies, their strategy isn’t to just buy and HODL, but to look for other opportunities
8/x
Easiest way to think about this: are they hodling long-term? If yes, they are probably a VC. Are they trading, farming, investing, hedging, probably a HF.
Easiest way to think about this: are they hodling long-term? If yes, they are probably a VC. Are they trading, farming, investing, hedging, probably a HF.
9/x
That said, most institutional firms in crypto will have a VC arm and a HF arm. VC to buy early and cheap tokens to HODL. HF arm to buy, sell, farm, stake etc. liquid assets
Most of the well known “VC” in crypto are structured this way
That said, most institutional firms in crypto will have a VC arm and a HF arm. VC to buy early and cheap tokens to HODL. HF arm to buy, sell, farm, stake etc. liquid assets
Most of the well known “VC” in crypto are structured this way
10/x
Anyways, that’s a quick take on VC vs HF. In a lot of ways, they are very similar but also very different. One looks for short term movements and the other looks for long term trends
Anyways, that’s a quick take on VC vs HF. In a lot of ways, they are very similar but also very different. One looks for short term movements and the other looks for long term trends
11/x
If you found this interesting, give me a follow. I promise the content will be worth it.
If you’re wondering, Im a Tradfi VC so am familiar with all of this.
If you found this interesting, give me a follow. I promise the content will be worth it.
If you’re wondering, Im a Tradfi VC so am familiar with all of this.
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