Venture capitalists are shunning tokens, say veteran crypto investors

Episode 89 of Season 4 of The Scoop was recorded live with The Block's Frank Chaparro, CoinShares CSO Meltem Demirors, and Aglaé Ventures' Managing Partner Vanessa Grellet.

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Last year’s bull market exuberance is a distant memory, as are the wildly inflated crypto funding rounds that attracted an unprecedented amount of venture capital to the space.

In this episode of The Scoop, CoinShare’s Chief Strategy Officer Meltem Demirors and Aglaé Ventures Managing Partner Vanessa Grellet unpack how the crypto VC landscape has changed since last year’s bull market, and particularly why venture capitalists are becoming more reluctant to invest in early token rounds.

As Demirors explains, savvy investors are realizing the token model is not always the best way to capture value:

“There's now consideration of the fact that tokens, in particular governance tokens, are not necessarily the best way to capture value creation… an investor who's willing to write really large checks is going to have some fundamental questions around monetization that doesn't just rely on ‘number-go-up’ tokenomics.”

According to Grellet, regulatory concerns — particularly regarding some token models’ similarity to unregistered securities — are another reason tokens are not as attractive to investors these days.

While hesitancy regarding seed-stage token rounds is becoming more widespread, Grellet believes there is still interest in tokens if they make sense as part of larger equity investments:

“We see a lot of investors being comfortable with both the equity and a token option so that if the main company has one project, but also has several other projects that warrant tokens, then you can have upside in the ongoing life of the company.”

During this episode, Chaparro, Demirors and Grellet also discuss:

  • The bull case for crypto custody and infrastructure products
  • Why DeFi is still in its early stages of development
  • How ‘computational finance’ will change the world

This episode is brought to you by our sponsors Tron, Chainalysis & IWC Schaffhausen

About Tron
TRON is dedicated to accelerating the decentralization of the internet via blockchain technology and decentralized applications (dApps). Founded in September 2017 by H.E. Justin Sun, the TRON network has continued to deliver impressive achievements since MainNet launch in May 2018. July 2018 also marked the ecosystem integration of BitTorrent, a pioneer in decentralized Web3 services boasting over 100 million monthly active users. The TRON network completed full decentralization in December 2021 and is now a community-governed DAO. | TRONDAO | Twitter | Discord |

About Chainalysis
Chainalysis is the leading blockchain data platform. We provide data, software, services, and research to government agencies, exchanges, financial institutions, and insurance and cybersecurity companies in over 60 countries. Backed by Accel, Addition, Benchmark, Coatue, Paradigm, Ribbit, and other leading firms in venture capital, Chainalysis builds trust in blockchains to promote more financial freedom with less risk. For more information, visit www.chainalysis.com.

About IWC Schaffhausen
IWC Schaffhausen is a Swiss luxury watch manufacturer based in Schaffhausen, Switzerland. Known for its unique engineering approach to watchmaking, IWC combines the best of human craftsmanship and creativity with cutting-edge technology and processes. With collections like the Portugieser and the Pilot’s Watches, the brand covers the whole spectrum from elegant timepieces to sports watches. For more information, visit IWC.com.


© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.