# A really opinionated and honest opinion on the Web3 VCs and crypto fundraising

Source: https://x.com/fede_intern/status/1878566400337518647
Kiwi News: https://news.kiwistand.com/stories/A-really-opinionated-and-honest-opinion-on-the-Web3-VCs-and-crypto-fundraising?index=0x6787d6ccb917f5f3ed3e9538eecfbd8c08ae0d3629b6baf6a0ec84184889da04da95b657
Submitted by ferran.eth on 2025-01-15 UTC, 1 upvote, 0 comments

## Summary

The author, who says they have spent 20 years in the industry, argues that crypto VCs select fund managers and founders based on conformity to a narrow stereotype rather than ability. Citing a post by @CryptoHayes, the article claims that institutional allocators such as endowments, pension funds and sovereign wealth funds must invest in "qualified" managers from elite universities and large banks or big tech firms, so allocators minimize career risk by backing familiar profiles. The same logic is said to extend to founders, who must match a set CV and be located near the VC, with Silicon Valley VCs investing only in Bay Area companies. The article also asserts that crypto founders had to change to win VC money after the ICO bubble burst.

## Article

In my 20 year professional carrer, one of the most boring things has been to deal with crypto VCs. This year I raised from them and I am still surprised by how stupid some of them are. Big part of them never had a real job in their life. They just analyze your abilities by checking where you were born and in which university you studied. 

One of the reasons I want to build Rogue is because I believe in the tech but also because I want to do avoid dealing with VCs.

@CryptoHayes explained better than myself the reasons of why things are the way they are:

“Let’s apply this framework to understand how a VC muppet raises money and allocates it.

To amass sufficient capital to invest in enough companies in order to find a winner (e.g. Facebook, Google, Tencent, Bytedance etc.), the top VC firms need a fuck-ton of capital. This capital comes from endowments, pension funds, insurance companies, sovereign wealth funds, and family offices. All of these pools of capital are managed by TradFi peeps. The managers must meet their fiduciary duty to their clients by investing only in “suitable” VC funds. That means, by and large, they must invest in VCs managed by “qualified” and “experienced” professionals. These subjective requirements mean that principals are educated in the same small set of elite global universities (Harvard, Oxford, Peking, etc.) and all started their careers at large bulge bracket investment banks (JPM, GS), asset managers (Blackrock, Fidelity), or big tech firms (Microsoft, Google, Facebook, Tencent, etc). If you don’t have this background, you don’t possess the requisite experience and pedigree that enables you to intelligently invest other people’s money, according to the TradFi employment gatekeepers. It is a homogeneous blob of folks who look the same, talk the same, dress the same, and live in the same global elite enclaves.

The dilemma facing an allocator to VC funds is that if they take a chance and invest in a fund managed by folks with non-standard backgrounds and that fund blows up, the allocator could lose their job. But if they play it safe, invest in funds managed by “fit and proper” individuals, and this fund blows up, they can chalk it up to bad luck and remain employed in the asset management business. If you fail alone, you lose your job. If you fail with others, you keep your job. Because the primary goal of a TradFi muppet is to retain their highly paid, low-skill job, they will minimize career risk by playing it safe and allocating funds run by folks with the “appropriate” background.

If VC funds are selected based on how well the managing partners fit into an accepted stereotype, then that same manager will only invest in companies or projects where the founders fit the stereotype of a “founder”. The business-focused founder’s CV must contain stints at large consulting or investment banking firms, and they are expected to have attended one of a particular set of global elite universities. The technical founders must have experience working for highly successful big tech companies and hold advanced degrees from universities that everyone knows produce great engineers. Finally, because we are social beings, we feel more comfortable investing in folks who are within close proximity. Silicon Valley VCs invest only in companies based in the Bay Area of California. Chinese VC firms expect their portfolio companies to be based in Beijing or Shenzhen.
The net result is an echo-chamber of sameness. Everyone looks, talks, feels, believes, and lives in the same place. Therefore, everyone succeeds or fails together. This is the perfect milieu for a TradFi VC muppet whose goal is to minimize career risk.

When crypto project founders begged for VC capital to fund their mostly worthless projects in the wake of the ICO mania bubble bursting, they made a deal with the devil. To raise capital from VCs, mostly based in San Francisco, New York, London, and Beijing, crypto project founders had to change.