“A bull run causes VCs to throw money around recklessly,” explains VC founder Weights.

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More than $731 million was invested in crypto startups in March as venture capital (VC) money began to return to crypto startups driven by positive news and recent price increases. Brian D. Evans, CEO and founder of VC fund BDE Ventures, believes bull run ‘manias' are causing some VCs to “throw money around without doing a lot of due diligence.”

According to Evans, this same movement occurred in the previous bull run between 2020 and 2021 and explains the movement that preceded it. However, during bear markets, the VC playbook is the polar opposite.

“VCs, that is, don't feel a lot of FOMO. [fear of missing out] And in turn, they are very intelligent when it comes to researching potential investments. I think it's good to be savvy and cautious in both bear and bull markets, but it's good to be willing to take the risks that encourage scary projects and in turn help them get into the market,” Evans explained.

Plus, while every bull run in the crypt sees new VC money, this time may be different. The initial approval of a Bitcoin-based currency in the US is closing the gap between traditional finance and crypto, and this is likely to influence the investment style of VCs.

I think over time we will see a further melting of the worlds of crypto and traditional finance, which will lead to new, more crypto-native players opening up funds and so on, and vice versa. In the latter case, we're seeing BlackRock, for example, looking to virtualize assets on Ethereum. But this will take time to put in place and will require strong legislation at the federal level in the United States that provides a clear and supportive framework for the industry. But I can see a world in the near future where ETFs are branded and sold entirely off-chain.

“Hyped” sectors

In new VC money, bull runs are also characterized by the pursuit of trending narratives or the most ‘overrated' sectors of the crypto industry. BDE closely follows projects related to artificial intelligence, distributed computing, real-world asset simulation, decentralized physical infrastructure, and gaming.

“As blockchain continues to evolve, I expect new use cases to emerge in the coming months and years. The amazing thing about crypto is that it's a new technology and design space, with all kinds of new ideas and projects emerging to solve broad problems in deeply novel ways.” Evans reported.

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