We have been working on several crypto-related projects lately. One constant question we get from outsiders whenever the topic arises is “Aren’t ICOs over?”. This question marks a back-handed sort of progress. A year ago, we usually encountered what we have taken to calling the Crypto-Pause – that moment after we raise the subject of crypto when our interlocutor has to pause and carefully consider their response. There is much less outright skepticism about crypto today, but the sense remains that things are not well in the Land of Blockchain. Nonetheless, the answer to that question is: No, things in the crypto markets are pretty healthy. And there are still many investors looking to deploy capital intelligently in the crypto markets.

Obviously, the crypto markets have fallen A LOT this year. Almost all of the major tokens are down significantly from their 2017 All-Time Highs. The number of coin sales or ICOs are down even more. So something has changed. We are not ignoring that, but we frame the problem differently.

In our view, 2018 is just a normal year. (Many major tokens are actually up over the past 12 months.)  Last year, 2017, was the anomaly. That was the year when almost literally anything would fly. The Bubble Mentality and Fear of Missing Out had captured everyone’s mindset. By contrast, this year the markets have returned to normalcy. Just like 2003 and 2004 were not a bad time to buy Internet stocks (e.g. Google went public in 2004), the years after the Bubble burst felt awful to live through, but were a good time to build a business.  In our opinion, so too is 2018 (and probably 2019) a good time to go out build a crypto business without all the distractions of “Lambos for Everyone!”.

Similarly, the market for raising crypto capital actually looks fairly reasonable. There are still several dozen legitimate crypto investors out there looking to invest or purchase coins. Many of these funds were built with long-term horizons written into their investment charters. So maybe 2018 is just a rough year for short-termers. If our now-crypto-heavy Twitter feed is any indication, there is a lot less discussion about Technical Analysis and one-day trading patterns and more long threads about investment theses and business models.

True, some things have changed. It is now much harder to raise crypto funds for a project or company. We would argue this is good news. Companies with real products and real technology can still raise money. Fly-by-night scams and speculative PowerPoint products no longer have ready access to funds. Companies need to have lawyers and accountants and compliance, which again we argue is a good thing. While it is more expensive to start a business with crypto funds than it used to be, the reality is conditions were too loose in 2017 and have now achieved a semblance of normalcy.

Admittedly, this is bad news for a lot of investors, funds and companies that went out last year. Crypto investor ranks, especially in Asia, are now much reduced from a year ago. And many of those investors still left are now as likely to ask companies to sign up for their compliance software as they are to invest in the company  itself.

Our sense is that raising a round of crypto investments now looks a lot like raising a venture round. The investors behave a lot like venture investors, and ask a very similar set of questions. The two big differences are: crypto investors want to talk a lot more about governance mechanisms; and they are battle-hardened in a way that many new venture investors are not (yet). They are much more wary, and much more likely to say No early  on. They were bitten by the worst excesses from last year and are thus twice-shy investing now.

Despite all this, most serious crypto projects we speak with now are fairly content with their reception from and treatment by crypto investors. Crypto is still very much about buying into the vision of the future. For those of us living through the Crypto Bear Market there is the grim camaraderie of the foxhole where we are all believers in that vision.