Adam Draper, Founder and Managing Director of Boost VC, a virtual reality and blockchain accelerator, said at the Yahoo Finance All Markets Summit last week that the rise of ICOs around the globe meant VCs are suddenly competing against the world.
“I believe venture capital is an asset class that everyone should have access to and not everyone does, but suddenly ethereum comes along, creates an ERC20 smart contract and just completely destroys venture capital,” he said. “I think it’s awesome first of all, but now what’s happened is there are these projects that are like overgrown babies. They have $200 million or $300 million, and they’re dealing with seed stage problems and no product, and that’s where the opportunity is [for VCs] to help.”
Draper explained that VC firms can act as a mentor to startups in the crypto space and help to ensure entrepreneurs are working on the right project.
“It’s the first time we’ve had to wake up and say, ‘Wait a second, we’ve got to do something good to make the world better now’,” he added. “I think venture capital is going to be a thing, money management is going to be a thing, but I believe that the service of venture capital is going to have to evolve and be better.”
Alexia Bonatsos, Founder and General Partner of Dream Machine, a venture fund, said VC firms can act like co-founders by helping startups to hire people, meet influential people and attract investors.
She added that if a company needs to have a token in circulation in order for their project to work, then an ICO is a good plan. “If they don’t and they just want to make banana coin or some vehicle for speculation – if the token has no connection to what you’re actually trying to build – then don’t do an ICO,” she commented.