In 2023, high interest rates and persistent inflation concerns have seen venture capital (VC) investors pull back significantly. As the flow of investment has dried up, many startups have been forced to accept down rounds. Joining major FinTechs like Revolut and Stripe, crypto firms including Blockchain.com and Worldcoin have raised capital at a lower rate this year.
Although a recent market rally has seen fundraising pick up somewhat, the long-running VC drought continues to present an opportunity for investors. Among them, Crypto 1 hopes to secure discounts of up to 80% as it targets struggling Web3 startups like Animoca Brands and Chainalysis.
Launched in March this year, C1 is a $500M investment fund with a remit to capitalize on opportunities in the secondary market for digital asset companies.
A C1 pitch deck cited by The Australian Financial Review said: “Due to current market conditions in the public and private markets, hyperinflation and rising interest rates we believe the digital assets market offers very attractive valuations in the secondary market.”
In other words, the fund has its eyes on startups that generated multi-billion dollar price tags during previous Web3 investment sprees but still need additional capital to see them through to profitability.
During its last funding round Animoca Brands was valued at $5.9 billion, while Chainalysis last raised capital at an $8.6 billion valuation. Despite both firms raising significant sums last year, C1 is apparently looking to snap up shares at a significant markdown.
According to the report, the fund has offered to buy Animoca Brands shares at $1.12 AUS – just a quarter of their price in 2022, when investors paid 4.5 Australian dollars per share.
Meanwhile, C1 could potentially acquire a $30 million stake in Chainalysis that would price the company at just 27% of its previous valuation.