Venture capital firms and large investors are driving up the prices of crypto startups. Boutique investment firms and family offices are being elbowed out by big venture capital firms, private equity funds, and even some pension funds.
VC Firms Driving Up Prices of Crypto Startups
Cryptocurrency firms are seeing high valuations due to large investors entering the space, according to Henri Arslanian, Crypto Leader at professional accounting and financial services firm PWC, also known as Pricewaterhousecooper.
In an interview with Bloomberg Thursday, the executive explained that boutique investment firms and family offices are being elbowed out by big venture capitalists, private equity funds, and even some pension funds. He noted that smaller venture capital firms are unhappy about this trend. Arslanian described:
Let’s say they’re looking at a deal and they believe it’s worth $10 million, and you’re seeing large VCs come in and put a bid in for a higher valuation. This is happening a lot with very early-stage companies, say, $5 million to $20 million — the prices are being inflated.
According to the State of Crypto M&A 2021 report, even though deal activity in 2020