A thought piece by Crypto Fund 1 General Partner, Nawaz Ahmed.

Raising in the ‘crypto winter’

Media commentary around blockchain, web3 and crypto over the past few weeks has been at best entertaining; and at worst downright misinformed as commentators (I use that word loosely - some have a very solid background knowledge; while some have very little other than a desire to write what’s most popular in order to drive viewership numbers) have scrambled to enter the fray and have their say on the ‘crypto winter’. 

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As someone currently raising for GD1 Crypto Fund 1, I’ve been asked a LOT of questions of late…and if those around me haven’t been bold enough to ask them, I know many are thinking about them. 

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In the interest of full transparency and a desire to add facts (not hyperbole) to the assumptions out there, I thought I’d take a bash at these three:

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> How has the market downturn affected our fund? 

> Are we still investing? 

> How are you doing in this market?

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I’m more than ok!

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Let me address that last one first because if you’re reading this, there is a strong chance that we’re either colleagues, friends or future friends: I am doing great. 

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It has been incredibly insightful raising a fund while simultaneously talking to and investing in talented founders and their teams. Being in crypto since early 2017 means I have gone through a full market cycle. The current status of these technologies is much stronger than it was years ago, which makes me very excited. How can I say that? Because innovation doesn't stop during a recession. 

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Let’s be clear; we’re not buying Bitcoin!

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The other two questions have equally simple answers. 

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The market may be facing a significant downturn, but this does not affect how we operate as a fund - which means we are very much still investing. 

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A clarification I have had to make more than a few times is that GD1 Crypto Fund 1 will not be investing or trading listed tokens like Bitcoin or Ethereum. We will only be investing in early-stage projects and companies who are building the next generation of applications and infrastructure to scale web3 and crypto.

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We’re excited about what’s on ‘the other side’

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When it comes to how price activity reflects the private markets, Chris Dixon describes this best in his essay ‘The Crypto Price-Innovation Cycle’. Dixox explains that there are 5 phases: 1) the price of Bitcoin and other crypto-assets goes up, 2) leading to new interest and social media activity, 3) leading to more people getting involved, contributing new ideas and code, 4) leading to projects and startups being created, 5) leading to product launches that inspire more people, eventually culminating in the next cycle.

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Source: https://a16z.com/2020/05/15/the-crypto-price-innovation-cycle/

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Keeping this cycle in mind, following the increased price activity over the past few years - which has led to significant media attention and interest - we have seen the entry of many large institutional investors; as well as seasoned operators from web2 companies, traditional finance companies and also exited entrepreneurs now entering the web3 space. They are either joining or starting their own web3 companies. 

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Naturally, this means that the next few years will see the launch of new products and services, culminating in the next cycle.

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We are incredibly excited to be able to support founders through these uncertain times and are looking forward to the incredible innovation that will arise following this downturn.

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