Not every VC has to be thesis driven, Dragonfly Capital GP says

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Thesis driven VCs look good, until they don’t

As someone who has spoken to a number of venture capitalists throughout the years, many of them have said they’ve sticked to stick to their guns on strategy, regardless of market conditions.

And to be fair, it makes sense: having conviction on a topic or sector can make a firm more well-known and respected for their specialization and beliefs…if they’re right.

At the same time, there are generalist VC firms that take a more broad approach toward investing across a number of areas.

“For us, we tend to be much less thesis driven than a lot of VCs in the space,” Tom Schmidt, general partner at Dragonfly Capital, said on Talking Tokens podcast.

(Listen to the episode on Spotify, Apple Podcasts and YouTube.)

“Other funds will put out manifestos on what they think…sometimes that works, it allows you to be contrarian and if you end up being right, that works.”

But other times, it’s a “dangerous, slippery slope” if the thesis is wrong. Schmidt joked it’s like being the last person on an island.

For Dragonfly, they’re focused on investing in startups and ideas that solve problems they have, create apps they’d like to use and provides data showing retention and strong metrics, he added. “These are all gold standards when we’re looking at products.”

Out of its most recent $650 million fund that launched in April 2022, their focus has been on those “buckets,” Schmidt added.

When its third fund was announced over two years ago, I interviewed with the firm’s managing partner Haseeb Qureshi — and he also concurred on Schmidt’s recent stance.

“If you’re a crypto investor, I don’t think your job is to pick out one sector that you think will be the future,” Qureshi said at the time.

In the past two years, the industry has explored a lot of new categories like synthetic dollars and liquid-staking derivatives.

“Those didn’t exist two years ago,” Schmidt said. “If you weren’t looking at what was happening [in the space] and taking those lessons you miss out on the next wave of opportunities.”

Check out the next section for more details and the full episode.

The latest Talking Tokens podcast 🎙️

For this week’s Thursday episode, I sat down with Tom Schmidt, general partner at Dragonfly Capital.

We talk about the current market cycle’s array of crypto startups, sectors he’s watching and interested in investing in, the state of crypto VC, his best investments, advice and more.

Talking Tokens episodes are released on Spotify and Apple Podcasts at 6AM EST or YouTube at 10AM EST every Tuesday and Thursday. Listen in!

Make sure to subscribe to keep up with the latest episodes. Feel free to leave a review and tell us your thoughts.

Monitoring blockchains

Looking at some of the biggest developments onchain.

• Gaming-focused Eclipse launches platform on Avalanche

• Developers are ready to launch OP_NET testnet, to bring smart contracts and DeFi to Bitcoin

• Aptos dApps are seeing significant 7-day growth, with Baptswap up 745% during that timeframe, according to DappRadar data 

Taking on the tokens 

The total crypto market cap increased 1% in the past 24-hours to $2.02 trillion. It declined 12.93% over a 7-day period.

As for the largest cryptocurrencies by market cap…

These metrics were taken prior to publication on Thursday morning EST.

Other numbers we’re eyeing…

• $513.1M - that’s how much profit CoinShares brought in during Q2 — but not all that glitters is gold as it lost $481.42M on the “fair value of digital assets” bringing its total income to about $32.6M

Money and people moves

Latest updates on crypto startups that secured funding and industry players who are starting something new.

1. Dawn raised $18M in a round led by Dragonfly to build decentralized autonomous wireless networks

2. Crypto vet Meltem Demirors raising $75 million for two venture funds under Crucible Capital (Fortune)

3. MicroStrategy’s Saylor Says He Personally Owns About $1 Billion in Bitcoin (Bloomberg)

4. Starknet Foundation CEO Diego Oliva is stepping down and will be replaced by James Strudwick

5. Metaplanet to raise $70M to buy more bitcoin (Bitcoin Magazine)

Talking points for the road 

Here’s some headlines and topics that you can talk about at your next dinner party, crypto event or on a first date to look smart (results may vary.) 

1. Why Ripple is bullish on Dubai and growing its presence (DL News)

2. Memecoins are the hottest sector in crypto—but 97% of them are already dead (Fortune)

3. 'Huge' DeFi announcement teased by two of Trump's sons may be called World Liberty, trademark records show (The Block)

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Please note that this content is for informational and entertainment purposes only. Any views shared should not be considered financial advice, nor should it be used to make investment decisions. Cryptocurrencies are high risk and you should consult a financial professional before making any financial decisions. Make sure you do your own research. We may have a direct or indirect financial interest in content mentioned in this newsletter.