Canada Markets closed

Crypto: Venture capital signs ‘record deals’ on metaverse optimism, Decasonic CEO says

Decasonic Founder & CEO Paul Hsu joins Yahoo Finance Live to discuss optimism in the cryptocurrency markets, bitcoin dropping to its lowest level since July 2021, and the outlook for economic growth.

Video Transcript

- Welcome back, everyone. Bitcoin prices have been tanking, falling to about $32,985, their lowest valuation point since last summer. The selloff expanding beyond just bitcoin. You've also got Ethereum and crypto investing platform Coinbase also under pressure. Joining us now for more on the latest crypto selloff is Paul Hsu, who is the Decasonic founder and CEO. Great to have you here with us today. First and foremost, I just want to get your reaction to some of the broad-based selling that we're seeing also protrude over into the cryptocurrency landscape.

PAUL HSU: Thanks for having me. There's a lot of negative sentiment right now in the public markets, both crypto and big tech. However, in the private markets, we're seeing record fundings and record deals. There's a lot of optimism about the supercycle for the metaverse right now.

- Paul, how, with all due respect-- I mean, it does really feel like a disconnect when you see all this red on the screen-- and not just in cryptocurrencies, by the way, but across technology and other sectors. There's this pullback. There's concern about economic growth. There's concern about the Fed's tightening cycle. Why isn't that having more of a depressive effect on funding in the private market?

PAUL HSU: Fundamentally, there's been a lot of positive catalysts over the last few months. April was a record month both in terms of deals and funding. We're trending on a run rate of 2x year-on-year in venture funding for blockchain. If you look at the recent events, Meta announced this morning the NFT integration into Instagram, Fidelity rolling out bitcoin, available in 401(k). These are longer-term duration macro catalysts that impact early-stage blockchain VC.

- Paul, now we're seeing reports of Facebook curtailing its hiring. Do you think Meta has been too early to invest billions of dollars into the metaverse?

PAUL HSU: We are very early in the metaverse adoption. You're right earlier about Reid Hoffman's comments. If Meta is going to spend $10 to $12 billion a quarter in the metaverse and the whole industry of blockchain VC funding is $10 to $12 billion, they're right. You probably need to cut that back. What's tremendously positive is this talent that might be freeing up to work on Web3. And we're seeing that day to day, of talent coming into Web3 and metaverse and blockchain.

- But are they going to some of the traditional technology companies? Is that talent saying, I want to go to Facebook or I want to go to Twitter to work on those projects to bring NFTs to Meta Platforms and to the Twitter social media community that's already there?

PAUL HSU: You're seeing talent migrate to all parts of Web3, both the open metaverse, the closed metaverse, like you described, early-stage companies, late-stage companies. We're seeing a lot of founders get the ambition and the boldness to go raise venture capital from groups like ourselves at Decasonic.

- And Paul, I also want to ask you-- because Brad reminded me with his NFT comment-- what we've seen in NFT pricing as well, that that has come way down. And so I'm also curious-- when it comes to recruiting people to startups, to this next wave of Web3 and metaverse, is it tougher to come up with compensation packages when you see NFT prices fall, for example?

PAUL HSU: On average, NFT prices have come down. However, there's still a flight to quality. The Bored Apes just raised $320 million in land sales. This is a record amount, tremendously oversubscribed. And a lot of our deals, we're also seeing very similar oversubscription. So the best founders, the best projects are still seeing tremendous demand for the projects. The average project is still suffering the same type of losses. A lot of employees are seeing a good time right now to reset their stock options or RSUs, reset into a lower price similar to the prior bear markets we've had in technology.

- Paul, it's a fascinating situation right now. Paul Hsu, thank you for being here, Decasonic founder and CEO. Good to see you.