Messari Daily Brief March 19, 2021: Invest Like a VC

Accredited investor regulations have always pissed me off. The premise that only people that either own 1) over $1 million in assets, excluding their first home or 2) make an annual income over $200k are the only people qualified to invest in risky assets is ludacris. The hypocrisy of these regulations dumbfounds me daily. It’s akin to big brother SEC saying “hey, investing in this startup might cause you to lose all your money, please take your capital over to the roulette table where your odds are better”. While Vegas is designed to keep people in, investing regulations are designed to keep the 99% out.

The nature of crypto networks – open, permissionless, global platforms – has largely removed barriers that restricted early-stage investing to institutional investors like hedge funds or venture funds and allowed anyone to participate.

As a result, most individuals (unless you’re a U.S citizen, RIP) are able to invest in upcoming cryptonetworks and protocols without being accredited. And in the worse cases, crypto assets trade on the open market letting many individuals enter before some venture or hedge funds make their allocation. Crypto still isn’t perfect, but it’s easily 100x better than the traditional system.

If you can’t beat ‘em, invest like ‘em.

Still, just because you can invest, doesn’t mean you can outperform institutional investors, unless your r/DeepF**kingValue. Institutional investors often have dedicated teams and industry relationships that can give them an edge. Examining the portfolios of successful investors in the space can help anyone glean insights into what may be the next big trend.

We’ve tracked down many of the top VC firms and hedge funds in crypto and recorded their liquid portfolios (assets that trade on the markets). This of course could miss equity investments or investments in networks that are not yet live.

• 1confirmation
• A16z
• Alameda Research
• Arrington XRP Capital
• Binance Labs
• Blockchain Capital
• BoostVC
• CMS Holdings
• Coinbase Ventures
• Coinfund
• DeFiance Capital
• Digital Currency Group
• Dragonfly Capital
• Electric Capital
• Fabric Ventures
• Framework Ventures
• Fenbushi Capital
• Galaxy Digital
• Hashkey Capital
• Huobi Capital/Exchange
• Kinetic Capital
• LedgerPrime Capital

(Go Pro to access our full list of community screeners, including VC portfolio screeners for Multicoin, Pantera, Paradigm, Placeholder, Three Arrows Capital and more)

The public nature of these portfolios and the availability of most cryptoassets ensures that both institutional and everyday investors can get in on the action (and lose together too). Some of the best networks have launched directly to their communities, whether it be Bitcoin, Yearn, or other networks. This naturally helps the enthusiast investor who is deep into a community and knows its ins and outs as opposed to a large fund looking at dozens of term sheets each day.

In the traditional venture capital ecosystem, investments made in equity are illiquid for 3-10 years (Sometimes more, looking at you Stripe coming up with a Series H round). While platforms like Carta have improved the ability to trade illiquid stock, the market is still limited to accredited investors. Public tokens could level the playing field for anyone with access to a smartphone or computer. Hopefully, this results in better capital allocation over time and democratize an industry that has for too long been limited to the wealthy few.