Welcome to Ploonge Exchange, a weekly newsletter about startups and markets. It is inspired by the Ploonge+ daily column, after which it is named. Want it in your inbox every Saturday? Sign here.
It’s a little difficult to sit down and write some animated notes about the current state of the tech startup market when the news has just come out that Russia must invade Ukraine in a short time. If you believe in democracy over autocracy, it’s a very dark day. And geopolitical clouds in our very near time horizon promise more bad news.
And yet, the news engine moves forward, and we have to do something with this space, so let’s talk about recycling capital in the cryptocurrency market to keep ourselves busy.
back and forth go
One result of the ever faster cadence of innovation in the tech world is that corporate venture capital work—both defensive and offensive—seems to start earlier and earlier in the life of companies.
OpenSea is the latest example of the trend. The company said earlier today which will launch OpenSea Ventures and a program it calls “Ecosystem Grants”, both “designed to support the creators, teams and emerging technologies that drive the global growth of web3 and NFTs”.
Companies that take capital from OpenSea will receive access to “OpenSea leadership” and OpenSea investors, including a16z, naturally.
Like the block notes, “OpenSea joins a number of cryptocurrency startups that have launched their own venture units, including unicorns Alchemy and FTX.” All of which, I will note, are private companies. It is common, then, for fast-growing blockchain companies with extra cash to start reinvesting that capital in other groups.
Gone are the days when Intel Capital was the paradigm for trading corporate ventures; Coinbase is probably the most respected corporate investment team right now, but its rivals are looking to take on it.
Or are they? There is a strange nuance to all this:
- Coinbase was supported while private by a16z
- Marc Andreessen remains on Coinbase’s board, along with Katie Haun, who recently launched her own cryptocurrency fund.
- Coinbase Ventures supports OpenSea
- a16z also supports OpenSea
- OpenSea is now making its own investment, in theory in conjunction with a16z to some extent given its promise
This is a web. a16z is also an investor in Alchemy, which is making your own investment. Open sea uses alchemy technology, it’s all very integrated. (That this level of centralization and family fraternization is the exact opposite of decentralization, or democratization, goes without saying.)
At what point does this whirlwind of capital-chasing-crypto-capital start to unravel and become more competitive internally? If Coinbase is going to launch its own NFT product as promised, how long will OpenSea want to stay close to its shared investor? What if Coinbase wants to sell infra and enter the Alchemy space? How could Coinbase not want to do this, frankly, given how much activity the latter company is seeing?
It is strange today that OpenSea is recycling capital into other ventures before finding its own outlet; but the pace of change in the cryptocurrency market seems to have made even companies with simple business models speculators, if not in the majority, at least to a more than modest degree. Wild! Is weird!
I’m trying to keep an eye on the closed network of major cryptocurrency players and their financial backers. To me, it’s even more centralized than most venture categories, which is a little weird. I can’t taste the bitter taste of bullshit I get out of my mouth when I keep reading about people pushing decentralized autonomous organizations, zero trust settings and the like, when it seems like the same people who made a big chunk of Web 2.0 money seem poised to reap the most rewards for anything for Web3 to become .
Alright, I’m going to fuck myself now and worry about the free society now and the fate of democracy. Let’s hope that by Monday Russia has not invaded Ukraine. — Alex