The mood among leading venture capitalists at Consensus Hong Kong was not one of retreat, but recalibration, as the crypto market experienced a prolonged downturn.
Haseeb Qureshi, managing partner at Dragonfly, described today’s venture capital market as a “bar”: on one side, proven verticals that accumulate at scale; on the other, a restricted set of high-risk next-generation bets.
“There are things that are working, and it’s like if you scale them up, you go even further,” Qureshi said, pointing to “stablecoins, payments and tokenization in particular.” In a market cooled by speculative excesses, these are the sectors which still demonstrate product-market and income adequacy.
On the other side is the intersection of cryptography and artificial intelligence (AI). Qureshi said he is spending time on AI agents that can perform on-chain transactions, even if “you give crypto to an AI agent, they’re probably going to lose it in a few days.” The opportunity is real, as are the attack vectors and design flaws.
The cautious tone reflects lessons learned. Qureshi said he initially dismissed non-fungible tokens (NFTs) as “definitely a bubble,” only to reverse course months later and support infrastructure plays like Blur. This experience, he said, reminded us of the need to balance conviction and the ability to adapt in rapidly changing cycles.
Dragonfly also missed an early opportunity in the Polymarket prediction market.
“We were actually his first term sheet,” Qureshi said of founder Shayne Coplan, but it was adopted when a rival fund offered a higher valuation. “Miss generational,” he called it, although Dragonfly later joined a 2024 round ahead of the US election and is now a major shareholder. The takeaway: Thematic conviction, in this case around predictive markets, can take years to bear fruit.
Mo Shaikh of Maximum Frequency Ventures argued that a company’s success in crypto always depends on long-term horizons. His best thesis, he says, was not a trade but a 15-year bet that blockchain could revamp financial risk systems.
“Have a 15-year timeline,” he advised, urging founders and investors to resist thinking in an 18-month cycle.
If the venture capital environment appears tighter, data from Pantera Capital bears this out. Managing partner Paul Veradittakit said crypto-VC capital grew 14% year-over-year, even as the number of deals fell 42%, evidence, he said, of a “flight to quality.” Investors focus on “accomplished entrepreneurs” and “tangible use cases.”
After more than a decade of crypto fundraising – from early $25 million funds dominated by family offices to today’s $6 billion platform – Veradittakit sees institutions increasingly taking the next step. But his advice to founders in a weaker market was direct. “Focus on product, market fit… If there’s a token, it will come naturally.”
In a retrograde cycle, the project’s message is clear: scale what works, experiment selectively, and don’t confuse narrative with fundamentals.
