The dynamic ebb and flow of the cryptocurrency market are much like a barbell layout, as observed by Shima Capital founder, Yida Gao. A surge in crypto’s venture capital landscape, primarily critiqued for its bear-market constraints, underscores this analogy. The instances where infrastructure deals fair remarkably well during crypto winters, owing to the prolonged project timelines and cost-effective talent acquisition, amplifies the narrative, as stated by Gao.
Parallelly, the other end of the barbell features consumer apps, particularly gaming. A surge in gaming during bear markets, coupled with the harmonious amalgamation of tokenomics and digital assets into a shrewd gaming ecosystem, has underlined the growth of this section. Since 2021, Shima Capital has endorsed over 100 nascent firms with a considerable investment pool ranging from $500,000 to $2 million.
Bill Ackman and cryptocurrency-focussed venture firm Dragonfly, amongst others, backed Shima’s initial venture capital fund of $200 million dedicated for Web3 projects. Shima’s notable portfolio enlistment includes analytics firm Web3Go, blockchain gaming company Intuition, and decentralized finance startup Maverick Protocol.
However, the inflated sizes of established crypto funds have raised concerns for Yida Gao. The slightest space, he recognized, was no longer funding Web3 companies’ budding stages, and angels and smaller funds lacked sufficient resources to back founders. Consequently, Shima emerged as a rescue platform to satiate this vacuum for Web3 founders by investing at the earliest lifecycle stages, proving to be a safe haven amidst market-valuation volatility.
Dedicating over half of Shima’s team to operational support entailing community building, tokenomics, and more, the firm ventured into initial stages of investments. Despite a rigorous bear crypto market that already potentiated risks for venture capitalists, a multibillion-dollar market turmoil arose with the breakdown of centralized exchange FTX and the subsequent collapse of crypto-friendly banks like Silvergate, Signature, and Silicon Valley.
Fortunately, Shima’s extensive investment and partnership due diligence paid off, with minimal exposure faced by a handful of portfolio companies. Undeterred by the initial market setbacks, Shima Capital, viewed these as an opportunity to boost its banking associations and safeguard future risk, motivating its founders towards diversifying funds across multisig wallets, bank accounts, and brokerage accounts. The austere venture capitalist landscape, intertwined with diligent banking partnerships, is shaping Shima’s investment, incubation, and portfolio platform in its evolving journey.
Source: Coindesk
