Podcasting, crypto and favorite 2021 finds with Acquired's Ben Gilbert & David Rosenthal | E1337

Valuation Discipline

Maintaining valuation discipline is crucial in investment decisions. Jason Calacanis argues that outrageous valuations can indicate founders optimizing for the wrong things, potentially leading to poor outcomes 1. David Rosenthal agrees, noting that comparing offers from top-tier firms to those from lesser-known ones can reveal significant differences in long-term value 1. He also highlights the irrationality of token-based valuations, which often lack the structure and oversight of traditional equity investments 2.

In crypto, I'm seeing a bifurcation where if people are raising on the traditional structures, where they're raising equity, they're a little overpriced relative to the regular insanity that's happening in the fundraising market right now.

--- David Rosenthal

Jason adds that the global, unregulated nature of crypto investments further complicates valuation accuracy 1.

   

Investment Strategies

Comparing traditional venture capital with crypto investments reveals differing strategies and expected returns. Jason Calacanis explains that tokenized finance allows the public to invest in startups early, potentially driving up valuations rapidly 3. Ben Gilbert contrasts this with traditional venture capital, where investments are more calculated and spread over numerous small bets to mitigate risk 4.

I used to be a professional venture capitalist for over a decade. Very traditional. I'd make one to two investments a year. I'd sit on the board. My model has completely changed now.

--- Ben Gilbert

David adds that token valuations often require a different mindset, as they must account for future community allocations, making them inherently more expensive 5.