Dragonfly's Open Letter to Portfolio Founders: The Industry Narrative Has Changed Dramatically—Survival Is Now More Important Than Ever!
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Dragonfly's Open Letter to Portfolio Founders: The Industry Narrative Has Changed Dramatically—Survival Is Now More Important Than Ever!
The entire industry has just shifted—you should reset your evaluation accordingly. Don't rely on old assumptions; we may see a significant transformation in how cryptocurrency works.
Navigating Web3 tides with focused insightsThis is a communication letter sent this morning by Dragonfly Capital to founders and partners of its portfolio companies, compiled by TechFlow.
Body:
I hope you are staying safe and grounded during these turbulent market conditions. You and your loved ones are likely deeply exposed to the crypto markets, and I urge you to put your well-being and health first.
Macro conditions are moving in the worst possible direction, for both cryptocurrency and growth assets.
We are long-term investors, and we know you're building for the long term—but you must assess the current market reality. In times like these, one priority overrides all others: survival—ensuring that you and your team endure until the market is ready for what you’re building.
Every bear market brings hardship and challenges, but those who weather the storm can reap the next harvest, creating generations of teams and products.
If you are fundraising, close your round as quickly as possible and retain the talent you need to build through this downturn. If you’ve recently raised capital, now is the time to focus on essentials and cut expenses—including product directions and headcount. If you’ve over-hired, reallocate your resources toward critical talent and product areas, and let go of the rest.
Focus is the name of the game. The history of technology is filled with teams that had the right idea at the wrong time—teams that never saw their vision realized. I don’t want to see that happen to any of you.
I say this not to frighten you—you should not fear this moment, but meet it seriously and with grace.
The entire industry has just shifted, and you should reset your expectations accordingly. Do not rely on old assumptions—we may see profound changes in how crypto works.
Here’s what we expect to happen:
1. Capital markets will slow down significantly, with many deals unable to close until investors absorb the new price levels.
2. A large amount of talent will enter the job market within the next three months, shifting negotiating power between talent and companies back toward normal levels.
3. There will be strong regulatory calls, some real and some performative, but greater-than-ever incentives to move innovative products overseas.
4. The market will become less speculative for a period, especially as retail investors no longer drive as much capital flow, many narratives will be reset, and we won’t see the same old stories play out again.
Each of you needs to internalize this differently. Your team needs to see confidence and direction from you—let them know you’re okay, and they’ll be okay too.
If you need us for anything—or just want to talk—we’re always here for you, thick or thin, green or red. We’ll stand with you because we believe in this industry, and because we believe in you. We look forward to continuing to be your partners in the days ahead.
— Tom, Haseeb, and the Dragonfly team
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