As the bull market continues, VC Brian D. Evans shares insights on how projects and founders can best approach and take advantage of the current bull run. He also comments on the difference in approach between a bull market in traditional finance vs. the crypto sphere.
Brian D. Evans, CEO and founder of BDE Ventures, has founded, advised, and consulted for a wide array of companies in the gaming, NFT, blockchain, and AI sectors, including ClubID, Mocaverse, and Candy Crush.
Our conversation with Brian is shared below.
Crowdfund Insider: What is the difference in approach to investing for VCs in a bull market vs. a bear market?
Brian D. Evans: Bull markets tend to bring a surge of investment dollars to crypto projects, generally making it easier for entrepreneurs to secure funding for their latest startup. In their haste to be a part of the bull market frenzy, VCs often let their guards down a bit and don’t do their due diligence. While securing money may be easier, so to is the potential for a bad return on investment.
On the flip side, VCs are much more discerning during bear markets, keeping a tight grip on their funds unless a project presents an airtight case for funding. It can be nearly impossible to secure sizeable investments and founders must truly be doing something special to warrant funds from less generous pocketbooks.
In my opinion, the cautious approach is the best approach, no matter how the market is performing. That’s not to say that I don’t think VCs should take risks, because ultimately, risks are what move the industry forward. But doing thorough homework to invest in the projects that deserve it the most is the best strategy in any stage of the market cycle.
Crowdfund Insider: What are VC investors interested in during this bull cycle?
Brian D. Evans: Every bull run is underscored by trending sectors at the current time. For example, the last bull run saw a huge influx of NFT-centric startups and millions of dollars flowed into anything that catered to digital assets. This time around, the buzzy narratives that are flooding the market focus on artificial intelligence, distributed computing, real-world asset tokenization, and decentralized physical infrastructure. I also believe that Web3 gaming integrations are going to have a resurgence this year.
It’s interesting to see the evolution of start-ups in the blockchain space and how we continue to move closer and closer to more mainstream integrations. Projects seem to finally be addressing problems that need to be solved and developing use cases that truly have the potential to attract mainstream audiences.
Crowdfund Insider: How is this bull market different from the last one?
Brian D. Evans: The approval of the first spot Bitcoin ETF in the US makes this bull market different from the many that have come before it. The Bitcoin ETF is a major step in closing the gap between crypto and traditional finance, so it might impact the investment pattern that we have come to expect based on behavior in previous cycles. It will be interesting to see how VCs adapt their strategies and patterns this time around.
The industry also seems to have matured during this last bear market a bit. Companies that were smart during the last bull cycle and built a solid foundation when the money was flowing then used the relative quiet of the bear market to further build out their projects, rather than abandoning them during the uncertainty. This allowed them to come out strong when the cycle came back around and capitalize on the influx of heads turning back toward crypto. These “tenured” companies will push the boundaries of the industry and show that blockchain-based projects are here for the long haul.
Crowdfund Insider: How can projects and founders take advantage of the current bull run?
Brian D. Evans: It can be hard for projects to break through the noise during a bull run because there are so many startups cropping up in an attempt to take advantage of the hot market. To be successful, founders need to focus on the audience that truly needs their product, and then meet them where they are. That might be traditional media and marketing, community building on channels like Discord or Twitter, sharing expertise on platforms like LinkedIn, meeting people in person at conferences, or, most likely, a strategic combination of many of these tactics.
By establishing a strong base of supporters, you automatically spread your project far and wide by letting your community be your advocate. Creating a strong digital footprint is also one of the best ways to show potential investors that there is truly market value in your project, you aren’t just solving a problem that has already been solved and are fulfilling a need that consumers are willing to pay for.
Crowdfund Insider: How should retail investors approach the bull run?
Brian D. Evans: Just as I advise VCs to proceed with caution no matter what the market is doing, the same sentiment applies to retail investors. It can be hard not to give in to the FOMO during a bull run, especially when it seems like everyone is getting rich en masse.
I have three key pieces of advice for retail investors that are fairly simple, but often overlooked in the craze that comes with a hot market. First, dig in to any project you are interested in investing in and do your own thorough research. Do not rely on influencers or super fans to tell you where to put your money.
The second is to diversify your crypto portfolio, just as you should with any investment strategy. As tempting as it can be to put all of your eggs in one basket for a hyped project, the risk vs. reward is usually not worth it. There are swaths of stellar crypto projects out there for you to explore and spread funds across.
My final words of wisdom: identify your risk profile and don’t overextend your funds. If this is your first time delving into crypto investments, start small and only invest what you can afford to lose or not have access to for months at a time. Although you hear a lot of “get rich quick” stories in this space, crypto is still a newer industry and every investment involves a decent amount of risk. Proceed with caution and stick to what you know about your appetite for risk.
