Crypto Startup Valuations Challenged by Market, Warns VC Expert

In the world of crypto startups, misjudging valuations can be a costly mistake, leading to wasted time and unfavorable fundraising outcomes. This is the sentiment expressed by Hootie Rashidifard, managing partner at hash3xyz. 
 
Crypto venture capital has hit its lowest point since late 2022 due to fund exhaustion, poor public performance, and perceived lack of innovation. These factors have culminated in declining valuations and investor caution. 
 
Rashidifard recently posted on X stating that setting high valuation expectations for your startup before engaging with potential investors can lead to significant waste of resources and time. Founders who overestimate their startup's value may end up having to lower their expectations later, which could result in less favorable partnerships or suboptimal terms. 
 
According to Rashidifard, many venture capitalists are now more likely to pass on deals if approached with a revised lower valuation, as this sends out signals that "everyone has already looked and passed for whatever reason." 
 
Instead of being rigid about their valuation expectations, founders should adopt a more flexible approach—either set the valuation lower than what they aspire for or let market dynamics determine it naturally. As momentum builds up around the offering, the price can always go up; those committed would feel better about paying more because they've won the deal. 
 
There is also an observed trend where some founders wait for favorable fundraising environments, which, according to Rashidifard, can be counterproductive as these conditions may not improve soon enough, making them lose valuable time. 
 
Meanwhile, VC-backed tokens seem to struggle long-term, with notable price declines witnessed over recent months sparking industry debates about underlying causes. In May @tradetheflow_, a crypto researcher at SwissBorg revealed through an X post that 80% of tokens listed on Binance since early 2024 had lost value since listing—most were backed by major venture capital firms like Coinbase Ventures, Pantera Capital Paradigm, and Dragonfly. 
 
Addressing these concerns, Haseeb Qureshi of Dragonfly Capital suggests that the token price drops have less to do with VC dumping and more about broader market dynamics. He noted that stability persisted until a widespread market downturn in April influenced by geopolitical tensions. 
 
Qureshi also debunked theories of venture capital manipulation, noting that most VCs have long vesting periods and are still locked into their investments. 
 
In conclusion, misjudging crypto startup valuations can lead to wasted time and unfavorable fundraising outcomes. Founders should adopt a flexible approach towards valuation, being prepared for possible downward revisions while understanding the impact of broader market dynamics on their startup's value proposition.