To All Dragonfly Founders and Friends | by Tom Schmidt | Dragonfly Research | May, 2022


This is a letter that we sent to our portfolio company founders and partners this morning. We thought it may be useful to a wider audience, so we are publishing it here to share with you as well.

I hope you are staying safe and sane during these turbulent market conditions. You and your loved ones likely have had a lot of exposure to crypto markets, and I hope that you are placing your well-being and health above all else.

Macro conditions are turning for the worst, for both crypto and growth assets generally. We’re long-term investors and we know that you’re building for the long haul, but you must take stock of the current market conditions. There is one imperative in a market like this one: survive, and make sure you and your team can live until the market is ready for what you’re building. Every bear market presents difficulties and challenges, but those that are able to weather the storm get to bear the fruit of the next harvest and create generational teams and products.

If you are in the process of raising, close your raise as quickly as possible and retain the talent you need in order to build through this downturn. If you’ve recently raised, now is the time to focus on what’s important and cut the fat, both in product direction and in personnel if you’ve over-hired. Direct your resources on key talent and product areas, and discard the rest. Focus is the name of the game. The history of tech is filled with teams with the right idea at the wrong time, who did not see their visions manifest. I don’t want to see that happen to any of you.

I don’t say this to scare you — you should not fear this moment, but instead face it with seriousness and poise. The whole industry has just shifted, and you should reset your evaluation alongside it. Don’t rely on old assumptions. We could see massive changes in how crypto works.

Here is what we are expecting will happen:

  • Capital markets will slow. Deals won’t get done for a while investors start to digest the new price levels.
  • Lots of talent will flood onto the market in the next 3 months. The bargaining power between talent and companies will shift closer to normal.
  • There will be strong calls for regulation. Some of the regulation will be really bogus. There will be more incentive than ever to offshore the innovative stuff.
  • The market will be less speculative for a while, especially as retail investors are no longer driving as much flows. Many narratives will get reset. We will not see the same old stories play out.

Each of you will need to internalize this in a different way. Your team needs to see you communicate confidence and direction. Let them know that you’re OK, and that they’ll be OK too.

If you need anything from us, or just want to talk, we’re always here for you, thick or thin, green or red. We partnered with you because we believe in this industry, and because we believe in you. And we look forward to continuing to be your partner for years to come.

– Tom, Haseeb, and the Dragonfly team

Credit: Source link

Leave A Reply

Your email address will not be published.