The question of whether Venture Capital or VC firms are good for the cryptocurrency industry has been raging passionately for some time now.

The main arguments encouraging VC investment is that they can provide beneficial funding for projects when they require it most; right at the beginning to allow their ideas to blossom. The opportunity to get the financing of many crypto projects via mainstream lending routes such as bank loans is greatly restricted for most, so by allowing for investment from the VC’s, very often with massive discounts to retail price, this at least allows the projects to get their idea off the ground and to hopefully evolve into something more significant.

There is also the fact that many of the VC’s are market makers within the crypto industry, these means their vast resources allow them to push specific projects when needed and keep the price inflated. This, of course, would be particularly beneficial to token holders of those projects and also allows further funds for the team to continue their work.

Now, the flipside to this discussion, however, is that the VC’s are in the long term very detrimental to the crypto markets as a whole.

For VC’s to provide much needed initial funding to projects, the projects will almost certainly offer 85%+ discounts to the funds. This, of course, is a considerable discount to what retailers will pay in the ICO or via other methods.

While the original funding may be achieved, this in the long term proves very often to be extremely harmful to those tokens price in the future. The reason being once the funds have received their tokens and are allowed to trade they will almost in all instances dump the tokens- completely depressing the token’s price and resulting in massive losses for retailers and the projects.

In rare cases, contracts are signed between the project and the VC’s which outline practices which cannot be taken that results in adverse effects for the tokens price, however, this is extremely rare, as the initial funding is almost universally favored towards the VC’s.

To further elaborate on this very prominent issue, Ameer Rosic, a cryptocurrency investor and co-founder of @Blockgks and @bountyoneio, has invited Eric Bahn– co-founder and general partner of the Hustle Fund, to appear on his podcast and deliberate this exact discussion. 

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