Too many crypto startups are pricing themselves out of venture capital funding by chasing valuations far exceeding their revenues, according to Dan Tapeiro, the CEO of crypto-focused venture capital firm 10T Holdings.
“For some reason, founders and CEOs think that they should be raising capital at 50 to 80 times revenue. So that makes it very hard for us to make a return for our liquidity providers,” Tapeiro said while speaking in a panel discussion at the Consensus conference in Toronto on May 14.
“So a lot of those deals we just pass almost automatically, even businesses that we really like, we won’t invest in if the price isn’t reasonable in the beginning.”
10T Holdings has passed on over 200 companies for similar reasons, including the now-bankrupt FTX, BlockFi and Celsius, Tapeiro said.
Tapeiro said 10T Holdings looks for crypto projects that have valuations above the $400 million to $500 million range with a valuation-to-revenue ratio of 10x or less.
VCs often prefer lower valuations because they offer more upside potential with less risk.
Realistic valuations often make follow-on funding rounds more attractive to investors while also simplifying the exit process.
“Valuation is very important,” Tapeiro said.
Despite Tapeiro’s comments, it appears that crypto startups have had no problem attracting VC funds, as PitchBook reported on May 13 that the total value of crypto venture capital deals rose over 100% quarter-on-quarter to $6 billion in Q1 2025, while the number of deals only increased by 8.8%.
VCs should diversify their bags
Also speaking alongside Tapeiro was Pantera Capital CEO Dan Morehead, who said more VCs should opt to receive a mix of private equity and tokens when investing in crypto startups.
“Each one has their pros and cons, and then they go in these wild pendulum swings where sometimes tokens are really expensive and ventures cheap. Sometimes it’s the opposite.”
“So as an investor, I always advocate people investing in a wide spectrum of tokens and ventures.”
Morehead’s Pantera has taken a more aggressive approach than 10T Holdings over the years and seen considerable success, making a return on 86% of the startups it invested in, with 22 of those reaching unicorn status (companies reaching $1 billion valuations).
