Venture capital funds are organizations that invest into risky assets. Cryptocurrency funds are doing the same thing, so what’s the difference? Let’s find out.
Venture capital funds represent an integral part of the financial world. The very word “venture” speaks loud enough about the nature of their activity, which means that their investments can go into either already established companies or even raw business ideas without much strategic groundwork ready, or both. It is the high risk combined with a similarly high growth potential that attract venture funds to these kinds of investments. Such organizations help young start-ups that are unable to gain funding from banks or access other traditional funding mechanisms because of their status. However, there is always a trade-off: VC funds often seek to gain a significant ownership stake in the company so that later they can sell it at a profit. It is a legitimate strategy in the context of the traditional world of finance.
Crypto funds, on the other hand, invest into cryptocurrency and blockchain projects as well as cryptocoins themselves. Such companies appeared on the market in 2015-2016 right around the time the cryptocurrency industry saw a rise in public interest. It is no wonder – the total market capitalization of this industry continues to grow, the storm of attention from retail investors continues unabated in a time when a profit of 100, 1000 percent and even more is possible in a short period of time.
One other interesting aspect about this entire industry is that the very nature of cryptocurrencies and crypto funds allows for even more freedom than securitized assets which had been unregulated by the American SEC until 2008. Regulating crypto funds in the same way as venture capital funds is essentially impossible meaning this market sector will continue thriving in the coming years.
