Key Takeaways
- • Michael Dempsey, managing partner at Compound, said the digital-asset venture capital market has been effectively stagnant for about two years.
- • Compound, a venture capital firm managing more than $200 million in assets, is among the crypto-focused investors describing the slowdown.
- • Dempsey said both talent and investment capital are shifting from crypto into artificial intelligence, after tech founders flocked to crypto as recently as 2021.
- • Dempsey identified token incentive structures as a core problem, arguing they have struggled to align interests over the long term despite tokenization's potential.
Summary
Michael Dempsey, managing partner at Compound, said in a recent Empire podcast interview that the crypto venture capital market has been effectively stagnant for about two years, according to Crypto Briefing, which reported the remarks on Nov. 14. Compound is a venture capital firm managing more than $200 million in assets.
Dempsey said technology founders were drawn to the crypto industry as recently as 2021, but attention has since shifted to artificial intelligence. As a result, both investment capital and talent are moving into the AI sector, leaving digital-asset venture funding in a prolonged slump.
Dempsey also pointed to token incentive structures used by crypto projects as a structural problem. While he acknowledged that tokenization has meaningful potential, he said compensation systems built around tokens have struggled to align incentives over the long term.
The comments suggest that the slowdown reflects both competition for founders and capital from AI and unresolved design issues within token-based models, two factors that may weigh on digital-asset venture activity for some time.
Dempsey said technology founders were drawn to the crypto industry as recently as 2021, but attention has since shifted to artificial intelligence. As a result, both investment capital and talent are moving into the AI sector, leaving digital-asset venture funding in a prolonged slump.
Dempsey also pointed to token incentive structures used by crypto projects as a structural problem. While he acknowledged that tokenization has meaningful potential, he said compensation systems built around tokens have struggled to align incentives over the long term.
The comments suggest that the slowdown reflects both competition for founders and capital from AI and unresolved design issues within token-based models, two factors that may weigh on digital-asset venture activity for some time.
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