Crypto Startups Seek 50-80x Revenue Valuations, 10T Holdings Rejects 200 Projects

Dan Tapiero, CEO of the crypto venture firm 10T Holdings, highlighted a significant issue in the crypto startup ecosystem during the Toronto Consensus conference on May 14th. He noted that many crypto startups are seeking valuations that are 50 to 80 times higher than their revenue, which makes it challenging for venture capital firms to achieve returns on their investments. Tapiero emphasized that this overvaluation makes it difficult for liquidity providers to see a return on their investments, as the high valuations do not align with the revenue generated by these startups.

Tapiero revealed that 10T Holdings has rejected over 200 projects due to overvaluation, including now-bankrupt companies such as FTX, BlockFi, and Celsius. The firm's investment criteria include enterprise valuations of 4-5 billion USD or more, with a market-sales ratio not exceeding 10 times. This stringent criteria ensures that the firm only invests in projects that have a realistic chance of generating returns.

Despite concerns about a valuation bubble, the cryptocurrency venture capital transaction volume in the first quarter of 2025 grew over 100% to reach 6 billion USD. This growth indicates that there is still significant interest in the crypto startup ecosystem, despite the challenges posed by overvaluation. During the same discussion, Pantera Capital CEO Dan Morehead suggested that venture capital firms adopt an "Equity + Token" combination investment strategy. This strategy involves investing in both the equity of a company and its tokens, which can provide a more balanced approach to investing in the crypto ecosystem. Morehead noted that 86% of the projects his firm invested in were profitable, and 22 of them became unicorn companies, highlighting the potential benefits of this investment strategy.