Summary
- Michael Dempsey said the digital-asset venture capital (VC) market has been effectively stagnant for about two years.
- He said both talent and investment capital are moving from crypto into the artificial intelligence (AI) industry.
- He also said crypto projects’ token incentive structures are struggling to align interests over the long term.
Forecast Trend Report by Period
The venture capital market for digital assets has fallen into a slump, with both talent and capital shifting to the artificial intelligence industry.
Michael Dempsey, managing partner at Compound, said in a recent Empire podcast interview that the crypto VC market has been effectively stagnant for about two years, Crypto Briefing reported on Nov. 14. Compound is a venture capital firm managing more than $200 million in assets.
Dempsey said tech founders were flocking to the crypto industry as recently as 2021, but attention has now shifted to AI. As a result, investment capital as well as talent is moving into the AI sector.
He also pointed to the token incentive structures used by crypto projects as a problem. While tokenization itself has meaningful potential, compensation systems built around tokens have struggled to align incentives over the long term.