Dragonfly Capital Internal Letter: The First Priority Is Survival

22-05-13 12:07

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Original Title: "To All Dragonfly Founders and Friends"

Original Author: Tom Schmidt, Partner, Dragonfly Capital

Original compilation: czgsws & wzp, Rhythm BlockBeats

This is a letter we sent this morning to our portfolio company founders and partners. We thought it might be useful to a wider audience, so we're posting it here to share with you as well.

I hope you are staying safe and sane amid the turmoil in the markets. You and your family and friends may already be in close contact with the crypto market, I hope you put your own happiness and health above all else.

Overall, the macro conditions for both crypto and growth assets are deteriorating. We know you are a long-term investor like we are, but you must assess current market conditions. In a market like this, the imperative is: survive, and make sure you and your team survive until the market is ready for what you're building. Every bear market brings difficulties and challenges, but those who can weather the storm will reap the fruits of the next boom and create enduring teams and products.

If you are expanding, please stop as soon as possible and retain the talent you need to survive this downturn. If you've expanded recently, now is the time to focus on what matters and cut expenses. If you've over-hired, both in terms of product direction and people, focus your resources on key talent and product and drop others. . "Focus" is the name of the game. The history of technology is littered with teams that came up with the right idea at the wrong time and failed to see their vision realized. I don't want to see this happen to any of you.

I am not saying this to scare you - you should not be afraid at this time, but face it with seriousness and composure. The entire industry has just changed, and you should recalibrate your assessment of the current situation. Don't rely on old assumptions. We could see a huge change in the way Crypto operates.

Here’s what we expect to happen:

·Capital markets will slow down. At this time when investors are starting to digest new price levels, many deals will not close.

·There will be a large influx of talents into the market in the next 3 months. Bargaining power between employees and businesses will normalize.

There will be a strong regulatory voice. Supervision will become more and more stringent, and more and more innovative products will go overseas.

·During this period, the market will be less speculative, especially if retail investors are no longer trading large sums of money. Many narratives will be reset, old ones are no more.

Each of you will need to absorb these in different ways. Your team needs to see the confidence and direction you convey. Know that you're okay and they'll be okay too.

If you need help, or just want to talk, we are always here for you, for better or worse. We partner with you because we believe in the industry and because we believe in you and look forward to continuing to be your partner for years to come.

- Tom, Haseeb and the Dragonfly Team