Yesterday, venture capital firm a16z purchased 6% of the total Maker (MKR) stablecoin supply for $15 million. It’s the latest investment disclosed by the fund since their sizable commitment to the Dfinity Foundation in late August. And with an initial runway of $300 million, more will follow.
On that note, the focus shouldn’t be on why a16z invested in Maker — it’s arguably one of the more promising algorithmic stablecoin projects in the market — but rather how the investment was made.
Meltem Demirors kicked off the conversation, explaining why she believes the sale is a display of poor governance and project management by Maker:Source: Twitter
(If you haven’t read the full thread, carve out some time. As us millennials say, it is fire.)
Here’s the condensed argument: Maker’s team made the deal behind closed doors. Given that Maker token holders were expected to have a say in major decisions… that’s problematic.
And the deal is notable. Crunching the numbers, $15m at 6% implies a $250m valuation — a ~20% discount compared to Maker’s current mkt cap of ~$311m.
Which reminds us… market cap is a crummy valuation metric. Watch a couple minutes of Nic Carter’s talk at Honeybadger 2018 or rifle through his slide deckto see what we’re talking about.Relatively speaking, discounts are nothing new
Venture capital firms and token discounts go together like white on rice. Sure, many kickbacks are outright criminal (advisors have reportedly received discounts of at least 900% for some projects), though there’s no denying that VCs bring a slew of resources to the table.
Not to mention that a16z’s investment is, by all definitions, a smart business play. Passing Meltem the mic once more, a16z is, in a sense, buying distressed companies on the cheap.Source: Twitter
With so many ICOs strapped for cash due to 1) poor treasury management and 2) the falling price of ETH, who knows? Similar purchases coul...