The Ledger
Every statement that passed quotation and attribution checks. Mix any filter with any other: certainty 1/5, debate potential 5/5, or both at once.
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Garg: Mid-tier venture firms face severe disruption from on-chain capital competition
“The people I think should be worried are if you're like VC firm, 15 through 1000, right? Like I think you get disrupted because capital, as it becomes a commodity, if you're a venture firm, 25 and you're like not breaking the top decile in terms of returns, An…”
Garg: Bitcoin could become a central bank reserve larger than the yuan
“Could Bitcoin actually be a Reserve currency that central banks are purchasing that could be bigger than the yuan or the euro in central banks. I don't think that's crazy, actually.”
Garg: Ethereum could become a neutral $1T GDP digital settlement layer
“Creates this opportunity for a third system, right? An incredibly neutral third system, which might be Ethereum, which effectively starts to behave like a digital economy and a digital settlement layer for all the transactions that need to exist in a third pla…”
Garg: Crypto dApps and computation will not create most long-term value
“Even though most of the dollars today, I think, are going towards those last two buckets of distributed computation and distributed applications, I don't think that's actually where most of the really new value will get created in the long term.”
Garg: The real threat to crypto is authoritarian adoption, not bans
“The real risk, in my opinion, therefore, is not that the government bans this stuff. I think the real risk, actually, is that nefarious governments fully, fully embrace it.”
Garg: Fully decentralized teams cannot effectively scale complex tech projects
“Yeah, I generally think decentralized teams won't work. I think in the very, very early days of any platform, they can work, and it's because there is not that much competition, and a lot of what you need to build out is infrastructure, and you have a small nu…”
Garg: Crypto companies will eventually recentralize in Silicon Valley
“So what I would expect will happen is actually, over time, crypto companies will actually recentralize in large part to Silicon Valley.”
Garg: A 20% ownership stake compromises crypto network resilience
“In a distributed system, in a distributed network, if you own 20% of the network, you're a liability to the resilience of the network.”
Garg: Electric Capital limits network ownership cap to 5%
“And so you actually, like in our case, we try to not own more than five percent.”
Garg: Crypto will eat capital markets and venture capital
“Crypto is also going to eat capital markets, right, which is the deployment of money and the deployment of capital. And if crypto is going to eat capital markets, it's going to eat venture capital.”
Garg: Andreessen and Sequoia Will Likely Successfully Transition to Web3
“Now, some absolutely can, and I think some will. Like, I think Andreessen and Sequoia will likely make that transition, but it's going to be extremely challenging.”
Garg: Software eliminates middle markets by converting regional monopolies into power-law global markets
“It like destroys these local and regional monopolies and turns them into global markets. And once you're competing at a global scale, it tends to have this sort of concentration effect. It creates a power law and it creates concentration in the head and it unl…”
Garg: Ten-year fund lockups benefit crypto LPs despite token liquidity
“And actually, I think the lockup periods, ten-year lockups, despite the liquidity, I think is actually better for LPs because it is a venture asset class. The returns are extremely asymmetric. And you can generate many multiples on your fund if you're patient.”
Avichal Garg: Token value creation often requires writing off founding equity
“We see cases where actually, yes, today there's a company, but the real value clearly will be in the token. And actually you want the company to dissolve and not exist. So effectively you're going to invest in some equity over time. You'll get some tokens, whi…”
Garg: Most company tokens act as loyalty points, not true networks
“But a lot of the time, what you're really doing is not building a sustainable token network. It's often going to be the case that it's sort of a customer acquisition channel, and it behaves a little bit more like loyalty points than it does a true distributed …”
Garg: A valid token network survives shutting down its corporate creator
“Generally, a limit test we're using is like, does the company just go away? And if you shut down the company, Would you still have a significant amount of value capture and creation that happens on the token side? And if the answer to that is yes, then really …”
Garg: 10% of DAOs will wildly break expectations of governance
“You'll have millions and millions of doubts created. Many of them will fail. Many of them will look very similar to what we would expect just reasoning through it. And some small percent, 10% of them will wildly break our expectations about what's possible.”
Garg: Latecomer VCs overpay for crypto logos to win future deal flow
“Like, if a VC firm that feels like, They missed out on the last wave of crypto for the last four years comes in and is starting to buy logos. Then they're going to overpay because their motivations are not just that they want to do the investment at a fair pri…”
Garg: Global economy will revert to 1950s-1980s geopolitical fragmentation over 20-30 years
“I think I've recently changed my mind on the uniqueness of the period of time that we lived in from roughly 1990 to 2020. Like, I thought we were trending towards that was basically the state of the world, where we would have this sort of, like, globally stabl…”
Garg: Cryptocurrencies represent software eating money across global markets
“I think what's happening is that cryptocurrencies are this massive platform shift in the world. They represent a change in a lot of different dimensions and everything from how we build companies to business models to, you know, I think this is software eating…”
Garg: Crypto-native companies will accrue the most long-term value
“So I think that's always the risk for the VCs or for the ecosystem in general is that investors pursue things that pattern match to things that we already know rather than identifying the places where the platform is natively able to do things that we weren't …”
Garg: Late-stage crypto token valuations in 2018 are out of whack
“And right now, what you have at the late stage is a lot of money and a lot of risk. And so you haven't really de-risked it, but there's a lot of money going in. And so as an investor, you look at that and you say, wow, that's a pretty tough place to put money.…”
Garg: ICO scammers threaten to gut the crypto space from inside
“I look at ICOs strictly defined as people raising large crowdfunding rounds from relatively technically unsophisticated investors as a symptom, which is that there are a lot of scammers who are taking advantage of this ecosystem. And I think those bad actors c…”
Electric Capital executes about 25% of its investments in USDC
“We probably do about a fourth of our investments in USDC, because it's just faster.”
Garg: Crypto startups need Discord governance and validators, not sales recruiting
“So I think crypto protocols and businesses need an entirely different kind of services layer. And so you don't need a board member that helps you figure out how to interview a VP of sales. You need people sitting in your discord helping you do distributed gove…”
Garg: DAOs will recreate traditional structures like representative government
“Is I absolutely think we will recreate a lot of the known governance structures in society. We will recreate representative government, for example, where there are experts and you sort of delegate your votes to them and then they go off and make decisions tha…”
Avichal Garg: Technology market growth should always be extrapolated exponentially
“Our instinct is to extrapolate linearly rather than extrapolate exponentially because the conclusions that you reach to seem ludicrous in the moment. But it's turned out that every moment in time on that curve, whether you were in 1980 or 1985 or 1990 or 1995 …”
Garg: Crypto volatility will drop over five years, improving store-of-value status
“I would expect that over time, over the next, say, five years, the volatility will go down in the space, and it will start to look like a better and better store of value.”
Garg: US government crypto regulation has been nuanced and sophisticated
“And if you look at the way that the U S government in particular, I think has handled crypto. I think they've been very nuanced and sophisticated in their handling of this.”
Garg: Regulatory certainty in crypto will boost investment and innovation
“And so I think, actually, in practice, what's going to happen is the government will clean up Our understanding of where those lines are, and once we have that regulatory certainty, we'll actually create even more investment and more innovation, because then e…”
Garg: Electric Capital compensates software engineers as investment professionals
“And we comp them as investment professionals. We don't comp them as like back office.”
Garg: Much of Electric Capital's activity will move on-chain in 10-15 years
“I don't think it's so crazy that 10 or 15 years from now, a lot of electric activity actually just happens on-chain.”
Garg: Late-stage crypto infrastructure can be evaluated as traditional SaaS
“By the time you're in a series C or series D, they look like you can evaluate them as traditional businesses. But in the early days, like getting your products right, you're going to go to market, right? So it requires some pretty significant understanding of …”
Garg: Determining durable DAO governance models will take 7 to 10 years
“And I think for us to really know which of these experiments from governance or economic game theory perspective are durable, I think it's going to take seven to 10 years.”
Garg: Global economy has tapped less than 10% of highly gifted talent
“I suspect we've tapped no more than 10% of those people. 90% of the highly gifted people in the world we have just not been able to find yet.”
Garg: Exponential market growth requires accepting short-term speculative noise
“You can't have exponential growth and experimentation and exploration without a bunch of this sort of speculative, cringey kind of activity, and so I think you just sort of have to swallow it as part of the process of figuring out what's really valuable, and s…”
Garg: LPs should dollar-cost average into crypto over multiple market cycles
“There's a lot of nuance here, and I think we're still very early. So I wouldn't FOMO in. I wouldn't worry about missing it. I would be very deliberate about sort of cost averaging in over a couple of cycles. I don't think people need to freak out about it beca…”
Garg: Elad Gil seeded Electric Capital with $1M and raised first $10M
“He was the catalyst. He was the person who came to us and said, you guys are really good at this, and there's a real market opportunity here for a thing that's not a traditional VC firm, and that's not a hedge fund, that's built differently, and you guys have …”
Garg: Crypto protocols achieve secondary liquidity in two to four years
“The fact that many of these protocols or companies can go public, so to speak, onto these markets, onto the secondary markets in two or three or four years instead of seven to 10 years from an investor's perspective is a huge advantage.”
Garg: Retail crypto investing without full-time dedication is highly risky
“On the retail side, I think it's really, really tough. I think unless this is basically a full-time job, it becomes kind of like day trading or speculating, which I think is very, very risky, and so hopefully people are not risking money that they can't afford…”
Garg: Electric Capital invested in Coda for zero-knowledge blockchain compression
“We did an investment in a company called Coda that has some novel ways to compress the blockchain itself using zero knowledge proofs. And the reason I think this is really interesting is what it allows is for a much, much smaller blockchain, which allows for m…”
Electric Capital grew fund sizes from $16M to $1B in three years
“Raised our first fund. It was a small fund, sixteen million, and then raised our sort of first proper institutional fund in 2020 at 110, and then just closed a billion.”
Garg: Electric Capital uses traditional VC fund structures to attract institutional capital
“Yeah, we actually look pretty vanilla on that stuff. And the reason is, I think, from a product perspective, it's much easier to tap into institutional capital at scale if you're not trying to invent something new there.”