July 28 – August 03 (Published August 6th)
PERSPECTIVES by Todd White
28 Crypto Private Financings Raised: $432.3M
Rolling 3-Month-Average: $573.9M
Rolling 52-Week Average: $345.5M
This week saw another round of PIPE transactions for crypto-treasury companies, with some impressively large deal sizes. We’ve covered this rather unique “treasury-company” phenomenon in several of our Architect Insights forums, and these issuers continue to blur lines. While PIPEs are technically private investments, the issuing companies are generally already public, or intend to become public quickly, and are thus distinct from VC-backed startups raising early- or late-stage growth capital. Beginning this week, we are therefore pulling them out of our database so we can refocus our private-financing coverage on capital that supports growth in the truly private crypto sector.
Crypto-treasury companies continue to attract significant capital. Investor views on the wisdom of these investments are mixed: at least one active investor expressed skepticism about the sustainability of the trading multiples these firms have enjoyed so far, yet signaled a willingness to keep supporting them as long as those dynamics persist. Ultimately, we will need to let the market speak and, we hope, find a sensible equilibrium.
The notion of letting the market speak encapsulates the idea that prices, driven by supply and demand across myriad self-interested actors, efficiently allocate resources and signal economic priorities. This is sometimes referred to as the invisible hand, a concept attributed to economist Adam Smith in The Wealth of Nations. Smith argued that individual self-interest, aggregated through market mechanisms, can lead to socially optimal outcomes without centralized intervention. This conviction underpins our belief in efficient public capital markets that will, sooner or later, find the right answer.
More recently, the concept has been applied to prediction markets, also known as information or betting markets, which aggregate collective beliefs about future events and translate them into probabilistic forecasts via market prices. Although their roots trace to informal betting pools, notably political wagering in the nineteenth century, modern versions have embraced crypto technology to provide decentralized exchange infrastructure, cryptocurrency for digital payments, smart contracts for automated execution, and decentralized liquidity pools that serve as market-making mechanisms.
Some argue that theoretically objective prediction markets can produce superior results to traditional polling, which may be subject to bias. They have certainly scored notable successes, most recently in calling the last U.S. presidential election, where many polls missed the mark. However, they are not perfect, and their accuracy can depend heavily on liquidity and participant diversity, much like capital markets. They have also recorded notable misses, such as Betfair’s errors in forecasting both the U.K. Brexit referendum and the 2020 U.S. presidential race.
Interest in the space has been rising. Polymarket, one of the sector’s leaders, closed the largest non-PIPE private financing round this week with a $135.4 million raise led by Peter Thiel’s Founders Fund. Will these new crypto-enabled prediction markets continue to perform and prove a worthy investment? We may just need to give it time and let the market speak.
