PAUL VERADITTAKIT: I can even tell you a little about when I joined Pantera in 2014 and how it's kind of progressed all the way until now. I mean, it's been crazy.

So my background is mostly in VC. I mean I've been in a VC now for nine years. And so that's kind of what I brought to Pantera-- kind of like the hedge fund experience with Dan, you got Joey with the operational technical experience, and myself with the VC experience.

So when it was 2014 and when I joined Pantera-- I think there's only 10 companies in the space. I could list them all on a piece of paper. And I was like, all right, which ones do you want to hit up right now?

And it grew quite a bit in 2015. We started seeing a lot of exchanges, a lot of cross-border companies. And then 2016 was the year of the enterprise where all these enterprises, Goldman Sachs, started making investments. JP Morgan started doing their private blockchain stuff and things started slowing down a bit. There wasn't any sort of consumer traction whether it is speculation or whether we restore value.

And then 2017 was just, like you mentioned, it was insane. What really brought that on was-- we had Bitcoin as sort of a store of value. And then started off as a way to move money across borders. That was sort of like a big use case for Bitcoin and still is actually the biggest use case. All cross-border payments are done using Bitcoin versus any other cryptocurrency. I mean that's where the most liquidity is at.

And 2017-- or actually late 2016 was where we started diving deeper into Ethereum and the ecosystem started growing, a lot of developers started building on it. And the first use case was being able to issue a token to have a function within your product and technology and be able to actually raise capital for your open source project from not only private investors, but retail and community investors.

And that's a great way to give skin in the game, or give value of your project to early adopters and have them go out there and promote and sell your product and your company. And that just turned into wild mania-- 2017. I mean--

TYLER NEVILLE: Liquid venture capital.

PAUL VERADITTAKIT: Liquid venture capital. And I think on top of just like the liquidity part-- but is the global part too. Anybody could be-- any retail investor could be investing into any project all over the world. So traditional venture capital-- it's about companies looking a certain way, companies being built in certain locations.

Now anybody could be raising capital from anybody around the world. And there was less limitations. You didn't have to be accredited. And on top of that you can get liquidity almost like the next week.

And so you put that all together, you know, like over $20 billion has gone into this space. A lot of it went in on 2017. And we were seeing projects go out there, hit the market, and raise their private sale or raise their crowd sale.

And a week later they're already up 5, 10, 20x. I've seen some like within a span of weeks hit 100x in terms of return, right?

TYLER NEVILLE: Insane.

PAUL VERADITTAKIT: It's insane.

TYLER NEVILLE: Yeah.

PAUL VERADITTAKIT: I still remember like we did a sale-- or we participated in a sale and it was up 3x. And we were just so disappointed, right? And we were just like--

TYLER NEVILLE: Triple my money.

PAUL VERADITTAKIT: Triple my money. This is not great, you know I mean? Compared to the norm. This is--

TYLER NEVILLE: The government came in and hovering, huh?

PAUL VERADITTAKIT: Exactly. So what happened in late 2017 and early 2018 was the government started sniffing around. The SEC started cracking down on some really obvious scams. I think the combination of the taxes to the SEC stuff which also--

And then basically investors getting smarter. And then I think the fourth thing is the exchanges themselves-- they're being targeted by regulations. Because those guys are the gatekeepers in terms of who gets to access these cryptocurrencies? And which cryptocurrencies are being offered to investors?

And so once exchanges started to slow down the listing of tokens, that in combination with projects actually like putting up lockups and investing schedules. So one of the big things that you mentioned that was really appealing about this face to investors was to be able to make money but in a quick way-- generating high IRR's.

And once that became gone and there was a lot more requirements and a lot of regulatory uncertainty, a lot of this scam projects started to back away. And what we saw in 2018 was the prices dropping, people are selling, uncertainty around the space, and then capital just starting to back away.

TYLER NEVILLE: As someone who was in the space and is, well, probably the most venerated firm in crypto, did you guys know it was just so much shit at the time? Or was it just like, oh my god, the capitals coming in. If we don't participate we're going to under perform? Like was there little bit of both of those?

PAUL VERADITTAKIT: Yeah, there was definitely-- there's definitely pressure to deploy capital into exciting projects. And knowing that there was liquidity there you can really just kind of act more like a hedge fund a bit, right? But nevertheless, we had a ton of capital that was coming in and we wanted to make sure that we were getting it out there and helping our company succeed and really just taking advantage of this momentum.

Nevertheless we've been long term investors in this. We come from more-- I come from more of a VC backround. So every single project I invest into, I want to try to help them maximize their potential.

Obviously some projects aren't going to get there. And then you kind of like take a step back and we calibrate and go into projects.

But yeah, there was definitely a lot of pressure to really go out there and hunt for these deals. And it's tough because at the time there was just a ton of capital. Capital was a commodity, right?

And I think for us, I mean, being Pantera and sort of having that reputation, having all of that value add that you can kind of bring to projects, we always had the opportunity to participate at least in some way. But the clock was ticking. Because every project had so much available capital that they'd rather not spend a lot of time on fundraising.

So sometimes we'd get projects and we would have two or three days to make a decision. And if not, we lose our spot, right? And that's not great because--

TYLER NEVILLE: 1999

PAUL VERADITTAKIT: --as an investor, yeah, it's hard to do great diligence in two or three days and make sure that you are sort of covering all your bases. And so a lot of times that you really had to just work really, really hard to kind of get these deals done.

And you're right, there's a ton of noise out there. I mean we were getting maybe 60 or 70 white papers a week.

TYLER NEVILLE: Oh, geez. Just the pure supply of it probably--

PAUL VERADITTAKIT: Just the pure supply of it. And you know how you get your best deals mostly from referrals. I think that's where that channel really mattered more than anything else. I mean a lot of the cold emails we'd have to-- I mean we'd look at everything.

But we would really prioritize papers that were coming from really strong referrals and really strong connections. Because you just can't go through that type of volume.

TYLER NEVILLE: Yeah, especially with 5, 10 people at the time, probably.

PAUL VERADITTAKIT: Exactly. And only three or four guys only the investment team and just focusing on investments but then also trying to help your companies too. So to able to do all of that it was really tough.

TYLER NEVILLE: And since it's calmed down-- the one message that you guys have had throughout this whole time is this is a long-- we might be in the first inning of a nine inning game.

PAUL VERADITTAKIT: Yeah.

TYLER NEVILLE: And you guys have been there consistently saying this is a long term investment. Can talk about your competition? Like what happened to all the capital that was fast? Are those funds now just under? And are there more giant institutional funds coming up to the plate?

Where like Fidelity I believe is starting a crypto fund. There's a lot of giant mega financial managers getting into space. Can you talk about that a little bit.

PAUL VERADITTAKIT: Yeah, so you're right. I mean in 2017 we saw a lot of capital that was looking to make a lot of quick money in this space. And a lot of it was coming from Asia. But actually a lot of it was in the States too and all around the world. But definitely a high proportion of them were in Asia.

And once 2018 hit and liquidity went away and the ability to more easily make money in a short amount of time just went away, a lot of those funds have just pulled back and shut down. And that plus like when the market's down like that a lot of their positions were in Bitcoin and in Ethereum and other tokens.

And they're LP's are not institutional and so they're not going to be sort of backing them up and those sort of things. So a lot of those funds have gone away. And the ones that have survived are funds like Pantera that have been doing this for a long time.

And I think the great thing that we've done is we've continued to be very transparent-- not only with our LP's, but with the community. And we tried to educate the market on what is going on.

I think the first thing we educate them on is we are stewards of your capital and we've been doing this since 2013. We've seen Bitcoin go up to $1,300. We've seen it go down to $139 where everybody was [? pinging, ?] saying, hey man, like I told you not to look at this Bitcoin thing. It's going down to $0.

TYLER NEVILLE: Is that your indicator to just kind of scoop some? Knowing Dan's background as a trader, right?

PAUL VERADITTAKIT: Exactly. So for us we've seen these cycles. And these don't-- these cycles don't phase us. We know what to do in every single one of these cycles.

And that's continue to invest, good prices to get in, good valuations to get in. This is a time when most of the building is going to be done. This is a time where the best companies are going to come out of. And that's kind of how we see it.

So this is great. The competition is sort of like moving away. And we're going out there and we're getting the best prices, getting into the best companies. But you're right that the best thing about 2017 was it brought a lot of awareness about the space in good and in a bad way.

The bad way is my mom during Thanksgiving in 2017 was like, hey, I heard about all these ICOs. My friends are telling me to get into it. And I was, like, mom stay away, stay away.

TYLER NEVILLE: Sell.

PAUL VERADITTAKIT: This is definitely at the peak of the hype. And so basically it's gotten a lot of attention to institutions. And that means that great entrepreneurs that are trying to create infrastructure to help institutions get into this space.

It also means that institutions are thinking about ways to participate. Whether that means starting to think about how do we hedge and trade derivatives? To maybe even setting up funds to be able to participate in this. Maybe investing into funds, institutions, endowments.

Funded funds are now looking at Pantera and other folks. And that means other experienced investors are also starting to branch off. I mean, we've already seen some other folks leaving some of the top VC funds to start their own crypto focused funds.

And so we're seeing sort of the institutionalization of the fund space too which is great. Your next question is, like, how do we differentiate from all these new guys maybe? I think for us I mean it's the--

TYLER NEVILLE: You read my mind.

PAUL VERADITTAKIT: It's the track record. We've done this before. It's the network and being able to provide more resources than anybody else.

Whether it's Dan's background in institutional finance, to Joey's operational and technical background, to my connections doing VC for the last nine years. Especially in this space where I think compared to any other US fund, Pantera has invested quite a bit outside the United States.

30% of our investments are outside the United States. So that means that we're looking at geographies where we think distributed ledger technology and cryptocurrencies make a lot of sense. And therefore we're building up really deep connections in all of these different communities.

And what that means is we can provide a lot of value add when companies want to scale their teams globally or want to market globally or want to get liquidity. Which again, most of the top exchanges are outside the United States. All the exchanges doing IEO's are out of the United States.

So those global connections are really helping us stand out from all the rest of the firms that are based in Silicon Valley.