Dragonfly, a venture capital firm, sent a letter to investors: Stay safe and rational, prioritize happiness and health above all.

Amidst the bleak market conditions due to economic, war, and Terra incident, Tom Schmidt, a partner at the cryptocurrency venture capital firm Dragonfly Capital, has sent a letter to its investors. We believe the contents of the letter will be helpful to you, as long as we persevere, there is hope for everything.

A Letter from Dragonfly Capital to Investors

I hope you are staying safe and rational amidst the turbulent market conditions. While you and your loved ones may have significant exposure in the cryptocurrency market, I hope you prioritize your happiness and health above all else.

Overall, the macro outlook for crypto assets and growth assets is deteriorating. We are long-term investors, and we understand that your goal is long-term development, but you must assess the current market conditions. The most urgent thing to remember in the current market is survival, ensuring that you and your team can survive until the market is ready for what you are building.

Every bear market brings difficulties and challenges, but those who can weather the storm will reap the rewards of the next harvest and create teams and products that will be passed down through generations.

If you are in the process of raising funds, please stop as soon as possible and retain the talent you need to get through this downturn. If you have just finished fundraising, now is the time to focus on the essentials and reduce unnecessary expenses, whether in product development or human resources. Allocate your resources to key talent and product areas, and discard the rest.

Focus is the name of the game right now. The history of technology is filled with teams that had the right ideas at the wrong time, to the point where they could not see their vision come to fruition. I do not want to see this happen to any of you.

I say these things not to scare you; you should not fear this moment, but rather face it seriously and calmly. The entire industry has just undergone a change, and you should reassess your evaluation. Do not rely on old assumptions. We will see significant changes in how the crypto industry operates.

Here are some things we expect to happen:

1. The capital markets will slow down, and investors will begin to digest and accept new price levels.
2. In the next three months, there will be a large influx of talent into the market, and the bargaining power between talent and companies will normalize.
3. There will be strong calls for regulation, but some regulatory requirements will be off base. There will be more motivation than ever to move innovative products overseas.
4. The market will reduce speculation for a period, especially as retail investors no longer have as much capital flow. Many narratives will be reset, and old stories will not be replayed.

Each of you needs to internalize these things in a different way, and your team needs to see you convey confidence and direction. Let them know you are okay, so they will be okay too.