Why a Gaming VC Thinks Now Is the Right Time to Invest in Crypto

• Gaming VC Yash Patel switched his investing focus to crypto startups earlier this year.
• In 2021, venture funding in startups has gone up 477% year-over-year.
• Patel expects that trend to continue and thinks there will be plenty of opportunities to invest. 

Yash Patel has found a new investing passion this year: Web3 and crypto. 

Patel, a general partner at Telstra Ventures, typically invests in enterprise software-as-a-service startups, as well as esports and gaming. 

But earlier this year, he noticed that some of his esports portfolio companies were striking partnerships and deals with startups like cryptocurrency exchange market FTX, worth upwards of $210 million. He eventually went on to invest in FTX and has other crypto startup investments in the pipeline. 

At the time, Patel didn’t know much about non-fungible tokens or how crypto was impacting egaming. But he saw the overlap and potential for profitability, and decided it was time to focus on crypto. 

“I needed to not remake myself as a crypto investor, but really, authentically be present in this sector that was adjacent to where I’m at,” Patel told Insider.

The proof is also in the numbers. Venture capital funding into crypto and blockchain startups is over $26 billion so far this year, up 477% from the $4.5 billion invested in 2020, according to Crunchbase. 

Even though Patel is relatively new to venture crypto investing, he expects this funding trend to continue. 

When approaching crypto investments, Patel and Telstra Ventures approach the space as they would investing in a software startup.

“We’re starting to look at both crypto and digital asset marketplaces that people are creating, to enable mainly Gen Zers and millennials to diversify their portfolio,” Patel said.

Patel looks for a good team and a founder that specializes in specific areas of crypto such as the sports, the creator economy, music or entertainment. 

As a gaming investor, Patel observed a massive overlap between gamers and crypto enthusiasts. To him, this overlap sits at what he calls the bleeding edge of next-generation entertainment and financial services, which makes the sector worthy of his capital.

“Despite the

volatility

of cryptocurrencies, crypto is here for real and being driven by the same audiences that love gaming/esports,” Patel said. 

What’s driving this appeal is the fact that crypto gives autonomy, independence and power to creators because there is no singular transaction fee, he said. 

For instance, if an athlete wanted to monetize a game-winning shot, they can have a GIF of the shot created as an NFT. The NFT code can then be put into the blockchain, where ownership is verified, and as consumers purchase the NFT, the athlete collects royalties on that purchase.

While Patel’s focus is on software and gaming, he thinks there’s plenty of crypto opportunities to be had in music, and other content. 

He said he’s noticed that musicians are making money by embedding their songs onto the blockchain and offering consumers exclusive access to their work by paying with cryptocurrencies. Patel said he has also seen writers and bloggers make money from readers paying to access their work with crypto, rather than through traditional subscription fees.

While crypto may have been seen as a risky investment before, Patel feels as though that’s now changed.

“Early-stage crypto investing had a high risk and equally high reward. Now, there’s a low risk and room to still have great returns,” Patel said.