CEO of Mysten Labs Evan Cheng says that VCs are changing their strategies because AI has a wide appeal to consumers.
Artificial Intelligence is the shiniest new thing venture capitalists are pouring money into, leaving once-popular cryptocurrency projects struggling to secure funding.
This shift, according to Evan Cheng, co-founder and CEO of Mysten Labs, is due to the ability of AI products and applications to serve a broader audience, whereas the crypto industry continues to concentrate on itself.
VCs shift focus from Crypto to AI as AI gains wider appeal
“Multidisciplinary venture capitalists are increasingly turning their attention to artificial intelligence investments, driven by the technology’s proven value to consumers,” Cheng said.
“ChatGPT came out, and [developers] are building products and applications for consumers and for developers–widespread, large-scale use cases are immediately possible,” he observed. “In crypto, the industry has been building products for crypto people.”
Mysten Labs was started in 2021 and offers a tech infrastructure tool for building and using Web3 projects. Its leadership team is made up of scientists and engineers who used to work at Apple and Meta (then Facebook). Mysten Labs started the Sui blockchain in March of last year. Its goal is to make transactions fast, cheap, and with low latency.
Cheng says that VCs’ actions on social media, especially Twitter, show that they are becoming more interested in AI.
Andreessen Horowitz’s $150 million investment in Character AI last month may illustrate Cheng’s shift in investing. In October 2022, Lightspeed Venture Partners helped Stability AI, which makes A.I. text-to-image platform Stable Diffusion, raise $101 million.
Blockchain companies invest in AI. Justin Sun announced a $100 million Tron AI development fund in February.
Cheng believes A.I., blockchain, and Web3 technologies are complementary and may be employed in consumer products. He doubted the need for A.I. as a basic component.
“One area we are very interested in, and where we see a lot of opportunities, is using AI technology in developer tools,” Cheng said. “We’ve already seen its value in smart contract auditing and code assistance, for example.
“While there are buzzword products combining AI and crypto, I’d be skeptical of their true utility,” he continued. “However, when it comes to developer tools for smart contract developers, that’s definitely a fruitful area.”
Cheng stated that VCs tend to follow trends and invest in compelling narratives, mentioning the rise of decentralized finance (DeFi) and non-fungible tokens (NFTs) as examples.
However, he emphasizes the significance of delivering tangible value in order to attract the attention of VC. He stated that if crypto initiatives can do so, they will be able to attract the necessary funding to continue innovating and expanding.
Cheng said that showing off new, consumer-focused goods will bring investors back to the blockchain and cryptocurrency markets, and he is optimistic about the future of the Web3, blockchain, and cryptocurrency markets.
“I believe there will be numerous big, powerful, and exciting products aimed at consumers, and that’s what truly excites me,” he said. “By presenting people with a few captivating, imaginative ideas, we can attract investments back to this space.”
The post As AI investments accelerate Crypto takes a back seat appeared first on NFT News Pro.