A week after Bain Capital Ventures unveiled a new fund that will pour $560 million into crypto investments, Lydia Hylton joined the venture firm as a partner from Redpoint Ventures, where she previously invested in Web 3 infrastructure startups. In an interview with The Information, Hylton discussed how she and her colleagues are doing due diligence on crypto-fuelled communities.
Take non-fungible tokens, the digital collectibles that founders are racing to incorporate into their business models as a way for creators to extend their brand. It can be hard to understand whether an NFT’s value is driven by fan interest or simple speculation that the NFT will rise in price. This means investors can’t rely solely on indicators like token prices to understand how an entity, such as a startup that lets creators mint their own NFTs and form communities, is performing. Instead, they need to do diligence in other ways.