On May 11, investor Shan Shan of Lightspeed Venture Partners spent two hours walking around San Francisco with Jack Lu and Zhuoxun Yin, the Australian-born co-founders of Magic Eden. It was a clear night on the Embarcadero, with the Bay Bridge twinkling in the distance. The crypto boom was still roaring and their stroll should’ve been a victory lap—but Shan was there to warn the founders about the storm that lay ahead.
“I was kind of being brutal with them,” she remembered. A former hedge fund analyst, Shan saw ominous clouds on the horizon. With both interest rates and inflation rising, Shan knew a recession could wash away many of the crypto companies created by the bull run of the past two years, and she didn’t want Lu and Yin’s NFT marketplace, Magic Eden, to be one of them.
The next month, Magic Eden would announce a $130 million Series B funding round that valued the company at $1.6 billion. But Shan’s warnings would prove prescient: In mid-June, the crypto market lost $2 trillion in value, leading to a massive drop in the trading volume of NFTs.