Sources: a16z and USV, who have cryptocurrency experience, are passing on Telegram's ICO; firms newer to crypto like KPCB, Sequoia, and Benchmark are investing
Context & Ripple Effects
Telegram's ICO has split the venture community along an experience line: the firms that lived through Bitcoin's cycles — a16z and USV — are passing, per sources, while KPCB, Sequoia, and Benchmark, newer to crypto, are writing checks. It is a rare public case of the most crypto-fluent investors declining the hottest token deal of the moment.
The abstention looks disciplined rather than disengaged: a16z channeled its conviction into dedicated vehicles instead, later raising its third crypto-focused fund at twice its predecessor's target and then a $3.5B flagship plus a $1B seed fund for digital assets. Within months of the Telegram decision, a16z and USV were also lobbying the SEC for a regulatory exemption alongside crypto firms — shaping the rules rather than buying into the deal.
First-order effects
- Telegram's token sale proceeds from firms whose crypto diligence is untested at scale, leaving KPCB, Sequoia, and Benchmark exposed to a structure — an ICO — that the sector's veterans declined.
- a16z and USV preserve capital and reputational distance from Telegram specifically while keeping their crypto exposure in funds they control.
Second-order effects
- The pass pushes a16z further up the stack — from token purchases to fund formation and policy advocacy — converting its early-cycle skepticism into structural influence over how crypto investing is regulated and capitalized.
- Generalist firms entering via hot token deals set a pricing benchmark for ICOs that specialist firms' absence does nothing to check, raising the cost of sitting out for other latecomers.
Third-order effects
- If the pattern holds, crypto capital bifurcates between specialists building durable fund franchises and generalists taking episodic token risk — a division visible years later when a16z vies for a seat on Trump's promised crypto advisory council alongside Paradigm, Ripple, Kraken, and Circle.
The trend: Venture capital in crypto is splitting between specialists who convert cycle experience into funds and policy influence, and generalists who enter through individual token deals.