Crypto growth equity returns hinge on entry price as Tapiero warns against steep revenue multiples

Paying too much for equity in crypto businesses can undermine returns even as the industry grows, according to Dan Tapiero. The 50T Funds CEO and CIO said selecting established businesses at reasonable revenue multiples is central to generating long-term returns and surviving sharp market declines.

In a November 12 interview with The Rollup, Tapiero outlined an investment approach focused on mature private companies, with entry valuations and due diligence shaping investment decisions.

Tapiero said the fund seeks businesses that have emerged successfully from venture funding and generate at least $50 million to $100 million in revenue. It holds equity in more developed companies rather than spreading investments across early-stage ventures. He cited a recent $40 million investment in MoonPay as an example.

Revenue multiples are a key valuation constraint. Tapiero said the fund aims to pay no more than 10 times revenue, with a preferred range of three to five times. It rejects valuations of 50 times revenue and has passed on more than 400 deals over six years. He said it declined FTX investments three times and also passed on Celsius and BlockFi.

The fund targets a return of four to five times invested capital over its 10-year life, during which investors' money is locked up. Tapiero described that target as reasonable given the industry's growth potential, but said entry valuations of 50 to 80 times revenue make profitable outcomes difficult. The investment process weighs business prospects, leadership and price alongside estimates of potential future returns.

Tapiero also emphasized the diligence process he developed during 20 years as a portfolio manager in macro hedge funds, saying early-stage businesses can be difficult to assess thoroughly. AI has shortened diligence that previously took two to three months to a few weeks, he said. He nevertheless stressed the importance of patience and resisting the fear of missing out.

Resilience through steep downturns is another priority. Tapiero said he expects crypto bear markets involving declines of 70% to 80% every three to four years. He argued that the return pattern of some venture investments—rising 20 times before falling 90%—is unacceptable to his institutional investors, making entry price and diligence central to managing volatility.