CRYPTO 101 – Ep. 693: How Coinbase Ventures Invests in Crypto Projects and Their 2026 Outlook

Hosts: Bryce Paul & Brendan Viehman
Guest: Huli Tejwani, Head of Coinbase Ventures
Release Date: December 16, 2025

Episode Overview

This episode dives deep into the venture capital philosophy and future outlook of Coinbase Ventures, one of the most active investors in the crypto space. Bryce and Brendan are joined by Huli Tejwani to discuss the firm's investment strategies, the sectors they're most bullish on, the impact of regulatory changes, the proliferation of crypto IPOs, the "Coinbase Mafia" phenomenon, and actionable lessons for both retail investors and aspiring crypto founders. The conversation is forward-looking, optimistic, and loaded with practical insights for anyone navigating the unpredictable crypto markets.

Main Discussion Points

1. Crypto Market Sentiment & Time Horizon

• Market Context:
  • 2025 has felt like a crypto "winter," with negative returns for major assets and significant drops in small-cap indexes.
  • Despite weak price action, underlying fundamentals and regulatory progress provide optimism for the future.
• Long-Term Thinking:
  • Huli stresses the importance of a long-term perspective over getting caught up in short-term price changes.
    • “Don’t worry about the price charts. It’s all about time horizon.” – Huli (01:44)
  • “If you zoom out, if someone’s been just small dollar-cost averaging into Bitcoin for 10 years, they’ve done quite well, right?” – Huli (14:28)

2. Coinbase Ventures: Mission, Evolution, and Strategy

[03:12 – 07:20]

• Origins:

  • Started as a simple blog post and small checks from Coinbase’s balance sheet to seed the crypto ecosystem.
  • No grand plan at inception, but quickly grew into one of the most active crypto investors globally.
  • Maintains a strict separation from Coinbase exchange listings (no investment favoritism).

• Current Structure:

  • Functions as a traditional VC within Coinbase with multiple strategies:
    • Pre-seed/seed: “Ecosystem investing”
    • Core seed/Series A: $1-5 million checks
    • Growth-stage and select liquid token investments

• Mandate:

  • Seeks to back “exceptional founders…really move the entire ecosystem and space forward” (05:16)

• Success Stories:

  • Early investments in major L2s (Optimism, Arbitrum, StarkNet), OpenSea (NFTs), Uniswap (DeFi), among others.

  “I think pretty much the major projects or categories for our space we’ve had exposure to.” – Huli (06:12)

3. How Coinbase Ventures Invests

[11:16 – 12:38]

• Deal Structure:
  • Mix of equity, SAFEs (Simple Agreement for Future Equity), and direct token exposure.
  • “Project-specific” approach; not a hedge fund, focus is on 5-10 year horizons.
• Underwriting Approach:
  • Early-stage: Expect many zeros (failures), but aim for a “power law” where a handful produce 10 to 100x returns.
  • Later-stage: Focus shifts as companies have proven business models and revenue.

4. Investment Philosophy for Investors

[13:55 – 15:56]

• Investing Mentality:
  • All about time horizon, not short-term trading.
  • “We as humans are so wired for kind of short-term measurement... But when you’ve gone through like 80% drawdowns and 80% upswings multiple times... you focus on where the secular trend is going over a multi-year period.” – Huli (14:28)
• Advice for Retail Investors:
  • Prioritize conviction and the long game, rather than constantly reacting to market swings.

5. Sectors and Themes for 2025 & 2026

[16:22 – 23:03]

Areas of Major Focus:

• Stablecoins & Payments:

  • “The Genius Act really was a game changer... clear rules of the road” (16:38).
  • Anticipates 10-100x growth in global stablecoin adoption.

• DeFi:

  • Continues to be an area of innovation and active investment.

• Real World Assets & Regulatory Progress:

  • Expecting market structure bill to expand on-chain asset classes.
  • “We’re spending a lot of time with real world asset type use cases and different forms of exchanges...” (16:52)

• Prediction Markets:

  • “Clearly… have hit massive product market fit. They’ve gone mainstream.” (17:30)
  • Believes prediction markets and stablecoins are now the "killer apps" for crypto.

• Perpetual Futures (Perps) for Everything:

  • Early investments here; believes every asset type can be expressed as a perp on-chain.

• DeFi Credit Models:

  • “Under-collateralized credit…” and “on-chain credit score” (20:28).

• Privacy Solutions:

  • Importance is resurging; balancing privacy/cypherpunk ethos with regulatory compliance.

• AI & Crypto Synergy:

  • Blockchains are key for proof of humanity, incentivizing data, and AI model security.

  “Blockchains and crypto are going to play a very complementary role into that secular trend.” – Huli (21:52)

6. The Investment Process & Deal Flow

[23:03 – 24:55]

• Deal Sourcing:

  • Leverages Coinbase’s broad network for inbound pitches.
  • Also does proactive “thesis-driven” outbound scouting for teams that align with researched trends.

• What They Look For:

  • Preference for “long-term, mission-oriented founders with the right technical DNA.”
  • Will bet on a great founder with a mediocre idea, expecting they’ll pivot to something great.

7. Market Trends: Small Caps, Early-Stage Vs. Public Markets

[25:43 – 28:39]

• Small Cap Tokens:

  • Explosion of new tokens disperses liquidity and attention.
  • Some large outliers emerge, but bulk of small/micro-caps may underperform.

• Early-Stage Correlation:

  • No direct correlation between early-stage investment trends and small-cap token performance, but believes strong projects always stand out in the noise.

• Overall Outlook:

  • “We’re more bullish than we’ve ever been… regulatory climate is 180 degrees better than it was a few years ago.” (27:33)
  • Developer growth, user bases, and stablecoin volumes all trending up.

8. Regulatory Changes: The Clarity Act & On-Chain Fundraising

[28:39 – 36:33]

• The Clarity Act:

  • Desire for clear rules on token classification (security/commodity), responsible agencies, compliant token holder value distribution, and registration frameworks.
  • “Just opens the design space for these smart contracts token instruments to not be artificially constrained…” (29:39)
  • On-chain capital formation (e.g., via Echo/Sonar) is flipping the venture model, democratizing access to new investments.

• Impact on Institutions and Startups:

  • Increased institutional participation need not edge out smaller participants; more capital formation and experimentation are ultimately positive.

9. The Crypto IPO Boom and Coexistence with Tokens

[36:33 – 40:34]

• Crypto IPOs:

  • 2025 dubbed “the year of the crypto IPOs.”
  • More exit routes (equities and tokens) de-risk venture returns and expand possibilities.

• Equities vs. Tokens:

  • Both will coexist; public company equities (e.g., Circle, Coinbase) don’t replace the need or value proposition for tokens.
  • Each investor can find assets matching their risk, governance, and return preferences.

10. On-Chain Fundraising Platforms: Echo vs. Sonar

[41:22 – 42:05]

• Echo:
  • For private sales and pre-token launch fundraising among accredited/KYC’d investors (“like an on-chain AngelList”).
• Sonar:
  • For public token sales and broader distribution.

11. The "Coinbase Mafia" & Founder Qualities

[42:05 – 44:36]

• “Coinbase Mafia”:

  • Over 100 startups founded by Coinbase alumni; Coinbase Ventures has backed nearly half.
  • “Talent density” and a culture of entrepreneurial DNA drive this trend.
  • Coinbase encourages employees to build, and acts as a springboard for new founders.

• Traits of Top Founders:

  • “Intrinsic motivation… the whole missionaries vs. mercenaries thing, are you oriented towards building something substantive and long-term?” (44:36)
  • Strong co-founding teams, at least one technical founder, and clear communication (“explain like I’m five” is a superpower).

12. Hard-Won Lessons from 500+ Investments

[46:08 – 47:56]

• “It’s easy to be contrarian. It’s hard to be contrarian and right.”
• “Don’t index on social proof”—what matters is what the team has built and shipped.
• Talent comes everywhere; don’t overweight degrees/pedigree.
• “Maximalism isn’t the route… always check your priors and be willing to update as new information arrives.”

Notable Quotes & Memorable Moments

• On Market Timing:

  • “If you zoom out, it puts a lot of things in perspective. …There will certainly be things that have 10 to 100x future outcomes and it’s just all about having conviction and having a first principles view.” – Huli (48:23)

• On Power Law Returns:

  • “It’s really that power law, where a handful are these 10 to 100x return outcomes.” – Huli (12:38)

• Advice for Founders:

  • “Clear communication is a direct indicator of clear thinking. …That’s a superpower I think, especially in our space.” – Huli (45:54)

• On the State of Crypto in 2025:

  • “From a fundamentals perspective, it’s as bright as ever. …We’re as bullish as ever deploying. It really is all about time horizon. Don’t get caught up in the weeklies, the hourlies, the five minute chart.” – Huli (48:23)

Timestamps for Key Segments

• 01:44: Huli on time horizon over price charts
• 03:12 – 07:20: Coinbase Ventures’ origins, growth, and current structure
• 11:16 – 12:38: How Coinbase Ventures structures investments
• 14:28: The importance of long-term investing in crypto
• 16:22 – 23:03: 2025 sector review and 2026 themes
• 25:43 – 28:39: Small-cap performance and early-stage perspectives
• 28:39 – 36:33: Regulatory clarity and its impact
• 36:33 – 40:34: Crypto IPOs and the investable universe
• 41:22 – 42:05: Echo vs. Sonar explained
• 42:05 – 44:36: The Coinbase Mafia & key founder traits
• 46:08 – 47:56: Hard-won VC lessons
• 48:23 – 49:23: Final advice, optimism for 2026, and contact info

Final Words & Resources

• Future Outlook:

  • The future is fundamentally bright despite 2025’s tough market. Regulatory clarity, infrastructure, and user/developer growth all bode well for the coming years.
  • “If you’re interested in working in any of those areas that we shared in the blog post, we’d love to hear from you.” – Huli (49:01)

• Where to Follow:

  • X (Twitter): @HulieG
  • Coinbase Ventures Blog: Coinbase Ventures Blog

This episode is a must-listen for retail investors, builders, and founders seeking to understand how world-class VCs approach conviction, timing, and thesis-driven investing in the rapidly evolving crypto industry.