Blockchain Capital, a crypto-focused investment firm, has successfully raised $580 million for two new investments funds in infrastructure, gaming, DeFi, and consumer technologies.
The first, the sixth $380 million early-stage fund, will concentrate on newer companies and protocols in pre-seed and Series A rounds. This fund follows the firm’s fifth early-stage fund, valued at $300 million and launched in June 2021.
The second, a $200 million opportunities fund, will target late-stage investments from Series B onward, providing access to companies with substantial prior funding.
The allocated funds will target six key sectors: decentralized finance, centralized finance, centralized infrastructure, decentralized infrastructure, gaming, and consumer/social technologies.
In a press release, Blockchain Capital stated:
“The end game is to elevate personal empowerment by granting individuals control over their digital and financial lives through innovative blockchain-enabled applications and services. This vision of a democratized and distributed future guides our passion and investment decisions.”
Despite a relatively subdued digital asset market over the past year, this successful fundraising signals a sustained interest in investment. The crypto market faced challenges in 2022, culminating in the collapse of FTX in November.
Since then, digital assets have struggled to break free from a narrow trading range, particularly Bitcoin (BTC), which has remained between $25,000 and $30,000 for the past six months.
“Indeed, the crypto market’s volatility these past 20 months revealed the hazards of short-term thinking, exposing many who misjudged this nascent technology,” writes Blockchain Capital in the release, adding later that “over the past 20 months we’ve invested more capital into the next generation of innovators than any other time in our history.”
Blockchain Capital’s Recent Fundraising Success and Shifting Investment Approach
The latest funds closed by Blockchain Capital represent some of the largest in cryptocurrency and blockchain history, marking a significant milestone for the firm.
However, this should be seen as something other than an indication that the firm plans to increase the size of its funds continually.
Spencer Bogart, one of the firm’s partners, emphasized that they do not intend to expand into areas like AI or become a hedge fund trading tokens. He also noted that future funds are unlikely to be significantly more significant than recently closed ones.
Blockchain Capital has shifted its approach to leading “most” of the rounds it participates in, committing over 50% of the funding, determining pricing, drafting term sheets, and securing a board seat.
This change in strategy enables the firm to increase the size of its funds, exercise greater governance oversight, and access more allocation opportunities in various investments.
Its limited partners primarily consist of traditional institutional investors, including university endowments, private foundations, financial institutions, sovereign wealth funds, and U.S. pension plans.
The firm also collaborates with non-traditional, strategic investors who are leaders in their respective sectors. These strategic investors often take a more tactical approach to fund commitments.
Still, the long-term nature of Blockchain Capital’s funds fosters enduring partnerships that can drive growth opportunities and enhance the competitive position of the firms and protocols within the fund’s portfolio.
Payment giants Visa and PayPal became part of Blockchain Capital’s fifth early-stage fund in 2021. While they haven’t committed to the new funds, their involvement underscores the interest and support from established players in the financial industry.
Blockchain Capital has recently led funding rounds, including a $115 million Series C investment in Worldcoin developer Tools for Humanity and a $40 million Series A investment in crypto infrastructure provider RISC Zero.