Crypto Investment Firm CoinFund Launches $300M Web3 Fund
As a demonstration of investor confidence in a sector beset by a bear market, CoinFund, a cryptocurrency-specific investment company, launched a $300 million venture capital fund to support early-stage blockchain companies.
David Pakman, managing partner and head of venture investing at CoinFund, stated in an interview that the CoinFund Ventures I fund will invest in businesses that have demonstrated commercial traction and are also a part of the cryptocurrency industry with a sizable total addressable market. Layer 1 blockchains, Web 3 infrastructure, non-fungible tokens (NFT), gambling, and asset management are among the topics of interest.
The first half of 2022 saw a 26% decline in the amount of venture capital investments in the cryptocurrency sector, but the number of agreements was still high, pointing to a trend toward earlier, smaller funding rounds. A little more than a year after the company raised $83 million for its first venture capital vehicle, the new purse was unveiled.
Prior to its establishment in 2015, CoinFund concentrated on bitcoin (BTC) and seed stage investments in initiatives related to decentralized finance (DeFi). Dapper Labs, the company behind NBA Top Shot, Blockdaemon, a blockchain infrastructure platform, and The Graph, a data indexing technology are some of the firms in our portfolio. Successful portfolio firms that went on to raise Series A rounds showed a wish to continue working with the company, despite the fact that it was lacking an investment vehicle at the time.
Pakman stated, “We identified this hole in the market. We felt we could be very effective and helpful at that point, so we raised an early-stage fund.”
The CoinFund Ventures I fund is expected to invest in 30 to 40 startups, with checks ranging from $6 million to $10 million in value for each organization. A small number of portfolio companies might receive follow-on investments, but the majority will go to businesses that CoinFund has never sponsored previously, according to Pakman.
CoinFund listed a few of the limited partners supporting the new fund, including the Teachers Retirement System (TRS) of Texas and the private market investment firms Adams Street Partners and StepStone Group. TRS joined the tiny but expanding group of pension funds investing in cryptocurrencies.
Pakman left the conventional venture financing firm Venrock after 13 years and joined CoinFund last year. In order to concentrate on early-stage investments at CoinFund, Einar Braathen left technology company Accel and made the same transition from traditional to crypto-native deal flow.
When asked about starting a fund during a bad market, Pakman pointed out that CoinFund had survived three downturns and that the new fund will last six to eight years.
“These kinds of market swings are sort of par for the course,” he said.
“As long as you’re focused on building something important that will capture lots of value over time, the markets will cooperate at some point.”