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The cryptocurrency bear market may be underway, but Blockchain Capital continues to grow. It closed two new funds for a total of $580 million, the firm’s general partner, Spencer Bogart, told TechCrunch.
The two venture funds, its sixth seed fund and its first “opportunity fund,” are allocated about two-thirds and one-third of the $580 million, respectively, Bogart said. The firm’s latest investment vehicle, its fifth seed fund, was worth $300 million as of June 2021.
“We’re doing more of what we’ve done over the last decade,” Bogart said. “It’s our bread and butter, and we wanted to stay aligned with the LPs [and] think about the previous size of the funds, but still increase a little.
The funds will focus on six sectors: decentralized finance, centralized finance, centralized infrastructure, decentralized infrastructure, gaming and consumer/social.
When thinking about the size of the fund, Bogart said a $2 billion fund would be too large in the current crypto investment climate. “It is difficult to find places to invest [that amount] while having a strong conviction.
Its LPs are divided into two categories: strategic LPs, such as Visa and PayPal, and long-term committed capital such as university endowments, family offices and sovereign wealth funds which will continue to subscribe to funds “as long as we produce yields”.
“Strategic partners like Visa and PayPal are more limited because they are more active,” Bogart said. “It’s not just an LP investment; they don’t care as much about returns on investment, but want us to be the eyes and ears on the ground for who else they should be working with.
The Opportunity Fund will be used to invest capital in projects that the company may have missed the opportunity to invest in during its Seed or Series A rounds.
The company plans to deploy the capital over a period of approximately three years, but could go up to two or five years, depending on opportunities.
Blockchain Capital hasn’t always led rounds, but it now leads “most” of the rounds it participates in, Bogart said. This means that Blockchain Capital typically commits over 50% of the funding rounds it is involved in, while setting the deal price and drafting the term sheet, all while serving on the board of directors. “This is a game-changer for us that allows us to increase fund sizes and have a say in funding, real governance oversight and opens up more allocation opportunities.”
As for what’s next? The company plans to continue investing in blockchain-based startups with a long-term view, similar to what it has been doing for the past 10 years.
“Venture capital firms have always been tempted to experiment in new sectors, but we have no intention of expanding and becoming an AI fund or a hedge fund and trading tokens,” he said. Bogart said. “We want to keep the size of the funds relatively small; we don’t see them getting much bigger than what you see here.
