PayPal and Visa are chasing bets in the crypto industry as co-investors in Blockchain Capital's fifth venture capital fund On Tuesday, a $300 million war chest was announced.
Companies that are becoming increasingly crypto-savvy are relative novices to crypto VC. While both have made direct investments in a few crypto businesses, becoming limited partners (LPs) means they will have an outside manager arrange larger equity investments on their behalf. PayPal confirmed to CoinDesk that this is the company's first partnership with a crypto VC firm.
General Partner Spencer Bogart told CoinDesk that Blockchain Capital is one of the older and larger crypto-native venture capital organisations, with over $1.5 billion under management. He added the firm's fifth fund was also backed by pension funds and university endowments, but he wouldn't name them.
By Bogart’s telling, the payments behemoths are on the lookout for riskier investment opportunities in an industry they believe in, but need the assistance of a "field guide" to completely navigate.
“There's nothing like walking an early-stage business into Visa or PayPal and assisting them in securing a commercial deal, as well as ensuring that Visa and PayPal have solutions for the products that they want to launch,” he said.
Bogart said the LP road leads these companies to indirect equity while also early reading about startups in partnership agreements.
That's how PayPal looks, too. "Investing in the new fund of Capital Blockchain enables us to engage and learn from entrepreneurs driving digital currency futures and blockchain," Jose Fernandez da Ponte, Paypal's lead crypto, stated in a statement.
That's how PayPal sees it, too. PayPal crypto lead Jose Fernandez da Ponte said in a statement that investing in Blockchain Capital's new fund allows them to engage with and learn from entrepreneurs driving the future of digital currency and blockchain.
Bogart explained that Blockchain Capital plans to invest $300 million in early-stage companies – “not quite the Coinbases and Krakens of the world just yet.” It started deploying cash over a year ago, but the majority of its new fund is still waiting. (Previous Blockchain Capital investments include Coinbase, Kraken, Anchorage, and OpenSea.)
Bogart said the new fund will focus on crypto infrastructure investments such as firms that support decentralised finance (DeFi) and non-fungible tokens (NFTs), rather than assets themselves.
The fourth fund from Blockchain Capital, announced in March 2018, was worth $150 million.
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