How Crypto VCs Who Just Closed a $150M Fund Invest in a Bear Market

• Archetype closed a second $150-million fund for early-stage Web3 startups on May 2.
• The venture firm has an LP base that includes family offices, pension funds, and endowments.
• The firm predicts that smart contracts will underpin all digital commerce within the next 15 years. 

Crypto-investment firm Archetype closed a $150 million fund focused on Web3 startups in May. The capital, founder and general partner Ash Egan said, will go towards founders with “unwavering conviction” and projects in their “earliest stages.” 

The Brooklyn, New York-based firm’s second fund, called “Archetype II,” cuts initial checks between $500,000 to $5 million. Past investments include non-fungible-token platform POAP, decentralized-finance platform Polynomial, and DAO-infrastructure provider Syndicate. 

“We’re backing founders who have a unique vision of the future,” Egan told Insider. “We’re looking for people who can create new markets or create new user behavior.”

In the weeks following Archetype’s announcement, broader crypto markets jolted. 

This was in part due to the collapse of UST and LUNA, along with inflation concerns that led to bitcoin and ethereum trading similarly to risky-technology stocks. Amid quantitative tightening by the

Federal Reserve

, investors have maintained a risk-off appetite, leaving analysts to predict a prolonged recovery for crypto.

Both bitcoin and ethereum are down more than 55% from their all-time highs, found Messari — a crypto-data and research company — with the total crypto-

market cap

stumbling to $1.2 trillion from its $2.8-trillion peak in November. 

“For people who have lived through multiple bear and bull cycles, whenever things get hard, talent leaves, investing money leaves, so you want to have a vision,” Katherine Wu, a venture partner at Archetype, told Insider. 

Price action, however, doesn’t change Archetype’s overarching twofold thesis. 

Archetype’s thesis and conviction

First, the firm predicts that smart contracts will underpin all digital commerce within the next 10 to 15 years. Second, it predicts that a smart contract-denominated app will reach 10 to 100 million users in the “next few years,” Egan said.  

Founded in 2021, Archetype has LPs including founders, endowments, pension funds, family offices, and Web3-related companies. The venture firm has partnered with 30 early-stage crypto teams so far.  

Archetype is looking for teams to invest in that have both “multi-decade disruptive ideas” and “a game plan with actionable steps,” Danny Sursock, a principal at Archetype, said. 

“It’s balancing taking these incredible market-defining ideas and distilling them into very achievable steps that we can actually supercharge,” he told Insider. 

More bearish cycles, Egan said, are also the best time for participants in the nascent space to “dig deeper.”

For Archetype, this means maintaining conviction by working with teams in their portfolio and using their products. The four-person venture firm, Egan said, actively uses at least 80% of the portfolio that it invests in.

“If you’re investing based on the macro trends or off headlines, you will go absolutely crazy. You’ll become jittery when the markets are jittery,” Egan said. “It’s hard to go against that and create your own thesis, but that’s where the real returns are made.”

The investment firm has also led or co-led most of its investments, including blockchain-based real-estate investment platform Parcl. 

“I think our promise to founders is that we will be the highest-conviction investor on the cap table and users of their product,” Egan said. “We’re going to give them feedback on a day-to-day basis, if that’s what they want.”

Archetype, however, is not the only firm to announce a sizable fund amid the recent market downtown.

On Wednesday, Andreessen Horowitz announced a new $4.5-billion fund for crypto investing. Volt Capital — which VC giants Marc Andreessen and Chris Dixon back — also closed a $50-million fund to invest in Web3 startups.