VC Firm Sequoia Capital Bets Big on Crypto
Cryptocurrencies might be posting losses for its investors right now but there is enough money pouring into this space despite the unstable nature of this asset.
Experts believe that crypto growth is here to stay.
Top notch California venture capital firm Sequoia is the latest to commit close to $600 million to become a more active investor in crypto.
The timing of the investment is perhaps a crucial reminder that despite a bitcoin slump, cryptocurrency is being viewed as a bullish asset.
Right now, bitcoin is down to the $40,000 mark again, a first in the past two weeks. Bitcoin is trading near $39,891 as of time of writing according to CoinGecko, a price-tracking website for crypto assets.
In a break away from its traditional venture capital model, the firm for the first time has created a separate fund — Sequoia Crypto Fund — to invest in cryptocurrency tokens traded on third-party exchanges and other digital assets.
“Our goal with this fund is to participate more actively in protocols, better support token-only projects, and learn by doing ourselves,” Sequoia wrote in a blog post.
The Sequoia Crypto Fund is one of the first sub funds to invest out of the firm’s new capital structure, the Sequoia Capital Fund, the company said. Sequoia Capital Fund is the overall investment entity also announced as part of a larger restructuring.
“We have a long-term view on crypto that it’s a megatrend over the next 20 years,” Sequoia Partner Shaun Maguire told Bloomberg. “It’s the future of money,” Maguire added.
Sequoia’s earlier crypto investments have included crypto-focused hedge funds like Polychain Capital, Metastable, social media start-up DeSo, data storage network Filecoin and San Francisco-based blockchain and software firm Orchid Labs.
“We remain committed to working collaboratively with the crypto community, including providing ongoing support for open-source research. We will also continue to partner with crypto teams across every stage of their journey out of our seed, venture, growth and expansion funds,” the company added in its blog post.
Web3 Melting Pot for VC Capital Funding
In a bid to improve financial infrastructure for everyone, venture capital money is flowing towards projects building Web3 and decentralized finance or DeFi.
Web3 is a roughly defined vision for a decentralized internet that uses technologies including blockchain.
Rival venture capital firm Andreessen Horowitz has investments in crypto investing app CoinSwitch, crypto and Web3 infrastructure company Alchemy, privacy focused blockchain app Aleo, blockchain startup Solana Labs that is developing technology used in DeFi, among others.
Andreessen Horowitz has also backed mobile-first digital wallet Valora that is working on broader adoption of crypto and DeFi.
In 2021, venture capitalists invested over $33 billion into crypto and blockchain startups, making this a milestone year, according to a report by bitcoin firm Galaxy Digital that offers banking and institutional services, as reported by Blockworks.
The largest crypto funds of last year include “Paradigm’s $2.5 billion fund, Andreessen Horowitz’s $2.2 billion fund, Hivemind Capital Partners’ $1.5 billion fund and 10T Holdings $750 million fund,” according to data from Galaxy Digital, Blockworks reported.
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