Venture Investors Get Crypto Option

Anchorage Digital and AngelList just made it easier to invest in companies through crypto. The partnership, announced today, allows AngelList’s early-stage investors to use USDC, the second-largest stablecoin, to fund young businesses.

This is the first time that both crypto-native and traditional companies will be able to fundraise with cryptocurrencies. USDC investments will be accepted from all investors for companies willing to accept the crypto investment. Anchorage Digital, the first federally chartered crypto bank, will provide digital asset custody and execution.

“During the investing flow, there is a choice of investing with USD or USDC,” says Avlok Kohli, the AngelList CEO.

Investors will be able to directly fund companies with their crypto portfolios. Rather than cashing out crypto holdings and re-investing them, a process that can delay payment for up to 30 days between bank transactions and approvals, investors can now use their USDCs directly. Users can also exchange bitcoin or other cryptocurrencies into USDC to make the investments.

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Despite bear-market conditions, venture capitalists invested $18.3 billion into crypto-related startups in 2022, even after pulling back from other industries. Now, non-crypto companies are jumping onto the crypto bandwagon and are accepting stablecoin investments.

The draw? “Instant settlements,” says Diogo Mónica, president and cofounder of Anchorage Digital. Cryptocurrency, he says, allows for transactions to be instantaneous. No more bank holds, no more waiting for Monday or holiday delays.

“For the companies to use it, it’s efficient,” he says. “For the clients who already have crypto, you can do it and you can manage it.”

Allowing investors to use USDC also opens up the door to those outside of the United States.

“The reality is that you have many outside of the United States that have a very hard time opening a dollar-based bank account,” adds Mónica. Foreign restrictions on opening dollar-based accounts can make it harder for foreign investors to invest in companies in the first place. Still, the dollar is the world’s dominant currency.

Using stablecoins like USDC, Mónica contends, “makes using the dollar so much easier for everyone, not just crypto companies, but for everyone.”

As an AngelList investor himself, Mónica sees the benefits of facilitating investment opportunities for international players. “Not too long ago, I was having to wait on wires, ACHs, waiting forever and having my transactions frozen by my bank and having to call up to get them unfrozen and unstuck,” he says. “Which are things that just don’t really happen in crypto with the infrastructure that we’ve set up.”

Anchorage, Mónica emphasized, is a federally chartered bank and must remain compliant with the regulatory system. “It’s using the crypto side of traditional infrastructure, because this is traditional infrastructure, traditional banking, all of the rails and all the compliance,” he adds. “We’re meeting the same guidelines, we’re just using a different type of technology.”