Multicoin Capital, led in part by Managing Partner Kyle Samani (pictured), yesterday announced its … [+]
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Multicoin Capital is making its biggest foray into small blockchain and crypto investing, with a $430 million venture fund that has it looking past the current bear market.
“We could have raised a much larger fund, but we chose not to do that,” says co-founder Tushar Jain. “If you raise a much larger fund, it’s hard to pay attention to the smaller deals.”
Modest seed-stage investments have been the driver of Multicoin’s growth since it was founded in 2017; The Austin, Texas-based manager was an early investor in Solana, which rose over 20,000% at its peak of over $250 per token before falling to its current value of just over $30, still more than a 13,000% gain from its initial coin offering price.
Jain and his partner Kyle Samani are putting their money where their mouths are; they’re the two largest investors in the new vehicle, dubbed Venture Fund III. The fund, which disclosed investments from at least 321 sources, aims to put $500,000-$25 million in early-stage opportunities, but potentially up to $100 million for more mature projects as well, according to a press release. Multicoin may also deploy additional funds from its multi-billion-dollar evergreen liquid fund for these larger investments.
The company offered a $100 million Venture Fund II last year, which invested heavily in blockchain and crypto. Winning bets on Solana, crypto exchange FTX and Hivemapper gave Multicoin the confidence to raise a new fund more than four times the size just a year later.
Venture Fund III is meant to focus on a few specific areas of investment, one of which is proof of physical work. These projects utilize blockchain tools to incentivize mass collaboration on real-world projects. A successful example is Helium, a proof-of-coverage startup that allows users to earn tokenized $HNT rewards by letting other users access their $495 Helium-branded internet hotspots. Multicoin bet big on Helium in 2019 and reported generating 10x returns after leading a $15 million Series C fundraising round. Venture Fund III will target similar investment opportunities that apply blockchain to consumer-facing businesses.
“With Helium at 900,000 hotspots, that’s substantial market proof,” said Jain, “that you can use tokens to pay people to build useful infrastructure. That is definitely something that we’re doing more of, and we’re doubling down on it as a thesis.” Jain added that the new fund will also target DataDAO (decentralized autonomous organization) projects, which offer users tokenized rewards for helping to aggregate publicly available data sets out of otherwise individualized information. Creator monetization is another key funding target.
But Jain says he has confidence that the currently adverse market conditions won’t affect the fund’s performance. Multicoin has been through bear markets before, in 2017-18 and last year, and lessons learned then dictate its strategy.
“Money is still flowing,” says Jain. “Funds are still getting raised. Everyone is always doom and gloom about public-market prices, but I think the enthusiasm to invest in this sector has only grown. A lot of our big wins were investments we’ve made in the last bear market that everyone thought were crazy. That experience has been very educational.”
Jain said that in his view, this downturn is distinct from previous ones because of how blockchain technology has evolved to provide opportunities for innovation.
“In the last bear market, the tools were not yet there to build anything useful from a creator monetization perspective,” says Jain. “You didn’t have the fastest layer on blockchains or layer twos. You didn’t have on-chain messaging yet. Now, we are substantially more mature. That means that people can build consumer-facing apps and experiences.”
