Crypto Venture Firms Challenge the 'Khaki, Sweater Vest' Crowd
Crypto Venture Firms Challenge the 'Khaki, Sweater Vest' Crowd
(Bloomberg) -- Venture capitalists are raising records amounts of money, and that boom is being partly driven by crypto-centric firms like Framework Ventures.
On Tuesday, Framework plans to announce a new $400 million fund to invest in young, blockchain startups, the founders said. It’s the third fund for the two-year-old VC firm, bringing its total assets under management to $1.4 billion.
Part of Framework’s pitch is that it’s nothing like a traditional VC in Silicon Valley. “If people have interacted with crypto, they have probably interacted with us,” said Vance Spencer, a founder of the San Francisco-based firm. “That — compared to the khaki, sweater-vest style of the Sand Hill Road firms — is just night and day.”
The VC industry is reaching new heights based in part on expectations for a generation of companies built around decentralized systems. In the first quarter, VCs in the U.S. raised $73.8 billion, the most money ever recorded in a three-month period and more than the total for most full years, according to research firm PitchBook.
Some crypto startups choose a specialized VC so they can enlist the partners’ expertise, said Michael Anderson, who founded Framework with Spencer. For example, he said, Framework has helped its startups beef up their blockchain security, an important issue in light of recent crypto hacks.
Framework will take steps with its investing to protect the integrity of decentralization, Anderson said. It intends to purchase about 4% to 6% of tokens in each project it backs — and therefore, restrict its influence by maintaining a small minority of votes, said Anderson. “Anything higher than that, or frankly, anything approaching 10%, you actually do call into question decentralization,” he said.
The firm will earmark about half of its new fund for companies developing crypto-based video games. Many gamers have expressed anguish about the potential for financial speculation to sour the fun, but Spencer is convinced that gaming will be the tipping point that ensures the mainstream adoption of crypto: “This is going to be the vertical that brings everyone in.”
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