Venture Capital Firm Sequoia Capital Bets Big on Crypto
Cryptocurrencies might be posting losses for their investors right now, but there is enough money flowing into this space despite the volatile nature of this asset.
Experts believe the growth of crypto is here to stay.
Leading California venture capital firm Sequoia is the latest to pledge nearly $600 million to become a more active investor in crypto.
The timing of the investment is perhaps a crucial reminder that despite a bitcoin crisis, the cryptocurrency is seen as a bullish asset.
Right now, bitcoin has once again fallen to the $40,000 mark, a first in the past two weeks. Bitcoin is trading near $39,891 at the time of writing according to CoinGecko, a crypto asset price tracking website.
In a departure from its traditional venture capital model, the company created a separate fund for the first time – 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 written in a blog post.
The Sequoia Crypto Fund is one of the first sub-funds to invest in the company’s new capital structure, the Sequoia Capital Fund, the company said. Sequoia Capital Fund is the global investment entity also announced as part of a broader restructuring.
“We have a long-term view of 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 previous crypto investments included crypto-focused hedge funds like Polychain Capital, Metastable, social media startup DeSo, Filecoin data storage network and San Francisco-based blockchain and software company 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 at every stage of their journey out of our seed funds, capital -risk, growth and expansion,” the company added in its blog post.
Melting Pot Web3 for venture capital funding
In an effort to improve financial infrastructure for all, venture capital money is flowing into Web3 building and decentralized finance or DeFi projects.
Web3 is a roughly defined vision of a decentralized internet that uses technologies such as blockchain.
Rival venture capital firm Andreessen Horowitz has investments in crypto investment app CoinSwitch, crypto infrastructure company and Web3 Alchemy, privacy-focused blockchain app Aleo, blockchain startup Solana Labs that develops technology used in DeFi, among others.
Andreessen Horowitz also backed the first mobile digital wallet Valora which is working on wider adoption of crypto and DeFi.
In 2021, venture capitalists invested more than $33 billion in crypto and blockchain startups, making it a landmark year, according to a report by bitcoin firm Galaxy Digital, which offers banking and institutional services. as reported by Blockworks.
The biggest crypto funds last year include “Paradigm’s $2.5 billion fund, Andreessen Horowitz’s $2.2 billion fund, Hivemind Capital’s $1.5 billion fund Partners and 10T Holdings’ $750 million fund,” according to data from Galaxy Digital, Blockworks reported.