Crypto firm Pantera Capital is looking to raise up to $175 million for a new venture fund

Pantera Capital, which has made its mark in recent years by investing early and often in a wide variety of digital assets, is looking to raise up to $175 million for its third venture fund — an enormous jump from the $25 million it deployed for its second venture fund and its $13 million debut venture fund, which it closed in 2013.

Firm partner Paul Veradittakit says the target amount is a “function of how fast the space is moving, the talent coming in, the opportunities, and the sizing of rounds. With more interesting later-stage investments [on our radar], too, we want to be flexible and able to move with the market.”

Whether the firm closes with $175 million or another number is an open question. A newly processed SEC filing shows it has so far rounded up more than $71 million in capital commitments from 90 investors, an amount that Veradittakit calls a “first close.”

Certainly, Pantera is accustomed to managing meaningful sums of money. In addition to its venture funds, which are structured like most traditional venture funds — they feature a 10-year investing period, similar economics, and involve good old-fashioned checks to startups in exchange for some amount of equity — the firm is also juggling three other strategies.

As we reported last year, one of its newest funds is a hedge fund that’s focused exclusively on initial coin offerings. As firm founder Dan Morehead told us at the time, Pantera buys pre-sale ICOs, “basically getting a discount to the ICO price by getting in early, when it’s just a team and a white paper.” Meanwhile, Morehead had added, “We help provide the right connections, whether in terms of marketing or recruiting or business development.

The vehicle is evergreen, says Veradittakit, meaning it has an indefinite fund life that lets investors come and go.

The other two other funds that Pantera currently oversees are also structured like hedge funds. One is a Bitcoin fund that has attracted plenty of investors over the years, and returned a lot to them, too, according to the calculations of Morehead. In fact, he wrote two weeks ago that the fund, launched five years ago, has enjoyed a lifetime return of 10,136.15 percent net of fees and expenses.

The very last fund invests in cryptocurrencies that are already trading on exchanges — an approach that includes machine learning to algorithmically invest in crypotcurrencies, as well as allows for some discretionary input by Pantera’s top brass, which includes Morehead, Veradittakit, and Joey Krug, who joined Pantera last year after cofounding the market forecasting startup Augur. (It went on to orchestrate the first ICO on the ethereum network.)

Explains Veradittakit of this last pool, it’s for “if you are’t sure that Bitcoin will remain the dominant cryptocurrency, or you’re interested in other use cases that may arise, or you just want to build a diversified portfolio of assets that have asymmetrical returns as bitcoin, or maybe return even more because they feature lower valuations.”

In some ways, the venture efforts of Pantera —   which employs 38 people altogether in San Francisco and Menlo Park, Ca. —  may be its most challenging given the nature of VC. Investors in the asset class are typically willing to wait a handful of years for a firm to produce returns; in Pantera’s case, because it is betting exclusively on ventures, tokens, and projects related to blockchain tech, digital currency, and crypto assets, some of those returns could potentially take even longer.

Veradittakit doesn’t sound concerned. Rattling off some of Pantera’s venture investments to date, including in BitStamp, Xapo, Ripple, and Circle, not to mention more recent investments in Chain, Abra, Veem Polychain, and Z Cash, he sounds more like a proud parent. Pantera has invested in “lots of wallets and exchanges focused around the world, in Coinbases of different geographies, in enterprise-related blockchain companies. More recently, we’ve funded everything from big data to decentralized application platforms.”

It’s still very early days, he acknowledges. But “in terms of returns, there will be companies that create something completely disruptive. There will be M&A [opportunities] more often and that [come together] more quickly than other companies.”

If everything goes as planned, Pantera will be there when they do, and it will have more resources to deploy than ever.

With at least $1.3 billion invested globally in 2018, VC funding for blockchain blows past 2017 totals

Although bitcoin and blockchain technology may not take up quite as much mental bandwidth for the general public as it did just a few months ago, companies in the space continue to rake in capital from investors.

One of the latest to do so is Circle, which recently announced a $110 million Series E round led by bitcoin mining hardware manufacturer Bitmain. Other participating investors include Tusk VenturesPantera CapitalIDG Capital PartnersGeneral CatalystAccel PartnersDigital Currency GroupBlockchain Capital and Breyer Capital.

This round vaults Circle into an exclusive club of crypto companies that are valued, in U.S. dollars, at $1 billion or more in their most recent venture capital round. According to Crunchbase data, Circle was valued at $2.9 billion pre-money, up from a $420 million pre-money valuation in its Series D round, which closed in May 2016. According to Crunchbase data, only Coinbase and Robinhood — a mobile-first stock-trading platform which recently made a big push into cryptocurrency trading — were in the crypto-unicorn club, which Circle has now joined.

But that’s not the only milestone for the world of venture-backed cryptocurrency and blockchain startups.

Back in February, Crunchbase News predicted that the amount of money raised in old-school venture capital rounds by blockchain and blockchain-adjacent startups in 2018 would surpass the amount raised in 2017. Well, it’s only May, and it looks like the prediction panned out.

In the chart below, you’ll find worldwide venture deal and dollar volume for blockchain and blockchain-adjacent companies. We purposely excluded ICOs, including those that had traditional VCs participate, and instead focused on venture deals: angel, seed, convertible notes, Series A, Series B and so on. The data displayed below is based on reported data in Crunchbase, which may be subject to reporting delays, and is, in some cases, incomplete.

A little more than five months into 2018, reported dollar volume invested in VC rounds raised by blockchain companies surpassed 2017’s totals. Not just that, the nearly $1.3 billion in global dollar volume is greater than the reported funding totals for the 18 months between July 1, 2016 and New Year’s Eve in 2017.

And although Circle’s Series E round certainly helped to bump up funding totals year-to-date, there were many other large funding rounds throughout 2018:

There were, of course, many other large rounds over the past five months. After all, we had to get to $1.3 billion somehow.

All of this is to say that investor interest in the blockchain space shows no immediate signs of slowing down, even as the price of bitcoin, ethereum and other cryptocurrencies hover at less than half of their all-time highs. Considering that regulators are still figuring out how to treat most crypto assets, massive price volatility and dubious real-world utility of the technology, it may surprise some that investors at the riskiest end of the risk capital pool invest as much as they do in blockchain.

Notes on methodology

Like in our February analysis, we first created a list of companies in Crunchbase’s bitcoin, ethereum, blockchaincryptocurrency and virtual currency categories. We added to this list any companies that use those keywords, as well as “digital currency,” “utility token” and “security token” that weren’t previously included in the above categories. After de-duplicating this list, we merged this set of companies with funding rounds data in Crunchbase.

Please note that for some entries in Crunchbase’s round data, the amount of capital raised isn’t known. And, as previously noted, Crunchbase’s data is subject to reporting delays, especially for seed-stage companies. Accordingly, actual funding totals are likely higher than reported here.