Crypto.com, a renowned cryptocurrency exchange, has increased the size of its venture fund to $500 million, following similar moves by rivals Binance, Coinbase, and FTX.
Crypto.com Capital's expansion comes less than a year after the Singapore-based firm announced its first $200 million funds. Unlike many of its competitors, the fund has no limited partners (LPs), which means the company's balance sheet entirely funds it.
YGG SEA, multi-chain crypto portfolio tracker DeBank, cross-chain token infrastructure Efinity, and Ethereum scaling solution Matter Labs have all received funding from the first fund, which has individual cheques ranging from $1 million to $10 million.
In an interview with TechCrunch, Crypto.com will continue to support early-stage startups, said Jon Russell, who joined the firm as a general partner this month.
Crypto.com broadly focuses on gaming, decentralized finance and startups innovating on cross-chain solutions with the fund. But he cautioned that the industry could change and expand, as it has in recent years, to areas "we don't know about," hence the firm is keeping an eye out on everything.
Tuesday's announcement also further illustrates the growing involvement of cryptocurrency exchanges in being the rainmaker – and beneficiary – of the ecosystem, which encompasses the industry they operate.
FTX, which has backed over 15 startups, announced a $2 billion crypto fund last week. Its founder, Sam Bankman-Fried, also owns Alameda Research, a venture firm that has backed close to 100 web3 startups.
Coinbase Ventures, the investment arm of the only crypto exchange publicly traded, and Binance, the world's largest cryptocurrency exchange by trading volume, are also among the most prolific investors in the web3 space.
Venture investment in crypto / web3 in 2021 by category (Image credits: Galaxy Digital)
Even as most of the names mentioned above often co-invest in startups, the funding activity in the space is at an all-time high. VCs invested more than $33 billion in crypto/web3 startups in 2021, more than all prior years combined, Galaxy Digital, another prolific investor in the space, wrote in a recent report.
"Valuations in the crypto/blockchain space were 141% higher than the rest of the venture capital space in Q4, highlighting a founder-friendly environment and the intense competition among investors for deal allocations," the report added.
Scores of venture capital firms have also raised new funds for their crypto investments. Just last year, Andreessen Horowitz added a $2.2 billion crypto fund, Paradigm unveiled a $2.5 billion fund, and Hivemind Capital Partners announced a $1.5 billion fund. Katie Haun, who co-led a16z's $2.2 billion crypto fund, has left the firm to launch her crypto-focused fund.
Russell – a former journalist who previously had stints at TechCrunch, The Next Web, and The Ken – said Crypto.com is backing startups to help the ecosystem grow.
"If you're in the industry, it's in your interest to help companies grow in the ecosystem and the ecosystem itself to grow," he said. (Worth pointing out that Solana, Avalanche, Polkadot — as well as some of their major investors — are also aggressively backing startups that are building applications for the native blockchains.)
The startups Crypto.com backs are under no obligation to list their tokens on Crypto.com over any of its rivals or offer the exchange any other preferential treatment, he said. He added that the exchange team similarly doesn't have a soft spot for the investment arm's portfolio firms.
(What's up with the career move? "I've been crypto curious for a number of years but I wasn't gasping to dive in full-time. This project appeals to me because Crypto.com is ambitious but yet it does things the right way. There's certainly a lot of hype and hot air in crypto and web3 right now, but it's impossible to ignore the talent that's pouring into the industry," he said.)
Crypto.com, which started its life as a blog of professor Matt Blaze (who sold the domain to the crypto exchange), has aggressively expanded in the past year as it looks to court more users. Last year, the Singapore-headquartered firm agreed to pay more than $700 million for the naming rights of the Staples Center in Los Angeles. The downtown Los Angeles complex has been rebranded as Crypto.com Arena for the next 20 years.
The firm, which bills itself as the "fastest-growing" crypto exchange, said at the time of the announcement that the move is positioned to make cryptocurrencies mainstream. Crypto.com, which processes trade volumes of over $2.5 billion every day, also teamed up with Hollywood star Matt Damon last year to promote the brand and cryptocurrencies.
The Damon-starring ad equated buying crypto tokens and NFTs to one of the greatest and boldest accomplishments in the history of humankind. Hyperbole, to be sure, but having the most mainstream American actor as Crypto.com's celebrity sponsor has certainly helped bring the trading platform, and all that it sells, into the mainstream. The ad went viral and also attracted criticism for being cringeworthy. Source