Building on the success of our first venture fund, we’re proud to announce that Multicoin Capital has raised a new $100M venture fund to back entrepreneurs building companies (equity), and protocols (tokens) in and around the crypto space. We have been investing out of this vehicle for several months already.
Coinciding with this announcement, we are excited to promote three of our team members to Partners: Matt Shapiro, Mable Jiang, and John Robert Reed. We are a small, close-knit group, and each of them creates a strategic advantage for the firm. Matt is based in the NYC area and leads our investor relations function and helps structure complex deals. Mable is based in Hangzhou, China where she leads our efforts in Asia and helps to bridge the information gap between East and West. Both of them participate on the investment team and are actively looking to lead new investments. John Robert is based in Austin, Texas. He leads the firm’s marketing and communications strategy and plays an integral role in supporting our portfolio’s success.
We also recently recruited two more people to our investment team, and are actively hiring for an investor relations role.
Our Limited Partners
Not all capital is created equal. Entrepreneurs know this better than anyone else. When putting together this fund, we made a deliberate decision to create a strategic mix of institutional partners, crypto-native partners, and strategic operators. Each brings something special.
Across our firm, our LPs include some of the world’s most reputable endowments, venture capital funds, fund of funds, HNWIs, and family offices. Our LP base is also deeply rooted in the crypto community. It includes some of the largest exchanges, market makers, mining pool operators, trading firms, builders, and operators in crypto from all over the world. We actively leverage these relationships to help our portfolio projects grow in unique ways including business development, recruiting, navigating crypto capital markets, and more. This is one of the many reasons why we often have the privilege of working with some of the top entrepreneurs in the space.
How We Invest
We generally prefer to back entrepreneurs earlier rather than later, and would rather lead than follow. We also prefer to invest in tokens but also do equity deals as well. We can invest as little as $500k in earlier stage deals, and can invest up to $100M+ in individual deals when including capital from our hedge fund. We are full life cycle investors, and will continue to invest with entrepreneurs from seed stages to mature public markets.
When we invest, we invest with conviction, which helps us justify rolling up our sleeves and being more actively involved. As we’ve written before, the best way to capture alpha is to create it.
Our single largest investment in our first venture fund was Helium, which represented almost 12% of the fund. We are looking for more Helium-level opportunities where we can work closely with an entrepreneur or team, develop deep conviction, and lead large rounds. In those instances, we can also leverage our much larger hedge fund to continue to invest in the project in the public markets unlike traditional venture investors.
The Next Wave of Crypto Innovation
The last few years of crypto has been predominantly about investing in technical and market infrastructure. This includes billions of dollars of investment into Layer 1 and 2 protocols, zero-knowledge systems, key management solutions, indexing and query solutions, storage solutions, ASIC manufacturers, sophisticated mining operations, custodians, prime brokerages, exchanges, and more. We helped seed or fund many of these projects early—The Graph, Solana, Torus, StarkWare, and others—out of our first venture fund.
Since then, the core infrastructure—both technical and market related—has matured tremendously. With much of the core infrastructure in place, innovation is moving up the stack.
At a high level, our Crypto Mega Theses guide our investment strategy. Within them we are looking for several new opportunities to emerge during the time we are deploying this fund.
Over the next few years there is going to be an incredible wave of innovation in Open Finance and Web3, as well as new kinds of crypto-enabled infrastructure and applications. This wave will only be possible because the underlying infrastructure has matured to a sufficient level. We expect to deploy a significant amount into these areas out of Venture Fund II over the next few years.
DeFi Primitives — We have been active DeFi investors over the past two years across both the public and private markets, including investments in Aave, Alpha, Oxygen, Perpetual Protocol, Saffron, Serum, Swivel, and Thorchain. We will continue to invest in DeFi investments out of Venture Fund II throughout the DeFi Stack. While we have already invested in many DeFi primitives, the design space is vast, and we expect to make major investments in even more primitives going forward.
Mainstreaming DeFi — as DeFi protocols mature, there are going to be thousands of entrepreneurs who localize the DeFi experience. We want to back entrepreneurs who are accelerating the adoption of DeFi. We are invested in this today today via Math Wallet and Luna, and are impressed with the growth of Mirror protocol.
DeFi on Solana — we have been proud and vocal Solana investors since our first investment in May of 2018, and we were among the first investors in Serum. After the most recent Solana + Serum hackathon, it’s clear that there will be a burgeoning DeFi ecosystem on Solana written natively in Rust that takes advantage of Solana’s performance, and plugs into Serum’s composable on-chain order book. We will back the best entrepreneurs building scalable DeFi applications on Solana.
Web3 Infrastructure — We have also written about Web3, another one of our Crypto Mega Theses, and specifically the Web3 stack. We made several investments in some of the most strategic layers of the stack out of our first venture fund. While the Web3 stack has come a long way, it’s still in its early days. We will continue to invest in core infrastructure within the stack, like Arweave, The Graph, and Torus, out of our new fund.
Crypto-Native Distribution Platforms for Creators — With the rise of the creator economy on Instagram, YouTube, TikTok, and SubStack over the last few years, it’s become clear that creators are seeking new ways to engage with their fans and monetize their work. We believe crypto will unlock new mechanisms for creators. There are already a handful of companies experimenting with this sector including Mirror, Audius, and AiMi, and we expect this sector to blossom over the next few years.
CRYPTO-ENABLED INFRASTRUCTURE & APPLICATIONS
Industry Applications with Crypto-Native Incentive Models — In addition to consumer- and creator-focused applications, we are also hunting for applications that leverage the unique qualities of crypto-native incentive models to solve problems within industry applications and physical space. We think this category will unleash a tidal wave of non-crypto-native innovation. Helium is the instructive example of this within our portfolio, which is focused on wireless networks. The thesis for Helium is that it enables the creation of a new business model for deploying and managing wireless networks. This is only possible by using a crypto-native economic model to incentivize people all over the world to deploy hotspots. We have learned a tremendous amount from working closely with the Helium team over the last two years. But the most important thing we’ve learned is that it’s possible to use crypto to incentivize people to build physical infrastructure that’s distributed around the world. We think this is a massive idea, and has all kinds of implications in fields such as data collection (e.g., weather data), logistics, and more. There will be more trillion dollar opportunities in this thesis in addition to Helium, and we are the best positioned investment firm in the world to lead these investments.
Finance-Infused Social Applications — Crypto makes it easier than ever to embed money and investments into any application. We want to invest in new kinds of social applications that embed money and finance in ways that were not possible on traditional financial rails. eToro serves as the first mainstream TradFi example. The opportunity to build social finance applications on crypto rails is 10x - 100x larger.
Crypto-Native Gaming Platforms — The first wave of crypto-native games were primarily focused on owning assets that give the player special powers (e.g., trading cards). We are looking to invest in games that are only possible in a crypto-native paradigm. This may include stateful universes like Decentraland or Axie Infinity, or in entirely new kinds of games that leverage crypto-native concepts like staking, betting, and curation. We don’t have strong conviction on what specific mechanics will matter; instead, we seek to back game developers who can incorporate crypto-native thinking to design new mechanics that are not yet widely understood.
NFTs & Digital Collectibles
Digital Collectibles — NFTs have blossomed over the last year as the foundational tech enabling people to express their passion for digitally native media assets. The design space around NFTs is very large, and we’re excited to back in entrepreneurs who are at the forefront of this design space.
Social Tokens — building on the digital collectible focus, we believe crypto rails create new opportunities for people to monetize their personal brands directly and share that upside with the public. The first incarnation of this was income sharing agreements (ISAs). But using crypto rails, the design space is vastly larger than the confines of debt + equity in the traditional capital stack.
Building The Metaverse — while it’s unclear how exactly the Metaverse will come about, we are convicted that 1) the Metaverse will be a massive opportunity, and 2) that the state of Metaverse will persist on a massively scalable, credibly neutral tech stack. We are looking to invest in all forms of infrastructure that can enable the Metaverse, along with Metaverse-native applications and marketplaces.
Work With Us
We’re actively deploying Venture Fund II. If you’re building something great, or even just have an idea, we’d love to hear from you. You can reach our team on Twitter or Telegram.
Disclosure: Multicoin has established, maintains and enforces written policies and procedures reasonably designed to identify and effectively manage conflicts of interest related to its investment activities, and may hold similar or related investments in different investment vehicles that follow different investment strategies from those of Multicoin Venture Fund II.