Web3 venture capital firm Hack VC is committed to staying the course after weathering “at least three bull market cycles,” the company said yesterday, announcing its first venture fund. The company said it raised $150 million for the fund “opportunistically in a bear market.”
This venture funding round follows Hack VC’s first $200 million cryptocurrency funding that closed in February 2022. Combined with other investment vehicles, the firm’s total assets under management currently exceed $425 million.
Co-founders and managing partners Alex Pack and Ed Roman said they are used to dealing with doubters.
“At every turn, we deal with institutional investors who dismiss the idea that web3 is investable,” they wrote on the Hack VC blog. “Every time I have Bitcoin, I’m asked, ‘Where are the use cases?’ And ‘Isn’t cryptocurrency illegal?’ “We’d be richer than Gary Gensler by now.”
But despite the challenges, builders continued to build and Hack VC continued to invest.
“As a company, our bias is to invest in technology infrastructure. The technical choices and steps that help build blockchains are a key focus of what we do,” Roman said. decryption. “That’s because we’re developers and we’re technical, and we think this is the foundational layer you need to build long-term applications.”
Roman declined to name venture fund participants for compliance reasons, but said “investors include some of the largest pension funds, endowments and foundations in the country.”
Hack VC portfolio companies include restaking security blockchain Eigenlayer, stablecoin lending platform Goldfinch, enterprise digital asset finance company Bitwave, and Bitcoin staking startup Babylon. (Disclosure: HackVC is one of 22 strategic investors. decryption.)
Hack VC has built a reputation in the tech world by hosting developer conferences and hackathons. The gathering has attracted more than 135,000 attendees from more than 150 countries over the past nine years, and the main Hack.Summit() event is scheduled to be held in Hong Kong in April, Roman said.
Hack VC is declaring a new upcycle in the cryptocurrency and Web3 space with its new venture fund.
“We are planting the flag as staunch long-term supporters of Web3 and are committed to bringing more funding to the core blockchain technologies we have invested in for a long time,” Pack and Roman wrote.
Roman explained that blockchain security is a key focus for the company.
“As Web3 grows, there will be more application developers coming into Web3, and they will need to build on a stable technology foundation that is not vulnerable to hacking,” he said. decryption. “Over the past few years, we’ve seen billions of dollars in losses due to (hacks), so making blockchains more scalable, improving performance, and making blockchains more secure is an area we’re focusing on.”
In addition to security, Hack VC is looking at two other pillars of the Web3 space: DeFi and AI.
“Currently, DeFi is not a category as valuable as infrastructure, but I think that’s probably a temporary phenomenon,” Roman said.
“If you look at the history of venture capital and look at Web2 Venture Capital, embedded finance and embedded fintech (financial technology) have been one of the hottest categories for Web2 investments for many years,” he explained. “There is a good reason for this: you are in a stream of payments, there are many ways to monetize it, and it is capital efficient. It is also very (business-to-business) focused, which makes it more reliable.” he said
“We think we’re going to start seeing a lot of these trends and patterns in Web3 as well,” Roman said.
Commenting on the recent surge in interest in Web3 games and the continuation of NFT projects, Roman said consumer-facing technologies, which often struggle to acquire users, are often outside Hack VC’s wheelhouse.
“It’s not about the game and the consumer, it’s about some kind of technology infrastructure,” he clarifies. “For some investors, the investment categories may seem a bit boring – infrastructure and DeFi rather than gaming – but we think these are more reliable and more predictable businesses from an investment perspective.”
Could NFTs make a comeback?
“We think that even though the long tail of NFTs has taken a hit in terms of price, there may be some that are basically worthless right now,” Roman said. “But ‘blue chip NFTs’ still have value and some of that has been retained, so they may still come back. It’s still too early to tell.”
Certainly the front end of Web3 technology could benefit a lot. The current state of the art of Web3, as observed by the Hack VC co-founders, is similar to what the Internet was like in the mid-1990s. A connected world was clearly inevitable at the time, but it was also low-tech, complex, and expensive.
“Like the Internet before Windows 95 and before Netscape, Web3 is largely unusable by legacy users and completely unusable by mainstream users,” Hack VC said. “Web3 requires an infrastructure paradigm shift that crosses scalability, security, and usability. I’m ready for my prime.”
Sensing that the next Google, Microsoft or Amazon is already here, the company wants to “invest at the earliest possible stage” and offers its in-house full-stack technology platform, Hack.Labs(), to founders to bridge these trends. The gap from GitHub to the mainstream market.