Earlier this year, and in the midst of a prolonged bear market, news that Abu Dhabi-based Venom Ventures Fund was ready to invest $1 billion in web3 lifted the spirits of cryptocurrency believers.
The fund was the brainchild of Venom Foundation, a little-known layer 1 blockchain licensed by the Abu Dhabi Global Market, and Iceberg Capital, a locally regulated investment management firm. Peter Knez, formerly co-chief investment officer of BlackRock’s fixed income division, formed half of the fund’s two-person leadership team, along with Iceberg’s chairman, Mustafa Kheriba. Together, they planned to invest across the venture spectrum, from early to late stage, and even issue grants of $25,000 to $200,000.
But as its first year in business comes to an end, Venom Ventures appears to have little to show for it.
At the time of the announcement, the fund said it had led a $20 million investment in Nümi Metaverse. At the end of January, we announced a $5 million strategic investment in layer 1 blockchain Everscale, with capital to be provided in phases based on progress. No deal has been announced since.
There is no information about Venom Ventures’ portfolio on the website, but there may usually be an announcement “soon” that may have such details. Block Research’s deal database shows no records of Venom Ventures investing in the startup since January. It is known that Venom Blockchain, to which the venture fund belongs, has not yet launched its mainnet. X’s recent post Written by Christopher Louis Tsu, CEO of the Venom Foundation.
Meanwhile, Knez took on new responsibilities. He was recently appointed chairman of a new conservation-focused fund called ONE Amazon, which was unveiled at a summit in Dubai on December 3.
Kheriba, Venom Ventures and the Venom Foundation did not respond to multiple requests for comment on the venture fund’s progress.
Turning to the Middle East for Capital
The love affair between venture capitalists and cryptocurrency startups has been on the rocks for more than a year. Venture capital flows into web3 are expected to reach approximately $2.7 billion in the fourth quarter of this year, according to data from The Block Research. This is down from the dizzying heights of $13.5 billion in the first quarter of 2022. Falling token prices and a string of disasters (including but not limited to the spectacular collapse of dozens of organizations from Terra to FTX) have left VCs hurting. Sequoia Capital, a legendary Silicon Valley venture capital firm, zeroed in on its more than $200 million investment in FTX.
Cryptocurrency startups needing capital during these difficult times are increasingly turning to the Middle East. Last year, Dubai announced its “Metaverse Strategy” to add $4 billion to the economy by 2027. Former Binance CEO Changpeng Zhao reportedly visited Abu Dhabi in November 2022 to seek investments for his multibillion-dollar industrial recovery fund. Recently, Saudi Arabia’s NEOM investment fund announced a proposal to invest $50 million in web3 investment firm Animoca Brands.
There is a perception among some cryptocurrency veterans that the hype about the Middle East’s web3-friendly capital is nothing more than a mirage.
Kenzi Wang, co-founder and general partner of Symbolic Capital, said many venture capitalists seeking to raise capital in the Middle East “think money is a lot easier here than it is.”
“Tourism fund managers and startup founders who come here have the misconception that Middle Eastern investors will pour their money into cryptocurrency investments. “This could not be further from the truth,” he said. “Investors and LPs in this region are very sophisticated. They saw a lot of naive investors coming to the area thinking that if they got out of hand money would fall from the sky. LPs in this area won’t fall for that.”
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