The approval of a U.S. spot Bitcoin exchange-traded fund this year provided significant validation for the cryptocurrency industry, according to Franklin Bi, general partner at Pantera Capital. This is because the cryptocurrency venture capital firm is raising a new mega fund worth $1.25 billion.
Bi declined to comment specifically on Pantera’s new fund, but told The Block in an interview that now is generally an appropriate time for venture firms to raise new capital and support emerging startups.
Bi said the spot Bitcoin ETF approval was “quite a validation” for the cryptocurrency industry. “This approval really shows people that regulation is still moving in a positive direction for digital assets,” he said. “This kind of validation has really solidified the confidence of many institutional investors that this is a long-term technology trend and development cycle that they should be exposed to.”
Several cryptocurrency VCs raise new funds
In addition to Pantera Capital, Paradigm is reportedly in talks to raise between $750 million and $850 million for the new fund. Galaxy Digital, Hack VC, and Hivemind Capital are reportedly in the process of raising $100 million, $100 million, and $50 million in new funding, respectively.
Crypto Accelerator Alliance recently raised $20 million from Brevan Howard Digital and Galaxy Digital for its third fund, and aims to raise another $80 million by July. Peter Thiel’s venture capital firm Founders Fund also recently acquired a stake in Alliance. Meanwhile, cryptocurrency venture 1kx recently secured $75 million to support early-stage startups.
Optimistic about gaming and DeFi
Within cryptocurrencies, the gaming and decentralized finance (DeFi) sectors offer significant investment opportunities, according to Bi. He also noted the emergence of real-world asset tokenization as a continuation of DeFi, which brings traditional financial assets into cryptocurrencies.
Regarding startup valuations, Bi described them as “healthy” overall, but noted some overheating in the early stages due to surplus capital chasing select investments in pre-seed and seed-level funding rounds. Bi believes Series A stage valuations are attractive, especially for teams that demonstrate market success and long-term growth potential. At that stage beyond Series A, valuations become “very attractive” because there is demand for capital, but supply is “very stagnant and declining,” Bi said.
long term focus
Pantera Capital remains focused on fundamental growth in the cryptocurrency industry. CEO Rain noted that blockchain technology is making inroads into various global markets, including financial markets, supply chains, and consumer applications, and that this fits the venture company’s long-term strategy.
“So I think this is a good time to focus on this aspect of the industry and double down on our efforts for the long term,” Bi concludes.
Portions of this interview first appeared in The Block’s new The Funding newsletter. To get expert insights first, subscribe to our free newsletter here.
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