Crypto.com, a popular cryptocurrency exchange, has expanded the size of its venture capital to $500 million to more aggressively support early-stage startups and help grow its burgeoning ecosystem.
Crypto.com Capital’s expansion comes less than a year after the Singapore-headquartered company unveiled its first $200 million funds. Unlike many of its competitors, the fund has no LPs (meaning it is fully funded by the company’s balance sheet).
The maiden fund, whose individual checks are sized up to $10 million, has been used to support about 20 startups so far, including YGG SEA, multi-chain crypto portfolio tracker DeBank, cross-chain token infrastructure Efinity, and Ethereum scaling solution Matter Labs.
Crypto.com will continue to focus on supporting early-stage startups, Jon Russell, who joined the company this month as a general partner.
With the fund, Crypto.com is focusing on gaming, decentralized finance, and startups developing cross-chain solutions. However, he warned that the industry could change and expand into areas “we do not know about,” as it has in recent years, which is why the company is keeping an eye on everything.
Tuesday’s announcement also illustrates the growing involvement of cryptocurrency exchanges as rainmakers – and beneficiaries – of the ecosystem that comprises the industry in which they operate.
FTX, which has backed more than 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 nearly 100 web3 startups.
Coinbase Ventures, the investment arm of the only publicly traded crypto exchange, and Binance, the world’s largest cryptocurrency exchange by trading volume, are also among the most prolific investors in the web3 space.
Funding activity in this space is at an all-time high, even though most of the names above often invest in startups together. VCs invested more than $33 billion in crypto/Web3 startups in 2021, more than in all previous years combined, Galaxy Digital, another prolific investor in this space, wrote in a recent report.
“Valuations in the crypto/blockchain space were 141% higher than the rest of the venture capital space in the fourth quarter, highlighting a founder-friendly environment and intense competition among investors to allocate deals,” the report continued.
Numerous venture capital firms have also raised new funding for their crypto investments. Just last year, Andreessen Horowitz raised 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 own crypto fund.
Russell – a former journalist who previously worked at TechCrunch, The Next Web, and The Ken – said Crypto.com supports startups to grow the ecosystem.
“If you’re in the industry, it’s in your interest to help grow companies in the ecosystem and the ecosystem itself,” he said. (It’s worth noting that Solana, Avalanche, Polkadot – as well as some of their major investors – are also aggressively supporting startups developing applications for native blockchains.)
The startups that Crypto.com supports aren’t required to list their tokens on Crypto.com or offer any other preferential treatment to the exchange, he said. The exchange team also has no preference for the investment arm’s portfolio companies, he added.
(What’s the career move all about? “I’ve been curious about cryptocurrencies for a few years, but I wasn’t keen on joining full-time. This project excites me because Crypto.com is ambitious, but still does things the right way. There’s certainly a lot of hype and hot air in the crypto and Web3 industry, but it’s impossible to ignore the talent that’s pouring into the industry,” he said).
Crypto.com, which began as a blog by professor Matt Blaze (who sold the domain to the crypto exchange), has been aggressively expanding over the past year in an effort to attract more users. The Singapore-headquartered company agreed last year to pay more than $700 million for the naming rights to the Staples Center in Los Angeles. The complex in downtown Los Angeles was renamed Crypto.com Arena for the next 20 years.
The company, which calls itself the “fastest-growing” crypto exchange, said at the time of the announcement that the move is designed to make cryptocurrencies mainstream. Crypto.com, which handles more than $2.5 billion in daily trading volumes, also teamed up with Hollywood star Matt Damon last year to promote the brand and cryptocurrencies.
The ad, starring Damon, equated the purchase of crypto tokens and NFTs to one of the greatest and boldest achievements in human history. Certainly an exaggeration, but having the most famous American actor as a celebrity sponsor of Crypto.com certainly helped bring the trading platform and everything it sells into the mainstream. The commercial went viral and also drew criticism for being so ridiculous