PayPal and Visa are chasing bets across the crypto industry as partners in Blockchain Capital’s fifth venture fund, a $300 million war chest announced Tuesday.
The increasingly crypto-savvy companies are relative newcomers to crypto VC. While both have invested directly in a handful of crypto startups, joining as limited partners (LPs) means an outside manager will place broader equity investments on their behalf. PayPal confirmed to CoinDesk this is its first such arrangement with a crypto VC firm.
Blockchain Capital is one of older and larger crypto-native venture capital firms with over $1.5 billion under management, General Partner Spencer Bogart told CoinDesk. He said the firm’s fifth fund also received backing from pension funds and university endowments but declined to name additional LPs.
By Bogart’s telling, the payments giants are hungry for bolder investment opportunities across an industry they believe in but need the help of a “field guide” to fully navigate.
“There’s nothing better than walking an early-stage startup into the likes of a Visa or PayPal and helping them secure a commercial agreement, and helping make sure that on Visa and PayPal’s side, they have solutions for the products that they want to launch,” he said.
Bogart said the LP route gives these firms indirect equity upside while also getting an early read on startups for partnership deals.
PayPal also sees it that way. “Investing in Blockchain Capital’s new fund allows us to engage with and learn from entrepreneurs driving the future of digital currencies and blockchain,” PayPal crypto lead Jose Fernandez da Ponte said in a statement.
Blockchain Capital is looking to scatter this $300 million in early-stage gems – “not exactly the Coinbases and the Krakens of the world just yet,” said Bogart. It began deploying capital over 12 months ago but most of its new fund is waiting. (Coinbase, Kraken, Anchorage and OpenSea are previous Blockchain Capital investments.)
The new fund is maintaining a focus on crypto infrastructure plays like startups building to support decentralized finance (DeFi) and non-fungible tokens (NFTs) while avoiding the assets themselves, Bogart said.
Blockchain Capital’s fourth fund, announced in March 2018, clocked in at $150 million.