I dug through the portfolios of 5 venture funds investing in crypto/blockchain: a16z, Coinbase Ventures, Pantera Capital, Paradigm Capital, & Sequoia Capital.
Broken out by section below, the goal was to understand:
- What categories are the top funds investing in? (5 min read)
- What is the most interesting place to invest? (1 min read)
1) Top Investment Categories by Fund
Below is a breakdown of each fund’s investments that they’ve published publicly. For each fund, I highlight the two most popular categories by investment type then pick one portfolio company that was particularly interesting.
#1 Pantera Capital
1st = Exchanges (~20% of their portfolio)
2nd = Blockchain infrastructure (12%)
Interesting portfolio company:
- Elevator: AMPL is a cryptocurrency like Bitcoin, but with a twist: the amount of coins you own changes daily, but the total value of your holdings stay the same.
- Key insight: You can never be diluted by inflation, meaning your percent ownership of the network remains fixed.
- Key solution: Cryptocurrencies mostly map to Bitcoin’s price pattern, which creates a dangerous correlation across the crypto market. AMPL diversifies that risk by increasing or decreasing the supply of coins to hold the price and overall value stable.
- Example: Borrowing and lending in crypto is challenging because the underlying collateral is made up of volatile stablecoins like USDC or Dai. The crypto you borrowed could easily drop 50% in value, forcing you to continually pledge more crypto to your initial collateral. AMPL constantly changes the supply of their tokens to manage inflation and hold the overall value of the network constant. As a borrower or lender, this ensures there won’t be any price shocks in the underlying collateral.