1Q 2019 — “Winter is here”, really?
In “Crypto” yes, but blockchain technology is thriving
Welcome to the first of our new periodic updates about our blockchain-tech focused funds, our strategy, our portfolio, and sector news.
- Should you read this update? Only if you are curious about how a diversified VC fund focused on blockchain and ‘decentralized finance’ can thrive despite the decimation of cryptocurrency valuations.
- Our maiden fund, ACV Blockchain Fund I is completely invested across a portfolio of 27 holdings across equity, tokens, and cryptocurrency investments (approximately a third in each category). Visit the portfolio here.
- Fund II is now open to qualified accredited investors (see disclaimers below) and several existing investors in Fund I have signed up for Fund II as well. Most have funded their commitments already. However we are not investing from it yet, while we tweak strategy to adapt to the changing blockchain opportunity. Accredited investors who are qualified clients may wish to check out Fund II (sign up to learn more).
- Investing and fund-raising will bring me to your global city (London, Chicago, Tokyo) in the next 6 weeks. I also frequently in New York and San Francisco. Please fill out this form and let me know you would like to meet via the message box.
ACV Blockchain Fund I completely invested
At this point our maiden fund is fully invested across a portfolio of 27 holdings (view portfolio). We are thrilled to have companies like Circle, Algorand, Adjoint, Tari Labs, mTonomy, and Staked in our portfolio.
We have always maintained that blockchain is a risky sector but for those with tolerance for this risk, investments in the sector present asymmetric upside. The investment team at ACV strives to minimize the risk by following a strategy of “over-diversification” — by which we mean more diversification than a typical venture fund. This diversification has played out across several dimensions but I will touch upon just a couple this month.
We invested in three kinds of assets to play the entire blockchain opportunity
- Equity positions account for about 30% of the fund in equity of software companies building blockchain technology or infrastructure
- Tokens make up 36% of the fund and these will accrue value for specific blockchain applications
- Currencies make up a third of the fund and these include major coins like Bitcoin and Ethereum
We invested across vertical and horizontal components of the blockchain technology stack
- Store of value: Crypto-currencies like Bitcoin attract a lot of attention for being “digital gold” or a store of value that can appreciate and in the 2017–2018 era, the use case for blockchain has primarily been as a store of value. Our 25% exposure reflects this reality.
- Smart-contracts: We believe the longer-term investment opportunity is much broader with a current-era emphasis on development of protocols which we highlighted in our published thesis on the blockchain technology stack. The bulk of our investments (nearly 40%) span protocols and infrastructure that drive blockchain transactions based on smart contracts
- Infrastructure and ecosystem plays make up the rest of the portfolio. These are companies emerging as technology vendors or market makers in the world of decentralized finance (“de-fi”) and next generation fintech called Fintech 4.0.
Fund II Update
I have been amazed by the response we have received from so many of Fund I investors as repeat investors in Fund II. We appreciate their continued support and confidence in ACV. Those who have already funded your commitments to Fund II, please note that we are not investing from the fund yet while we are focused on tweaking strategy, finalizing some of our ancillary legal structures, and wrapping up the fund raise.
Three major changes in Fund II:
- We will have a larger fund with institutional investment options
- We will do a larger proportion of equity investments with more focus on applications and infrastructure
- We will be more global (more on this next month)
Please fill out this form to learn more about our diversified venture capital approach to investing in the blockchain opportunity.
Important Disclosure Information:
The various funds of the Applied Crypto Ventures (ACV) Blockchain Fund are a series of Green Nonce Ventures, LLC (GNV), DBA Applied Crypto Ventures, LLC. GNV is an independent, for-profit company. Past performance of Applied Crypto Ventures Blockchain Funds may not be indicative of future results. Different types of investments involve varying degrees of risk, and venture capital funds, including the Applied Crypto Ventures Blockchain Funds, are very long-term investments that involve substantial risk of loss, including loss of all capital invested. Moreover, you should not assume that any of the above content serves as the receipt of, or as a substitute for, personalized advice about investments. This newsletter is informational and educational only, and no offering of securities is made with this newsletter. Offers are made only pursuant to formal offering documents, which describe risks (which are significant), terms, and other important information that must be considered before an investment decision is made. Applied Crypto Ventures Fund offerings are made solely to accredited investors who accept the responsibility for conducting their own analysis of the investment and consulting with their professional advisors with respect to their analysis of this investment. ACV’s investments are risky, not suitable for all investors