Announcing Our $110M Seed & Series A Fund

We are pleased to announce the close of Electric Capital’s second fund, a $110M Seed and Series A fund, focused on cryptonetworks and blockchain enabled businesses.

We are fortunate to partner with world-renowned university endowments and philanthropic foundations for our second fund. While it is common for these sorts of institutions to partner with traditional venture capital firms, it is rare for them to partner with cryptonetwork and blockchain centric firms. We are grateful to be able to work with partners who offer financial aid to the world’s brightest students, provide free healthcare to those most in need, and support the world’s leading scientific researchers.

We Invest $250k to $10M

As we did with our first fund in 2018, we aim to be the first to commit to a founder and are long term investors. We hold tokens for many years and use our tokens to participate in networks. With our larger fund size we will invest from $250,000 to $10 million in tokens or equity.

We Continue to Focus on “Programmable Money”

We have been focused on “Programmable Money” since 2017 and have three areas of focus:

1. Layer 1 Protocols where the base token is a form of money and a token that may become a non-sovereign, store of value.
2. Decentralized Finance & Community Owned Networks where tokens align economic incentives. Some of these networks will decentralize existing entities in traditional markets while some will be entirely novel applications that were previously impossible.
3. Crypto Enabled Businesses and Marketplaces where customers receive novel benefits enabled by cryptography, tokens, and blockchains.

Specific Ideas That Excite Us

The following are specific examples of networks and projects we would like to see emerge. If you are working on related ideas, we would love to hear from you. You can reach us at info@electriccapital.com. This is an email that delivers to every one of our investment partners.

DeFi

This is the fastest growing segment in crypto and blockchain-native financial products are still in the early days. We’ve gathered ideas that could unlock the next step-function for DeFi.

• Decentralized Market Maker — Crypto incentive systems like the ones used by Synthetix have been extremely effective in bootstrapping user adoption. Whether users can easily access and exchange tokens is one of the biggest determinants of a network’s success. We are looking for decentralized approaches to traditional market making to inject liquidity into the ecosystem and help DeFi products gain user adoption.
• Insurance for DeFi — Risk mitigation is one of the most pressing product needs as capital locked in DeFi grows. Risks range from flash crashes to smart contract vulnerabilities. We are looking for founders iterating on blockchain-native ways to manage risks.
• Credit Scoring for DeFi — Even with overcollateralization, value locked in DeFi has grown by 700%+ in the last year. Credit scoring and unsecured lending would create an explosion of new capital efficiency in DeFi. We are looking for founders creatively tackling this next big frontier.
• Pooled Asset Management & Decentralized Robo Advisors — Pooled assets are one of the key characteristics of DeFi. In traditional finance, pooled assets from retail investors created new robo advisors like Betterment and Wealthfront. We are looking for founders to map this fintech idea to crypto assets.

Community Owned Networks

Below, we’ve described ideas that can emerge now that blockchain enabled value exchanges within tribes and communities.

• Fan Clubs — The rise of Patreon & OnlyFans meant influencers shifted from needing to reach millions to thriving off the support of small groups. We’re looking for founders exploring ways to use tokens to allow communities to benefit from the rise of creators they support and decrease platform dependence for creators with dedicated fan bases.
• World-Building and Digital Land Ownership — Projects like Decentraland, Cryptovoxels, and Somnium have created digital worlds where users can verifiably own everything from their avatars’ shoes to digital land. We are looking for founders working on the growth of these worlds, especially tying it in with crypto elements to build experiences where the game encourages owners to behave as owners, not just players.
• Decentralized Bloomberg — The Bloomberg terminal is central to the trading of traditional financial assets. Cryptonetworks may allow data providers to offer data feeds on a pay per usage model as part of a network/consortium that uses the same data standards while allowing traders to keep proprietary data secret.

Fintech & Marketplaces

Tokenization makes ownership transferring easy and marketplaces more efficient. We have outlined ideas that are just the tip of the iceberg for what can be tokenized and traded.

• Fractional Ownership of Collectibles — Collectibles are one of the most accessible ways of accruing art, whether that is a coveted Magic the Gathering Card or a classic car, but the rarest collectibles sell from $10,000 to the millions. We are looking for founders tapping into the collectible fan base to democratize ownership.
• Invoice Factoring Marketplace — Today, businesses can sell their accounts receivables at a discount to receive financing. On the backend, financial institutions buy and sell packages of invoices, but this has a hard-to-trace paper trail. We’re looking for founders exploring a crypto-enabled marketplace that introduces more flexibility and liquidity in invoice factoring.
• Loyalty Points Exchange — Loyalty points account for more than $500 billion in value. While products exist that allow points exchanges today, the experience is difficult to navigate and appeal to niche users. Users want to build loyalty without being locked to specific merchants. We’re looking for founders who look beyond tokenization of loyalty points to a comprehensive user experience.
• Gift Card Exchange — The gift card industry is valued at more than $600B globally. Yet these gift cards are issued on legacy systems, people buy and sell gift cards in marketplaces with significant fraud risks, and people use gift cards to work around the legacy financial institutions (in sending money across borders, for example). There are likely meaningful opportunities to facilitate p2p exchange of gift cards and new ways to issue gift cards for business that take advantage of distributed ledger technologies.

Payments

While people have worked on crypto-enabled payments use cases since Bitcoin, the fiat onramps and offramps have been difficult for users to onboard to crypto. Below, we listed payment ideas that we’re excited to see as founders create better global infrastructure.

• Better Cross Border Remittances — Western Union processes roughly 2x the cross border volume of its next nearest competitor and has been in operation for over 150 years. It has an enormous network and high accessibility, but customers often complain about long lines and high fees. We are looking for founders working on a blockchain solution to unlock lower fees, shorter wait time, and capture the billions in volume that are remitted each year.
• Browser with Micropayments — Most web purchasing intents start with a browser, but our paradigm of making purchases online is based around the need for high transaction amounts to account for processing fees. Blockchain enables the ability to make a stream of small, fraction-of-a-cent payments. We are looking for founders exploring fluid pay-as-you-browse experiences or novel payment methods built in to the browsing and app experience.
• User Friendly Wallets — The gateway to crypto applications, wallets, are often a heavy lift for the user to operate. We are looking for founders working on crypto wallets for users who are not crypto-fluent.

Privacy

Our data is collected by a few big technology companies as we traded our privacy for efficiency and convenience. Below are privacy-preserving product ideas for mainstream users.

• Keybase for Enterprise — Keybase was acquired by Zoom because of the importance of encryption in communication and the rise of Signal shows that users around the world increasingly value end-to-end encryption backed by auditable, open-source code. We are looking for founders working on a private productivity application built for modern, decentralized teams. This application should encrypt chats and documents, integrate with engineering tools like github, and create a pseudonymous work identity. Since it plugs in with tools and cryptocurrency, users can get paid without impact on their real identity.
• Private Payments & Digital Cash — There is no shortage of brilliant engineering talent working on private payments, but privacy with a smooth user experience has been a hard problem to solve. We’ve invested in privacy solutions in the past and continue to fund teams working on the ability to transact privately with a special focus on go to market plans that solve real problems for real people.

About Electric Capital

Electric Capital is a venture firm that invests in cryptocurrencies, blockchain based businesses, fintech companies, and marketplaces. We compile code, profile nodes, analyze blockchains and open source projects, help secure cryptonetworks, and write software to help our portfolio companies understand their ecosystems. We publish an annual Developer Report that is the industry standard for understanding the developer ecosystems across cryptonetworks. Electric Capital and its founders have invested in crypto companies such as Anchorage, Bitwise, Celo, Coda, Derivadex, Elrond, Mobilecoin, Oasis, and NEAR.

The founders of Electric Capital are serial entrepreneurs, prior executives at Facebook and Google, and successful venture investors. We have previously started and sold five companies, invested in non-crypto companies such as Airtable, Boom Supersonic, Color Genomics, Cruise, Figma, Newfront Insurance, Notion, Threads, and more.