Blockchain Capital raised a total of $580M for two VC funds and says their focus will be on six sectors, including DeFi, blockchain gaming, and consumer/social

The crypto bear market may be ongoing, but Blockchain Capital is still going big. It closed two new funds for a total of $580 million …

TechCrunch 2023-09-19 Jacquelyn Melinek

Context & Ripple Effects

Blockchain Capital’s $580M raise marks a substantial expansion from its earlier $150M fourth crypto fund and its prior disclosed effort to raise roughly $150M across two vehicles. The firm is directing the new capital across several application-focused segments rather than a single blockchain category.

The raise arrives after crypto and blockchain venture activity had already reached record levels, including $6.5B in global funding in one 2021 quarter. It matters as evidence that a specialist investor is maintaining deployment capacity despite the bear-market backdrop described in the article.

First-order effects

Blockchain Capital has more capital to back companies in DeFi, blockchain gaming, and consumer/social, giving founders in those sectors another large specialist funding source.
The firm can make investments across a broader set of blockchain use cases, while portfolio companies and prospective investments gain access to a dedicated crypto-focused investor with a larger fund base.

Second-order effects

Other crypto-focused funds may face pressure to demonstrate comparable sector expertise and reserves for follow-on rounds as Blockchain Capital competes for investments.
Startups in the named categories may gain leverage in fundraising, but capital could concentrate around the sectors selected by the largest dedicated funds rather than spread evenly across blockchain applications.

Third-order effects

If specialist funds continue raising through market downturns, crypto venture finance may become more institutionally durable while concentrating allocation power among a smaller group of managers.
The shift toward application categories such as consumer/social and gaming suggests the sector’s investment case may increasingly be judged on product-market adoption rather than blockchain infrastructure alone, though sustained deployment and outcomes remain unproven.

The trend: Specialist crypto investors are building larger, multi-sector funds to finance blockchain applications across market cycles.

Discussion

@_kinjalbshah Kinjal Shah on x
Extremely excited & proud to share our two new funds at Blockchain Capital we're as committed as ever to this industry & the founders building the future
@_alekslarsen Aleks Larsen on x
Very proud to share the closing of our new funds. We have more conviction than ever in the crypto industry and the amazing founders pushing it forward. https://techcrunch.com/...
@gustafkornias Gustaf Kornias on x
“It took 35 years from ARPANET to the founding of Netscape, arguably the first internet unicorn, in 1994. And, much like the Dot-com bust that followed, the late 1990s were punctuated by too many investors expecting too much from a nascent technology.”
@blockchaincap @blockchaincap on x
We're thrilled to share the closing of 2 new funds - our 6th early stage fund and 1st opportunity fund. Together, they total $580 million and serve to reinforce our commitment to leading the global transition to decentralized, blockchain-based systems. ↓ https://www.blockchaincap…
@cremedelacrypto Spencer Bogart on x
Why are large investors doubling down with us? The facts on the ground signal the growth opportunity ahead — over the past 12 months, in the depths of a crypto winter: >$6 trillion in stablecoin volume ~$700 million of DeFi Protocol revenue >$700 billion of DEX volume ~$3...
@erikvoorhees Erik Voorhees on x
Blockchain Capital was one of the early investors in ShapeShift. They were patient and helpful, despite our brutal challenges, and they are aligned with the ethos of crypto. Congrats guys, put this capital to good work.
@macbrennan @macbrennan on x
> ~$3 billion of outstanding loans across the two largest lending protocols (Aave & Compound) in 12 months @marginfi alone has >$3B in volume the last ~3 months There's an explosion happening in Solana DeFi, and most investors are going to be completely caught on the sidelines.

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