Venture: Five Prominent VC Firms Invest In Blockchain
What had originally been a concept for the storing of cryptocurrencies such as Bitcoin, blockchain technology has been instrumental in assisting many corporations worldwide store their financial information in a growing list of blocks that are linked through cryptography. These blocks are records organized in a list filled with computers networks that make financial transactions conducted by two or more parties are public for anyone to access them at any time, are verifiable, and aren’t stored in just one specific location.
Blockchain technology has also been used extensively by venture capital firms which aim to make their presence known in the digital assets market, importantly being able to have more exposure to various forms of cryptocurrency. These firms see blockchain investment as something that will help attract potential investors to their firms and if they continue to earn money through blockchain, these firms may think about building more networks and systems that will lead to a new revenue stream.
Some of the biggest names in the venture capital industry invest in blockchain technology knowing that their investments in blockchain can create huge amounts of risk and financial wealth for them at the same time. Since last week, there are five prominent venture capital firms that are now investing in blockchain and they are; RRE Ventures, Fenbushi Capital, Blockchain Capital, Pantera Capital, and Andreessen Horowitz
The investment of blockchain by these venture capital firms show an intent to invest in a market that they know will contain a lot of risks such as being aware that value can increase or decrease in high amounts and that there are differing bitcoin protocols. The volatility of prices and innovative nature in the cryptocurrency market may have made these firms initially reluctant to invest in the blockchain industry but they will now have the opportunity to gain new customers and a new experience in a once-unknown market.
The first firm to be covered is New York-based RRE Ventures which had recently raised $265 million in its latest fund and half of its investments have always been conducted in the East Coast, mostly from New York City. According to its RRE Ventures’ General Partner, Raju Rishi, the firm will continue its current investment strategy which includes investing in sectors that they have conducted extensive research on such as healthcare IT, space technology, and now blockchain; as well putting 60 percent of its money in Series A investment and the rest goes into seed deals and Series B and C rounds.
In the case of Fenbushi Capital, the Shanghai-based firm founded by CEO Bo Shen, their investment in the blockchain industry is a strategic investment in an AI + blockchain project called ‘Jarvis+’. The Jarvis+ AI project was described by Jarvis+ CEO Stephen Wu as having the ability to support any social platform, allow the Internet community to connect to Blockchain without dealing with Smart Contracts, and completing cryptocurrency transactions by interacting with a live person.
Blockchain Capital has focused solely on investing on blockchain tech and the crypto ecosystem and it currently has $250 million in AUM (assets under management) and investments in crypto firms such as Blockstack and Coinbase. In its fourth and latest fundraising round, Blockchain Capital had raised $150 million, which raised its total value in assets to $250 million, and the fundraising round had two parts; $125 million for the Blockchain Capital IV LV fund and $25 million for the Blockchain Parallel Fund IV.
Pantera Capital has been seeking to raise $175 million for its third crypto fund, which is a sharp increase from its first round when it raised $13 million and its second round when it raised $25 million. The firm has also been looking for potential investors by implementing three crypto-specific strategies which is a hedge fund called Initial Coin Offerings (connecting developers with investors), a crypto fund that targets already-listed crypto assets, and continuing to run its flagship Bitcoin fund.
Andreessen Horowitz’s current foray into blockchain investment has begun with a joint investment with crypto hedge fund Polychain Capital in a blockchain startup called Dfinity, which was dubbed as the “world computer”. The investment in Dfinity was $102 million and the startup has already been in the process of creating a decentralized cloud computing network that could soon rival Amazon Web Services, which is currently competing with Salesforce and Microsoft in the cloud computing sector.
According to Investopedia, Blockchain is defined as a decentralized, digitized, public ledger of all cryptocurrency transactions and the blocks (the most recent transactions) are recorded and added in chronological order that allows the participants to keep track of cryptocurrency transactions without central recordkeeping. Since blockchain is not a physical asset to be purchased, investors have two ways to invest in blockchain with stock investment being the common choice and crowdfunding being another popular choice for investors as it is the easiest way for investor to obtain more money quickly.
There have been requests made by the IBM Research Division, MIT Connection Science, and the Congressional Blockchain Caucus for a strong U.S. government leadership and vision that emphasized on the importance of blockchain technology and called for more funding of distributed ledger technology research. A report created by the IBM Center for the Business of Government stated that blockchain can reduce vulnerabilities in the existing identity, payment, and supply chain systems and based on three roundtables between U.S. Congressmen and crypto industry representatives, the report had outlined key areas where distributed ledger technology can be successfully adopted in the national economy.
Blockchain works like a digital spreadsheet that will transform how many industries, particularly for companies that have their own finance department, will develop their business models. The trend in investing in blockchain is likened to the rise of the Internet in the 1990s in which the technology of the Internet had transformed how society viewed the world and the technology used in blockchain can enhance the bitcoin market to be an attractive industry for investors to look at.