• Pantera Launches $600M Fund as Crypto VC Funding Hits Record High

  • Pantera Capital has announced the creation of a new $600 million blockchain fund to invest in early stage tokens, equities, and currencies, as venture capital allocated to digital assets reaches an all-time high.

    According to Pitchbook data, venture capital money is pouring into the digital asset space at an all-time high this year, with $3 billion allocated to the space in the first quarter of 2021 alone.

    Pantera Capital, a cryptocurrency investment manager, is launching a new blockchain fund, and it is already more than halfway to its $600 million goal.

    On a conference call with investors on Wednesday, Pantera CEO Dan Morehead announced the fund, which will close every fiscal quarter. The fund’s first closing occurred in June, with $375 million raised.

    The fund will make investments in three categories: venture equity, early stage tokens, and traded liquidity tokens like bitcoin. The majority of the funds will be allocated to venture capital. It is intended to protect against short-term volatility, which can be stressful for investors.

    “The new fund is able to capture the often-large swings in value between equity and tokens,” wrote Dan Morehead, Pantera’s CEO and co-chief investment officer, in a letter to investors. “Tokens are quickly reset. Tokens fell by 55 percent in a matter of weeks in May. On the other end of the spectrum, venture capital moves very slowly.”

    The venture capital structure is a 10-year commitment, which allows investors to ignore day-to-day market fluctuations, according to Pantera.

    Pantera, which manages $5 billion in assets, began investing in digital assets in 2013, when convincing institutional investors to do so was difficult.

    “Our first institutional, or outside LP, venture fund was in 2014, and it was a struggle,” said Pantera partner Paul Veradittakit. “We raised about $25 million for that one, mostly from high net worth individuals and family offices, and it was just a venture.”

    Things have changed since then, primarily as a result of institutional investor interest, which increased significantly earlier this year, according to Verdittakit.

    “Because of what happened with DeFi last year, investors were really opened up to the possibility of getting exposure to tokens,” he explained. “A lot of investors believe that having exposure to everything makes sense, and they prefer to defer to a fund manager rather than trying to decide which strategy to deploy and when.”

    Given the current lack of clarity in the space, regulation, according to Verdittakit, is a common concern for investors, but more oversight is an indication that the industry is growing.

    “I think there’s been a lot of regulatory progress, both in terms of custody and licensing,” he said. “There are obviously some potential concerns around DeFi, but I think it probably won’t get regulated, to a certain extent, unless the space grows large enough,” he added. “If there is enough space, the project will have matured, and it is a good problem to have. We’ll see what happens, but we’ll obviously do everything we can as a firm to push regulations forward.”

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