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Sunday, November 27, 2022

Hack VC to support early-stage startups with $200M crypto seed fund

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100 A multi-million dollar crypto seed fund has been launched by the investors behind virtual hack.summit (). The money will be used to support early-stage crypto startups.

The investors behind the world’s largest blockchain programmer event, virtual hack.summit(), have formed a $200 million crypto seed fund under the Hack VC umbrella, according to fund partner Alex Pack.

Ed Roman, a former solo GP, previously invested in early-stage tech and cryptostartups through Hack VC for over ten years before working with Pack, who previously co-founded global crypto fund Dragonfly Capital and oversaw Bain Capital Ventures’ debut into digital assets.

Prior to founding this fund, Pack and Roman each invested in multiple early-stage crypto firms, including DeFi platforms Compound Finance and Terra, according to Pack. Hack VC completed its funding last fall and has been very active since then, with the fund making “at least” 15 investments totaling tens of millions of dollars, according to Pack.

Its recent crypto investments range from NFT emoji firm Yat to DeFi loan platform Goldfinch Finance to metaverse game business SynCity. Hack’s thesis is around investing in what Pack refers to as the “scaffolding” for a global digital rights system, with a focus on emerging markets.

The Hack VC team is made up of roughly ten people, about half of whom work in the venture firm’s specialised in-house Crypto Lab, which Pack sees as a source of competitive advantage. Because crypto networks are user-owned, it is critical for crypto investors to be early adopters of new protocols, according to Pack.

Its team stakes networks to secure them and is “one of the most active actors” in the DeFi ecosystem, according to Pack, including market-making, governance assistance, and liquidity provisioning on numerous protocols.

Hack VC raised seed fund cash from LPs such as Sequoia Capital, Fidelity, and a16z’s Marc Andreessen and Chris Dixon, as well as other institutional investors.

Several of these LPs are active crypto investors, including Sequoia, which created a $500 million fund to invest in tokens recently. Businesses such as Sequoia and a16z investing in other cryptofunds while also managing their own funds in the same sector is a very regular occurrence in the crypto realm, despite the fact that these firms are ostensibly competing for the same kind of transactions.

This overlap, according to Pack, is a vestige of the early days when investing in crypto businesses was “the polar opposite of competitive.”

Pack’s role in giving seed money to over a dozen crypto funds, including Multicoin, Polychain, Paradigm, Standard, and Parafi, has resulted in Hack VC having “excellent coinvestor relationships” with other venture firms in the industry, he said. Nonetheless, he feels Hack VC adds distinct value to the ecosystem by investing in deep-tech, edgy, early-stage cryptostartups.

Hack VC, on the other hand, considers co-investments with some of its LPs in other areas — it recently invested with Twitch founder Justin Kan in a metaverse firm, leveraging Kan’s vast expertise of gaming, he noted. Pack attributed Hack VC’s backing from other crypto venture investors to its unique developer community developed through hack.summit.

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