May 20, 2024

Polychain Capital Secures $200M for Fourth Crypto Fund Amid Staff Reshuffle and Market Challenges

Polychain Capital Secures $200M for Fourth Crypto Fund Amid Staff Reshuffle and Market Challenges

Polychain Capital, a leading venture capital firm in the cryptocurrency sector, has secured approximately $200 million in the initial round of its fourth fund, as per an insider so Fortune found out. This comes alongside a reshuffling of its research team, with three members departing due to evolving investment focuses. The firm aims to raise a total of around $400 million for this fund.

Polychain only has a small team of approximately 25, with around 15 focusing on research. Besides the three research team members also general partner Niraj Pant departed, he will start his own project.

This fundraising effort indicates a positive trend for the industry, demonstrating continued interest in the sector despite a “Crypto Winter” that has led to a decrease in venture funding for startups and VC firms.

Established in 2016 by Olaf Carlson-Wee, the first employee of Coinbase, Polychain Capital quickly rose to prominence in the crypto venture landscape. The firm has spearheaded investments in entities like the decentralized exchange Uniswap and the African crypto exchange Yellow Card. Polychain was also featured in the inaugural Fortune Crypto 40 this year.

Polychain has previously raised three funds, reportedly managing $2.6 billion in assets, as per Pitchbook data. However, this figure is subject to change due to Polychain’s liquid token hedge fund. In 2019, the Wall Street Journal reported a 40% drop in its assets under management, nearly 0 million, during a crypto market downturn, although it outperformed the overall value of cryptocurrencies, which fell 70% in the same period.

After raising its third fund over 2022 and 2023, Polychain has largely deployed the capital, according to the insider. In March 2023, The Block reported that Polychain was aiming for $400 million for its fourth fund. The insider informed Fortune that the target amount is slightly less than $400 million.

The successful initial close of 0 million indicates that Polychain has entered agreements with investors to start deploying capital, while continuing to raise funds for its fourth fund.

This fundraising effort is a positive indicator for crypto VCs. Pitchbook data reveals that global crypto VC firms have only raised .7 billion in the first half of 2023 across 12 funds, compared to .5 billion across 91 funds in 2022. On Tuesday, Bloomberg reported that crypto VC firm CoinFund had raised 8 million.

Polychain’s 0 million target is still lower than some crypto firms’ fundraising efforts in 2022, such as Haun Ventures, which raised .5 billion, marking the largest-ever debut by a solo female founding partner.

Polychain’s new fund will have a different focus as the firm navigates the bear market. The staff changes reflect shifting priorities, with the new researcher having a background in data science. The insider mentioned that Polychain will be particularly interested in Ethereum-based projects similar to its investments in Arbitrum and Scroll, both layer-2 networks on Ethereum, and EigenLayer, an Ethereum re-staking protocol.