Multicoin Capital Unveils Latest $430M Crypto and Web3 Startup Fund

Key Insights:

• The massive investment fund is the company’s third in five years.
• Venture Fund III will invest in Web3 infrastructure, DataDAOs, and the creator economy.
• Venture firms are confident about the crypto sector despite a deepening bear market.

With the announcement of its latest fund, Crypto venture firm Multicoin Capital has shown no fear of the bears. Multicoin’s third fund, Venture Fund III, is a $430 million fund that invests in crypto, blockchain, and Web3 startups.

According to the July 12 announcement, the fund will invest $500,000 to $25 million in early-stage projects, with as much as $100 million allocated to later-stage, more established projects.

The U.S. company was founded in 2017 when it began investing in the crypto ecosystem. It manages a hedge fund and a venture fund, investing across both public and private markets. Managing Partner, Kyle Samani, posted the news on July 13.

We did a thing

But more importantly thar thing let’s do a lot more really cool things

LFGhttps://t.co/QBRfP4ifwE

— Composability Kyle (@KyleSamani) July 13, 2022

Focus on DeFi, DAOs, and Web3

The fund will focus on crypto projects that “create incentive structures that allow anyone in the world to permissionlessly contribute to a set of shared objectives,” which it calls Proof of Physical Work. This is not the same as the energy-intensive proof-of-work consensus mechanism that Bitcoin (BTC) uses.

The concept incentivizes people to do verifiable work that builds real-world infrastructure, it explained. It used AirBnB and Uber as examples of Web2 firms already doing this.

The fund would also concentrate on DataDAOs, which are similar to the proof of physical work concept but for data instead of infrastructure. Data cannot be aggregated at the moment due to privacy and security issues, but blockchain technology solves this with decentralized, permissionless, trust-minimized data intermediaries.

Multicoin recently led a $60 million investment round in a DataDAO called Delphia.

The firm is also interested in creator monetization, which puts control back into the hands of content creators rather than huge social media platforms. By using nonfungible tokens (NFTs) and marketplaces, creators can be in control of their own content and its monetization.

Consumer-facing Web3 decentralized applications built on top of an existing structure, such as Ethereum (ETH), were also an area of interest for the new fund. It would also look at Web3 infrastructure, decentralized finance (DeFi), and DAO (decentralized autonomous organization) tooling.

Web3 refers to the next iteration of the internet, which is decentralized and controlled by its users, as opposed to Web2, which is dominated by multinational profit-driven data harvesting social media and tech giants.

Retail in Pain as VCs Soldier on

Retail traders are suffering at the moment as crypto markets, which are the underlying monetary base for many of these Web3 concepts, continue to bleed.

Crypto markets have declined a further 1.9% on the day as total capitalization fell to $909 billion. Major cryptocurrencies are still within a range-bound channel; however, negative macroeconomic news from the U.S. later today regarding CPI (consumer price index/inflation) could send markets south again.