Introducing Alumni Ventures’ Blockchain Fund
July 29, 2021 | Scott Murphy
Alumni Ventures is pleased to introduce our new Blockchain Fund, focused on new sectors and ventures using blockchain tech. We will provide investors in the fund with a portfolio of ~20-30 promising, venture-backed companies innovating in areas like decentralized finance (DeFi), Metaverse, non-fungible tokens (NFTs), and more. This is an actively managed fund led by a three-person investing team, all with deep VC and blockchain experience. To introduce you to the fund, we interviewed Alumni Ventures CEO and Founder Michael Collins.
About Michael Collins
Mike is CEO and Founder of Alumni Ventures. He has been involved in almost every facet of venturing, from angel investing to venture capital, new business and product launches, and innovation consulting. He began his career at VC firm TA Associates. He holds a BE from Dartmouth and an MBA from Harvard Business School.
Why does Alumni Ventures think blockchain is an attractive investment opportunity?
Blockchain is a disruptive technology with broad applications. Alumni Ventures recognized the potential early on, launching our first blockchain fund in 2018 in the middle of a wave of major innovation and investment opportunities — reminiscent of early Internet days. But due to shifting regulations and early (though expected) market turbulence, we paused plans to launch a second vintage. (Click here to read more about the backstory of AV’s original blockchain fund.)
Now with more clearly defined regulations, broader market acceptance, and significant investment opportunities, we think it’s the right time to launch this new Blockchain Fund. Venture firms have already committed $17 billion to the crypto market in just the first half of 2021. That’s more than double the previous record of $7.4 billion in all of 2018. In addition, some early blockchain leaders have raised capital at really impressive valuations, including Alumni Ventures portfolio companies BlockFi and Circle. BlockFi recently announced a $350 million Series D in March at a $3 billion valuation — one of the largest to date among blockchain and cryptocurrency startups. Circle is finalizing a SPAC acquisition at a reported $4.5 billion valuation*.
What are some blockchain investment trends and opportunities Alumni Ventures is monitoring?
A lot of people assume blockchain equals Bitcoin. Blockchain is actually the technology underlying Bitcoin — and it’s that technology that’s got us interested.
Blockchain is a type of database where transactions can be virtually recorded, retained, and protected. It’s the technology’s ability to provide secure, decentralized distribution that has attracted so many companies in so many industries. As an example, here are just three sectors where we believe blockchain will continue to be disruptive:
- Fintech: One of the first sectors to adopt blockchain has already leveraged the technology in cryptocurrencies, peer-to-peer payments, investing and trading, NFTs, and more. Interest is picking up among banking and insurance companies because of increased safety, security, and speed in exchanging data and money at fairly low operational costs.
- Retail: Blockchain in retail is expected to help improve product authenticity, reliable delivery, supplier accountability, and consumer experience. Big players like Walmart and Amazon are using blockchain solutions for supply chain management, documentation, and services.
- ICT: The Information, Communications, and Technology (ICT) sector will also be leveraging blockchain. For example, Swisscom and the Swiss national postal service are developing their own private blockchain for monitoring shipments, smart energy billing, and other services.
We’re also seeing blockchain applications in healthcare, hospitality, insurance, pharma, research, cleantech, and more. We believe the technology will allow startups across sectors to tackle some of the world’s biggest challenges — including early pain points with blockchain itself like energy use. Alumni Ventures portfolio company Algorand has created next-gen “Proof-of-Stake” blockchain tech, a faster and more scalable blockchain protocol that requires less energy.
What will a fund investor’s portfolio look like?
Investors will own a diversified portfolio of ~20-30 investments built over ~12-18 months, with ~20-25% held for reserves. Token purchases will be limited to about 20% or less of the portfolio. The minimum investment is $25,000, and the maximum is $3 million. We’ll focus on innovative new sectors and ventures using blockchain tech, including DeFi, the Metaverse, and NFTs. Investors will also have an exclusive membership to our Blockchain Venture Club. Benefits include access to portfolio news and upcoming events, networking with other fund investors, and the ability to review and invest in a target of 6-12 Syndications each year. Club members can also assist with sourcing investment opportunities if that interests them.
How will Alumni Ventures source and vet potential investments?
Our Blockchain Fund will be actively managed by a full-time, three-person team and four venture fellows. Managing Partner Ray Wu will lead the fund, with the help of Principals Jack Statza and Sophia Zhao. They all bring deep venture and blockchain experience to their roles, along with their own VC networks. They’ll follow Alumni Venture’s well-established playbook for sourcing and vetting the most promising companies from among the hundreds of new blockchain ventures cropping up each year. They’ll also work with the other 50+ investing professionals at our firm — all of whom will bring their own experiences and relationships to help identify blockchain investments.
Why types of companies might the fund invest in?
Our Blockchain Fund team is reviewing investment opportunities and starting to invest now. This is an area we’re very familiar with given that many of Alumni Ventures’ funds are already investing in exciting blockchain companies like BlockFi and Circle. We’ve invested in other promising fintechs powered by blockchain, including Adjoint, a crypto-ledger platform for managing smart contracts, and TRM Labs, a regulatory tech platform helping the industry address compliance concerns.
In the ICT space, we’ve invested in companies like Stacks, which offers developers an open source platform to create consumer-facing apps and run them through a decentralized browser. Filecoin is leaning into decentralized distribution with its cloud data network, which leverages a vast amount of unused global computer storage.
We’ve also invested in startups that are applying blockchain in creative ways. Molten’s complete blockchain infrastructure empowers media artists and businesses to publish, license, and monetize their content. Mythical is offering a fresh experience for gamers, with a next-gen video game platform that enables true ownership of digital assets.