Venture investors get crypto alternative

Anchorage Digital and AngelList just made it easier to invest in companies through crypto. The partnership, announced today, allows AngelList’s early stage investors to use USDC, the second largest stablecoin, to fund young businesses.

This is the first time that both crypto-native and traditional companies will be able to raise money with cryptocurrencies. USDC investments will be accepted from all investors for companies willing to accept the crypto investment. Anchorage Digital, the first federally chartered crypto bank, will provide custody and execution of digital assets.

“During the investment flow, there is a choice between investing with USD or USDC,” says Avlok Kohli, CEO of AngelList.

Investors will be able to fund companies directly with their crypto portfolios. Instead of withdrawing crypto holdings and re-investing them, a process that can delay payment for up to 30 days between bank transactions and approvals, investors can now use their USDCs directly. Users can also exchange bitcoin or other cryptocurrencies for USDC to make the investments.

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Despite bear market conditions, venture capitalists invested $18.3 billion in crypto-related startups in 2022, even after pulling back from other industries. Now non-crypto companies are jumping on the crypto wave and accepting stablecoin investments.

The draw? “Instant settlements,” says Diogo Mónica, president and co-founder of Anchorage Digital. Cryptocurrency, he says, allows transactions to happen instantly. No more bank stops, no more waiting for Monday or holiday delays.

“For the companies to use it, it’s effective,” he says. “For the customers who already have crypto, you can do it and you can manage it.”

Allowing investors to use USDC also opens the door to those outside the US.

“The reality is that you have a lot of people outside the US who have a very hard time opening a dollar-denominated bank account,” adds Mónica. Foreign restrictions on opening dollar-denominated accounts can make it more difficult for foreign investors to invest in companies in the first place. Nevertheless, the dollar is the world’s dominant currency.

Using stablecoins like USDC, Mónica claims, “makes the use of the dollar so much easier for everyone, not just crypto companies, but for everyone.”

As an AngelList investor herself, Mónica sees the benefits of facilitating investment opportunities for international players. “Not too long ago I would have to wait for wires, ACHs, wait forever and have my transactions frozen by my bank and have to call up to have them unfrozen and unfrozen,” he says. “Which are things that don’t really happen in crypto with the infrastructure we’ve set up.”

Anchorage, Mónica emphasized, is a federally chartered bank and must remain in compliance with the regulatory system. “It uses the crypto side of traditional infrastructure, because this is traditional infrastructure, traditional banking, all the rails and all the compliance,” he adds. “We meet the same guidelines, we just use a different type of technology.”