Crypto asset manager Valkyrie looks to raise $ 30 million for its new VC arm – TechCrunch
Crypto-asset manager Valkyrie, best known for launching one of the only US SEC-approved bitcoin futures ETFs, is moving into a new asset class – venture capital. The company hired investor Lluís Pedragosa in April and has quietly prepared him to lead Valkyrie Ventures, its new VC arm announced today, as managing partner.
Pedragosa, who previously worked for the New York-based venture company Marker LLC, has spent over 10 years investing in the United States and Israel, mainly in B2B software, he told TechCrunch in an interview. Pedragosa caught the crypto error after investing in the Israeli start-up of the cryptocurrency depot Curv in 2018, which PayPal bought last year.
He shared the task for Valkyrie’s new fund, which he has been working on since joining the Nashville-based company in April.
“The idea for us is that we want to invest in what we call the middleware layer, which is a bit like the infrastructure layer – everything that is between an application and the layer one protocols and in what we call web 2.5,” said Pedragosa. explains that he aims to support companies that provide a “web2 user experience”, but which have a “web3 infrastructure” underpinned.
Although the fund is an arm of Valkyrie, Pedragosa emphasized that it is not a typical corporate VC as Valkyrie Ventures will not invest Valkyrie’s balance sheet capital. Instead, Pedragosa is talking to external investors, including institutions and individuals with high net worth, to raise $ 25-30 million for the fund, he said.
Pedragosa plans to write checks between $ 250K and $ 1 million per company, and the investment size may vary by region.
“In the United States, I think you can write smaller checks … But in Israel, you have to be more focused on the efforts you make, because the exits may not be as great,” Pedragosa said.
The fund is strategic for Valkyrie in that it focuses on emerging infrastructure that the company can use in its digital asset management operations, including: security, authentication, compliance, data management, storage, networking, communications, management, payments and transaction companies, according to Pedragosa. The company will focus on investing in the tools developers need to build decentralized companies, he added.
Pedragosa believes in raising capital under Valkyrie’s responsibility, but without using the classic VC model, gives him the best of both worlds. Valkyrie Ventures joins the growing group of cryptocurrencies that have close ties to companies but do not invest directly off the balance sheet, including Cathay Innovation, which launched a $ 110 million VC fund in partnership with hardware provider Ledger last month.
«Traditional VCs for companies move relatively slowly, or slower than financial VCs. Sometimes you need to have a master in the business who wants to support your investment in, for example, a company. So that’s why I stay away from it, why [our fund] is separate. I do not need to convince anyone. If we think it’s a good investment, we just do it, Pedragosa said.
By collaborating with Valkyrie, Pedragosa hopes to utilize the company’s internal technical expertise for due diligence processes. He added that Valkyrie’s deep network in the crypto room could be an advantage for the founders, as the company can help with introductions on their behalf.
When it comes to timing, the crypto pedragosa down market gives confidence that he will be able to find strong companies for cheap valuations. He is optimistic about the fundraising process based on what he has heard from investors so far and aims to close the fund by the end of 2022.
“The [funds] that was [investing in crypto] just because they thought it was the next big thing and they just invested left and right just to follow the trend, will probably have less liquidity to move on right now. But I think many of the institutions and many of the sophisticated investors have been waiting for this, and they still have firepower to invest, Pedragosa said.
