Venture capital firm Coinfund is investigating crypto startups with a new round of fundraising at a time when many investors are pulling out of the industry.
Coinfund, a New York-based venture capital firm with 105 portfolio companies, announced today that it raised $152 million in its latest round.
In an interview with decipher, Alex Felix, Coinfund’s co-founder and chief investment officer, said his company’s priority lies in projects that further develop the infrastructure around cryptocurrencies, particularly as it relates to enabling further decentralization.
This, Felix adds, follows a trend that emerged after the implosion of cryptocurrency exchange FTX last year.
“In the post-FTX era, we have seen many developers decide to finish the roadmap towards a decentralized application development stack,” Felix said. decipher. “Now you’re seeing a big, renewed focus on scalability, interoperability, and user experience to really complete that roadmap toward decentralization.”
With previous fundraising rounds, Felix said Coinfund invested in what he called the “established category” of apps around NFT gaming and DeFi, among others. This round will focus more on what he described as emerging sectors, such as early-stage crypto startups, particularly those that intersect with artificial intelligence.
To date, Coinfund has invested millions in seed funds for companies like AI company Gizafor which he raised around $3 million, and on infrastructure projects like Cosmos, where he helped raise $10 million along with Binance Labs and others. to continue developing its Neutron smart contract platform.
Coinfund’s latest move comes against the backdrop of a broad withdrawal from cryptocurrency-related investments after a maelstrom of failures throughout 2022, including the demise of the TerraLuna Stable Coin and the collapse of FTX. Fundraising has also been hampered by a year of higher interest rates that have made borrowing more expensive.
In the first quarter of 2023, funding for crypto projects dropped from $9.1 billion a year earlier to just $1.7 billion, according to a report. Crunchbase report. one more recent report by Galaxy Research found that investment in crypto and blockchain plunged to $2.3 billion in the second quarter, down from more than $8 billion last year.
Despite these drawbacks, Felix said that the current market environment offers some advantages. One is that it allows funders to be more demanding of applicants compared to previous cycles when funders had more available capital. This slower pace, says Felix, raises the bar for entrepreneurs competing for more limited funds.
“It slows down the negotiation, but it gives you more time to make the best, most thoughtful decisions possible,” Felix said. decipher. “You really have to be solving tougher problems and putting your company under much greater scrutiny sooner than you would have in the broader tech boom.”