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FTX wants to move fast.
Last week, the cryptocurrency exchange and trading platform said it was setting aside $2 billion from the company and its founder Sam Bankman-Fried under a new venture arm called FTX Ventures. A team of nine people—including three developers—are running the show under Amy Wu, a near-three-year crypto investor with Lightspeed Venture Partners.
The new fund, now the fourth largest crypto fund in the market, per Pitchbook data, has already begun deploying capital, Wu tells me, though she said it isn’t disclosing any of its initial investments yet. The team hopes that a lack of external LPs will allow the fund to move “extremely quickly” to invest up to several hundred million in promising crypto startups, Wu says.
It’s an interesting move for Bahamas-based FTX (which, at a $25 billion valuation, is itself one of the most well-funded companies in the crypto sphere), and it’s one that is being made in conjunction with team members from Alameda Research, a hedge fund started by Bankman-Fried in 2017. The hedge fund had a crypto and fintech investing arm, called Alameda Research Ventures, which is sunsetting, and a few of those team members have joined the FTX Ventures team, according to Wu.
“Our motto is by builders, for builders,” she says. The team is composed of experts in things like protocol design, market making, and token launching—expertise the fund hopes to leverage with founders to make it an appealing partner. The company also plans to utilize the crypto exchange’s legal and compliance teams to help startups navigate the burgeoning regulatory environment.
Wu says the fund is “keeping an open mind” to all opportunities in the crypto market, but it’s going after the web3 market—think gaming, social tokens, NFTs, and eventually commerce—as well as DeFi and layer 2 blockchains (a layer 2 blockchain being a secondary framework built on an existing blockchain to speed up transactions or make them cheaper). Emerging markets in Latin America, Africa, and Asia are of particular interest, Wu says, pointing out that their penetration in mobile payments and fintech operations tend to be deeper. FTX Ventures will invest in equities, pre-launched tokens, and liquid tokens, and plans to fund startups in USD, USDC, or cryptocurrency—depending on how the crypto project is accruing value.
The crypto investing world is highly competitive: There’s a host of capital and a limited number of startups—meaning that successful funds are putting emphasis on what else they can offer a company apart from a check.
While a founder calls the shots in a traditional startup, many crypto projects are community-oriented. VCs may need to win the favor of a DAO, or potentially thousands of token-holders. “The ability of an investor to actually align their interest with the community, to add value to the community—just as another member—is really important,” Wu says. That would be one of the reasons Wu is in “dozens” of Discord channels.
Wu will also be leading FTX’s gaming business and will oversee M&A opportunities for the crypto exchange. She will remain a venture partner at Lightspeed, staying on the board of companies she invested in, but will no longer be seeking new investments for the firm.
Vishal Garg is back… You may recall the mass layoffs at the digital mortgage company Better. Employees had told Fortune that CEO Vishal Garg’s comments via a Zoom call had made them feel threatened, and were offended by subsequent statements he made via an anonymous professional network that ex-employees had been “stealing” from colleagues and customers. Garg had been taking time off, but is returning to his full-time duties as CEO of the company, per a memo seen by CNBC . Two board members have resigned.
Until tomorrow,
Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
VENTURE DEALS
– 1Password , a Toronto, Canada-based password management software company, raised $620 million in Series C funding led by ICONIQ Growth and was joined by investors including Tiger Global , Lightspeed Venture Partners , and Backbone Angels .
– Clari , a Sunnyvale, Calif.-based revenue operations platform, raised $225 million in Series F funding led by Blackstone Growth and was joined by investors including Light Street Capital , Maverick Capital, B Capital Group , Bain Capital Ventures , Madrona Ventures , Northgate Capital , Sapphire Ventures , and Sequoia Capital .
– Dream Games , an Istanbul, Turkey-based studio behind Royal Match, raised $255 million […]
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