Venture

A $50M blockchain venture fund has just launched. Its niche? Looking beyond Silicon Valley

Quick Take

  • A new blockchain venture fund called Proof Of Capital has announced its arrival on the scene with an eye-opening $50 million raise, arguably joining the heavyweights in the space like Pantera
  • Proof of Capital hopes to focus on building Web 3.0 in the long term but on “redefining money” in the short term
  • It expects to have finalised between 4 to 7 investments by year end

A new blockchain venture fund is on the scene, boasting a $50 million treasury and a team of big-name partners from Horizons Ventures, Greylock Partners and 500 Startups.

It goes by the name of Proof of Capital , and it’s scouting for early-stage blockchain entrepreneurs in need of seed and Series A funding.

But unlike the Panteras and the Morgan Creeks of the space, this fund will be looking further afield than the U.S., focusing on finding innovation based in the ‘Global South.’ Within that, the fund’s mission is to “to usher in worldwide adoption of blockchain technology” as well as a decentralised web — an admittedly broad agenda, its managing partner Phil Chen tells The Block.

“Our thesis is that these are deeply tied to each other. It’s empowering people to own their financial data…It’s an all-encompassing view of cryptography and looking for how this can impact the end user.”

Moreover, there’s also an obvious interest in shorter-term returns and more immediate applications than the distant hope of a decentralised web. That’s why Proof of Capital is also looking at things “people are already making money on; like custody solutions and enterprise experiments around remittances and identity-proofs.

“There’s what Thiel calls the 0 to 1 innovation,” Chen explains, saying this encapsulates their broader mission of finding disruptive innovation. “But there’s also looking at the 9 to 10 things, like just improving efficiency…[So] in the short and mid-term, it’s still about redefining how money is and how it’s being surveyed,” he says, noting his confidence that the demand to have ownership of one’s own digital property will take off – especially in emerging markets.

He adds, “Blockchain will take some time to achieve parity with the financial system in the west.. but there are applications happening now that could really help in “emerging markets.”

Indeed, the fund’s first investment is in a crypto”exchange” called Ubanx, geared at the Latin American market, which Chen says should allow users to use cash to top-up their accounts.

In the meantime, the fund’s partners are busy looking for their next investment. Chen says they have looked at “tens of companies.” He also believes they could have “a deal every two months,” which means by the end of 2019 they could have up to 7 more.

They’ll certainly be in demand with a $50 million raise. By comparison, Morgan Creek was celebrated for its $40 million raise amid the bear market. Meanwhile, Pantera closed a fund at just $13 million in 2016 during its earlier days (having said that, it recently closed its DLT fund at $160 million). Regardless, it’s clearly a feat in monetary terms, and Chen says it’s the product of a practical vision. 

“If you can demonstrate that you’re investing in real technology that can be hugely transformative rather than speculative, that’s worth something….We want firms with a unique tech angle that can demonstrate potential growth.”

It’s worth noting one of the fund’s major backers is HTC, where Phil Chen continues to work as its Decentralized Chief Officer. As part of this partnership, POC will be able to draw on data and user feedback from HTC’s blockchain-based phone, the EXODUS, which Chen created as “a due diligence tool” before investing in other applications. HTC won’t have any more sway than the other investors as a corporation, Chen clarifies, although he personally will have a degree of direct influence.