Brevan Howard Digital, Galaxy Digital invest in crypto accelerator Alliance aiming to raise $100 million for new fund

Brevan Howard Digital, the crypto arm of the global asset management giant, and Galaxy Digital, the crypto firm founded by billionaire Mike Novogratz, have both invested in crypto accelerator Alliance's third fund. 

The Alliance Fund III had its first close in February, getting commitments from Brevan Howard Digital and Galaxy Digital worth $20 million, according to Alliance limited partner meeting slides dated Mar. 26 obtained by The Block. A source with direct knowledge of the matter told The Block that each firm has already invested $10 million in the fund, meaning it is not just a commitment.

According to the meeting slides, Fund III is looking to raise an additional $80 million by July, capping it at $100 million. It is expected to invest $500,000 per startup.

Alliance fund III

Alliance's third fund comes as crypto funding shows signs of rebounding after a two-year slump. Last month, crypto venture capital funding reached an 18-month high, touching $1.4 billion, according to The Block Pro's Deals Dashboard.

Amid the crypto market rebound, more venture firms are raising or have raised new funds. Last week, 1kx raised $75 million to back early-stage crypto startups. Paradigm is reportedly in talks to raise between $750 million and $850 million for a new fund. Galaxy Digital, Hack VC and Hivemind Capital are also reportedly raising $100 million, $100 million, and $50 million for their new funds, respectively.

Alliance's previous two funds

Alliance's third fund is being raised following the success of its first two funds. Since its founding in 2020, Alliance has accelerated 12 cohorts with over 200 startups.

Alliance's first fund has backed high-profile startups like Arbitrum, Immutable X and Axie Infinity. The first fund raised $15 million in 2021 from Jump Capital, billionaire Mark Cuban and others. The fund's invested capital has surged over $90 million as of Dec. 31, 2023, marking a growth of 6.1 times its initial value, per the obtained slides.

Fund II, which was still deploying as of Dec. 31 per the slides, has recently finished deploying, the source said. They added that the second fund was worth $30 million and raised in 2022. Fund II has backed notable startups, including Tensor, Hyperlane and Story Protocol.

As a crypto accelerator, Alliance provides mentorship and funding to selected startups in its cohorts. The firm recently opened its headquarters in New York City, designed for its portfolio companies to work collaboratively with mentors and peers.

A number of high-profile investors, including Peter Thiel's Founders Fund, Solana Labs co-founder Anatoly Yakovenko, Visa head of crypto Cuy Sheffield, Brevan Howard Digital's co-heads of venture Peter Johnson and Colleen Sullivan, are also backers of Alliance, according to Alliance's website.

While Johnson and Sullivan have been part of Alliance in individual capacities, it is the first time Brevan Howard Digital itself has invested in Alliance, the source said. Meanwhile, Galaxy Digital is a repeat backer of Alliance, having previously anchored its second fund, according to the source.

Jocelyn Robancho, core contributor and head of accelerator at Alliance, declined to comment. Spokespersons for Brevan Howard Digital and Galaxy Digital also declined to comment.