Crypto's "Anti-Cowboys": Fidelity Vets Raise $30M Blockchain Fund, Castle Island Ventures

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Flipside Crypto, Walsh says. The Boston-based startup helps wealthy individuals invest in cryptocurrencies, and it develops algorithms—some modeled on lines of code that equity hedge funds use to guide trades—to help steer the crypto investment picks. Flipside’s services include managing the process of acquiring cryptocurrency and storing it, handling potentially confusing things like encryption and digital wallets, the company has said.

Flipside CEO and co-founder Dave Balter, a serial entrepreneur and startup investor, says he’s also an investor in Castle Island’s fund. He thinks Walsh and Carter will succeed, in part, thanks to their investment strategy, their knowledge of the blockchain sector, their experience in finance, and their data analytics capabilities.

But the number of venture funds focused on blockchain and cryptocurrencies is growing, which means competition for deals will increase. PitchBook, the Seattle-based venture capital research firm, found there are at least nine other VC funds investing exclusively in the sector, with at least nine more venture firms that invest in it as one piece of a broader strategy, according to data compiled for Xconomy.

VC Funds Focused on Blockchain & Cryptocurrencies
Name & size of latest fund
a16z crypto (Andreessen Horowitz)$300 million
Blockchain Capital$150 million
SparkChain Capital (SparkLabs Group)$100 million
TMT Blockchain Fund (TMT Investments)$60 million
Castle Island Ventures$30 million
The Future Capital Bitcoin Fund (Future Capital)$30 million
1confirmation$26 million
Eterna Capital$20 million
Science Blockchain Holdings (Science)$12.3 million
Blockchain Angel Fund (BitFlyer)More than $400,000
Sources: PitchBook; news reports; company websites

The Bay Area is the home of much of the activity. San Francisco-based Blockchain Capital said it raised $150 million for its fourth fund in March. Last October, SparkLabs Group, which runs a network of venture capital funds and Asia-based startup accelerators, said it launched a $100 million early-stage blockchain/crypto venture fund based in Palo Alto, CA. Andreessen Horowitz, the well-known Silicon Valley VC firm, reportedly launched a $300 million blockchain/crypto fund in June.

Outside of California, the players include New York-based Digital Currency Group, a startup incubator and investor that has backed more than 100 crypto and blockchain ventures, according to its website. There’s also Australia-based Future Capital’s cryptocurrency fund and Japan-based BitFlyer’s Blockchain Angel Fund.

Now, Castle Island will try to put its stamp on the industry.

“There will be winners, but only a few that are world class,” Balter says of blockchain and crypto funds. “Matt and Nic happen to be delivering on what I believe will be one of them.”

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