Inside crypto exchange FTX’s new venture fund

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 Coins2Day 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: [email protected]

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 in Series C funding led by Index Ventures and was joined by investors including Makers Fund, IVP, BlackRock, Kora, and Balderton Capital.

- Lattice, a San Francisco-based employee performance management software company, raised $175 million in funding from Thrive Capital, Elad Gil, Tiger Global, and Dragoneer.

- Ironclad, a San Francisco-based digital contracting platform, raised $150 million in Series E funding led by Franklin Templeton and was joined by investors including BOND, YC Continuity, Emergence, Lux, Haystack, Accel, and Sequoia Capital.

- Facet Wealth, a Baltimore, Md.-based subscription financial advisory company, raised $100 million in Series C funding led by Durable Capital Partners and was joined by investors including Warburg Pincus, Telesoft Partners, and Green Cow Venture Capital.

- Clockwise, a San Francisco-based intelligent calendar assistant developer, raised $45 million in Series C funding led by Coatue and was joined by investors including Atlassian Ventures, Accel, Greylock Partners, and Bain Capital Ventures. 

- Nowsta, a New York-based work management platform for hourly, gig, and flex workers, raised $41 million in Series B funding led by GreatPoint Ventures and was joined by investors including VMG Catalyst, Rally Ventures, Tribe Capital, Green Visor Capital, Compound Ventures, and Clocktower Technology Ventures. 

- BlockFills, a digital asset trading and fintech company, raised $37 million in Series A funding from investors including Susquehanna Private Equity Investments, Simplex Holdings, and Nexo.

- The Wanderlust Group, a marine and outdoor travel tech company, raised $30 million in Series C funding led by Thursday Ventures. 

- Poa Internet, a Nairobi, Kenya-based affordable internet access provider, raised $28 million in Series C funding led by Africa50 and was joined by Novastar Ventures.

- Radian Aerospace, a Renton, Wash.-based space systems transportation developer, raised $27.5 million in seed funding led by Fine Structure Ventures and was joined by investors including EXOR, The Venture Collective, Helios Capital, SpaceFund, Gaingels, The Private Shares Fund, Explorer 1 Fund, and Type One Ventures.

- Smartcar, a Mountain View, Calif.-based API developer platform that connects vehicles with mobile apps, raised $24 million in Series B funding led by Energize Ventures and was joined by a16z and NEA. 

- Carry1st, a Cape Town, South Africa-based mobile games publisher, raised $20 million in Series A funding led by Andreessen Horowitz, and was joined by investors including Avenir, Google, Nas, and Sky Mavis.

- Rocketlane, a Walnut, Calif.-based customer onboarding platform, raised $18 million in Series A funding led by 8VC and was joined by investors including Nexus Venture Partners, Matrix Partners India, and Gokul Rajaram. 

- Arc, a Menlo Park, Calif.-based financial services platform that offers non-dilutive growth capital, raised $11 million in seed funding led by NFX and was joined by investors including Y Combinator, Bain Capital Ventures, Clocktower Technology Ventures, Torch Capital, Dreamers VC, Soma Capital, and Alumni Ventures.

- MOVii, a Bogota, Colombia-based digital payments company, raised $15 million in funding from investors including Block and Hard Yaka.

- POAP, an Argentinian NFT developer to preserve memories as digital records, raised $10 million in seed funding co-led by Sapphire Sport and Archetype.

- StructionSite, an Oakland, Calif.-based intelligent project tracking software for the construction industry, raised $10 million in new funding from 500 Global, PCL Construction, GS Futures, and other investors.

- Invenda Group, a Luzern, Switzerland-based IoT / AI vending machine startup, raised $7.6 million in funding led by the former Emmi CEO Walter Huber and financial specialist Gregor Greber and was joined by former Denner CEO Philippe Gaydoul.

- Filmhub, a Santa Monica, Calif.-based solution for modern filmmakers to distribute their titles to streaming services without relinquishing rights, raised $6.8 million in seed funding led by a16z and was joined by investors including 8VC, FundersClub, Eleven Prime, Rupa Health CEO Tara Viswanathan, and Candid CEO Nick Greenfield. 

- Stan, a New York-based creator monetization tool, raised $5 million in seed funding led by Forerunner Ventures and was joined by investors including Norwest Venture Partners and Pear VC. 

- BirchAI, a Seattle, Wash.-based AI platform for healthcare customer support, raised $3.1 million in seed funding led by Radical Ventures. 

PRIVATE EQUITY

- Thoma Bravo invested $85 million in Personetics, a Tel Aviv, Israel-based virtual assistant software for financial services companies. 

- FTV Capital invested $60 million in Gale Healthcare Solutions, a Tampa, Fla.-based healthcare services and payments platform that provides per diem, contract, and travel temporary staffing services in post-acute and acute healthcare settings.

- Clearfork Midstream, backed by EnCap Flatrock Midstream, agreed to acquire Azure Midstream Energy, a Katy, Tex.-based natural gas gathering and treating platform. Financial terms were not disclosed.

- Kent Outdoors, owned by Seawall Capital, acquired BOTE, a Miramar Beach, Fla.-based watersports company, and Kona Bicycles, a Ferndale, Wash.-based bicycle company. Financial terms were not disclosed.

- Netrix, an OceanSound Partners portfolio company, acquired BTB Security, a Philadelphia-based cybersecurity and digital forensics solutions company. Financial terms were not disclosed.

- OceanSound Partners acquired CFM, a Tempe, Ariz.-based retail banking software company. Financial terms were not disclosed.

- OpenGate Capital acquired Chemisphere, a St. Louis, Miss.-based specialty solvent blender and chemical distributor. Financial terms were not disclosed.

- Sky Island Capital acquired USA Industries, a South Houston, Tex.-based piping isolation and testing product, tube plug, flow measurement orifice plates, and heat exchanger tool manufacturer and rental provider. Financial terms were not disclosed.

EXITS

- IK agreed to acquire a majority stake in FCG Group, a Stockhollm, Sweden-based GRC services provider for financial services companies, from Bridgepoint Group. Financial terms were not disclosed.

- PT Holdings, backed by Berkshire Partners, acquired REPA Group, a European parts distribution company, from The Riverside Company. Financial terms were not disclosed.

OTHER

- UCB agreed to acquire Zogenix, an Emeryville, Calif.-based CNS disorder and rare conditions treatment company, for approximately $1.9 billion.

- BIC agreed to acquire Inkbox, a Toronto, Canada-based semi-permanent tattoo brand. Financial terms were not disclosed.

- OpenSea acquired Dharma Labs, a San Francisco-based DeFi wallet company. Financial terms were not disclosed.

- Sema4 agreed to acquire GeneDx, a Gaithersburg, Md.-based gene-based testing laboratory service subsidiary of OPKO Health. Financial terms were not disclosed.

- WebPT acquired Clinicient, a Portland, Oreg.-based patient experience software company for clinicians, and its subsidiary Keet. Financial terms were not disclosed.

IPOS

- Human Horizons Group, a Shanghai-based electric vehicle company, is weighing an IPO that could raise around $500 million in Hong Kong, per Bloomberg.

- The trū Shrimp Companies, a Balaton, Minn.-based early-stage seafood and biopolymer production company, filed for an IPO. The company reported $4,000 in revenue in the nine months ending in Sep. 2021 and a net loss of $8 million. Ralco Nutrition, Schwan’s Shared Services, and Eagle Energy back the firm.

SPAC

- Acorns, an Irvine, Calif.-based micro-investing and retirement platform, withdrew plans to merge with Pioneer Merger Corp., a SPAC. 

FUNDS + FUNDS OF FUNDS

- ByteDance, the Beijing-based owner of TikTok, is dissolving its internal venture capital and startup investing team, per Bloomberg.

- 2048 Ventures, a Princeton, N.J.-based venture capital firm, raised $67 million for a second fund focused on pre-seed investments.

PEOPLE

- Ara Partners, a Houston, Tex.-based private equity firm, promoted James Wang to managing director. 

- Fifth Wall, a Marina del Rey, Calif.-based venture capital firm, promoted Sarah Liu to partner of real estate technology; Cedric Char to senior associate of climate tech; Virginia Drennen to vice president of value creation; Mike Foell to senior finance manager; Oliver Harrison to senior associate of Europe; Clay MacFarlane to vice president of real estate technology; Michael New to principal of capital formation; G. M. Nicholas Vik to partner and head of strategy and operations; and Gaby Yo to vice president of the investment team.

- Levine Leichtman Capital Partners, a Los Angeles-based private equity firm, promoted Micah Levin and Matthew Rich to partners; Jeff Kropp to Chief Compliance Officer; Josh Kaufman to senior managing director; Chris Overmyer to Director; and Rob Papetti, Alexander Bruno and Zue Leong to associate director.