VC Firm Homebrew Considering an ICO to Raise its Next Fund

Jun 27, 2017

Homebrew, a venture capital firm founded in 2013 by ex-Twitter and Google executives, has mulled a nascent and controversial method of raising money for its next fund: an initial coin offering, or ICO.

Rooted in blockchain technology, ICOs are a form of crowdfunding whereby companies sell their own digital currencies or "tokens"—similar to cryptocurrencies such as Bitcoin and Ethereum—as opposed to equity or stock. While there have been more than 30 ICOs already this year alone, so far only one VC fund worldwide has gone through with such a deal: Blockchain Capital, whose ICO in April raised $10 million.

"We’re going to raise our next fund using an ICO, how about that," Satya Patel, a co-founder and partner at Homebrew, said on stage Tuesday at CB Insights' Future of Fintech conference.

Patel, however, subsequently walked back his statement, which he made during a panel discussion between several venture capitalists, saying that Homebrew has not made definite plans for an ICO. "It has been discussed at a partner meeting or two, let’s put it that way," he added.

Based in San Francisco, Homebrew provides seed funding to early-stage companies (investments include Shyp and the Skimm), and fintech startups make up roughly a quarter of its portfolio, according to Patel.

While blockchain enthusiasts and ICO proponents have speculated that the new fundraising system could replace traditional avenues for startup financing, putting venture capitalists out of a job, Patel said he thought both "can coexist." After all, entrepreneurs don't approach VCs just for the money—at least, VCs hope they don't: "Because at the end of the day, a coin is not going to pick up a call at 11 o'clock at night when your lead engineer gets fired," Patel said. "We think that the best entrepreneurs value currency, but they value counsel more."

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