By Polina Marinova
April 11, 2018

This article originally ran in Term Sheet, Fortune’s newsletter about deals and dealmakers. Sign up here.

Ripple, the fintech startup known for the XRP coin, made a $25 million investment in the form of its own cryptocurrency into a dedicated sidecar vehicle alongside Blockchain Capital’s fourth venture fund.

Blockchain Capital, the oldest venture capital firm dedicated to blockchain technology, announced last month that it raised $150 million to invest in equity and cryptocurrency assets.

Now, Blockchain Capital says it accepted XRP, reportedly making it one of the first venture firms to accept capital calls in digital assets. The fundraise carved out the XRP funds into a separate special purpose vehicle called Blockchain Capital Parallel IV, which only accepts contributions in cryptocurrencies.

“We created the parallel fund to separate our other LPs from the risk of any change in valuation associated with accepting Ripple’s investment in XRP,” said a spokesperson for Blockchain Capital.

XRP, the third-largest cryptocurrency by market cap after Bitcoin and Ethereum, is the name for both a digital currency and an open payment network. Users are able to efficiently send money globally using the blockchain. Blockchain Capital is looking to deploy the XRP into companies focused on healthcare or identity management, which are industries that “could benefit from blockchain or distributed ledger technology.” Blockchain Capital is also an investor in Ripple, the company.

“Whether it’s using XRP, bitcoin, or just the underlying blockchain technology, our goal is to find the best projects and give them the resources to be successful companies that deliver value to customers for the long-term,” said Blockchain Capital managing partner Bart Stephens.

If you’re scratching your head as to why a company would choose to accept capital in the form of a cryptocurrency, let’s remember what happened with storage startup Omni.

In December, Omni raised $25 million in Series B funding, opting to accept the majority of the investment in XRP. On the same day that the startup announced the fundraise, XRP plunged 46% to near 90 cents, meaning that the principal investment amount no longer held the same value. At the time, Omni CEO Tom McLeod said he wasn’t worried about the short-term price volatility. Rather, he’s betting on the long-term benefits of “having a potentially appreciating value on the balance sheet.”

I followed up with him yesterday to see how he has navigated Ripple’s price fluctuations over the last few months, and he noted that he hedged against some of the volatility by converting a portion of the investment to USD.

“We fully expect to see (and have seen) a lot of movement – up and down – in the coming months,” McLeod told Term Sheet. He added that XRP is “a highly usable currency” and some of his company’s vendors and employees have requested payment in the form of XRP.

So to founders working on cryptocurrency-related projects, it makes sense. For the rest of the venture community, investors need to ask themselves questions like, “Will future fundings be a mix of traditional VC and digital currency,” and “What safeguards will need to exist to prevent overexposure to cryptocurrency price volatility?”

As for Ripple, keep an eye out for more deals like this one. Patrick Griffin, Ripple’s SVP of Strategic Growth said, “This is the first fund that we’ve contributed to, and it won’t be the last.”

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