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What’s the right size crypto fund?

July 13, 2022, 12:21 PM UTC

Theoretically, you’d raise a fund based on the market opportunity.

So here’s a question: How much opportunity is there really in crypto? Ask a16z crypto or Lightspeed Faction, and you’ll get a different answer.

Each firm offered their own perspective at Fortune’s Brainstorm Tech conference, where a16z crypto GP Sriram Krishnan, Lightspeed Faction managing partner Sam Harrison, and Variant co-founder and general partner Li Jin chatted about the crypto market onstage with my colleague Anne Sraders.

As you may recall, Andreessen Horowitz raised a whopping $4.5 billion in funding for crypto vehicles earlier this year, and Lightspeed Faction has raised some $325 million for its first close of its debut crypto fund, as I reported yesterday (Lightspeed Faction is declining to comment on its fundraising efforts.)

Fortune senior writer Anne Sraders speaks with Lightspeed Faction managing partner Sam Harrison, Variant general partner Li Jin, and a16z crypto general partner Sriram Krishnan about the state of the crypto markets.
Michael Faas—Fortune

“I think pacing is really important,” says Lightspeed’s Harrison, who wouldn’t confirm or comment on the fund’s size, but said that “a fund around that size could be commensurate with the opportunity that we see today” in terms of the time to deploy as well as the current pricing in the market. Harrison pointed out that it took three years to deploy the fund at Blockchain Ventures, his former firm, which was a good timeline. “Crypto has a habit of getting ahead of its skis whenever there’s some pop,” Harrison said, adding: “It gets really overheated, and then crashes back down to reality.”

Andreessen clearly thinks bigger is better.

“Every firm is obviously a bit different,” Krishnan says, adding later: “We see people coming to us every single day working on something cool and interesting, and we want to take advantage of that. And so this is really a reflection of our belief in this space in a very long-term capacity and the people that we hope we’re fortunate enough to work with.”

During the panel, Sraders asked Harrison about Blockchain Ventures’ investment in the algorithmic stablecoin Terra.

At the outset, Terra was exactly what Harrison was looking for in an investment, he said: A high-IQ team solving a real-world problem, which was to get people to use a stablecoin as a payments mechanism as opposed to credit cards. It also offered three or 400x multiple for early investors, he said. 

“And then, sadly, where it went wrong… I think it set the industry back. It’s an awful story for lots of people,” said Harrison, who was cut off before he could fully depict what exactly went wrong.

See you tomorrow,

Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
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Correction: This newsletter has been updated to reflect that Harrison said Terra used a stablecoin as a payments mechanism, not Bitcoin.

Jackson Fordyce curated the deals section of today’s newsletter.

VENTURE DEALS

- SingleStore, a San Francisco-based cloud-native SQL database company, raised $116 million in funding. The growth equity business within Goldman Sachs Asset Management led the round and was joined by investors including Sanabil Investments, Dell Technologies Capital, GV, Hewlett Packard Enterprise, IBM, Insight Partners, and others. 

- Tecton, a San Francisco-based machine learning platform, raised $100 million in Series C funding. Kleiner Perkins led the round and was joined by investors including Databricks, Snowflake Ventures, Andreessen Horowitz, Sequoia Capital, Bain Capital Ventures, and Tiger Global.

- Pattern Brands, a New York-based at-home products company with multiple brands, raised $25 million in Series B funding. Toba Capital, Verlinvest, and BAM Elevate led the round and were joined by investors including Primary, RRE Ventures, and Victory Park Capital.

- Traba, a Miami-based labor marketplace that connects workers with open shifts at warehouses and event venues, raised $20 million in Series A funding. Khosla Ventures led the round and was joined by investors including Founders Fund, General Catalyst, SciFi VC, and Atomic.

- Nexii, a Vancouver-based green construction company, raised C$20 million ($15.36 million) in funding co-led by Horizon Technology Finance Corporation and Trinity Capital

- Provus, a Saratoga, Calif.-based automated services quoting solution provider, raised $12 million in Series A funding. Norwest Venture Partners led the round and was joined by investors including Accel Partners, Storm Ventures, and Firebolt Ventures

- Quadrata, a Marina Del Rey, Calif.-based passport network, raised $7.5 million seed funding. Dragonfly Capital led the round and was joined by investors including Franklin Templeton, Abra, GSR Ventures, Orange DAO, Fellows Fund, GreatPoint Ventures, August Capital, and other angels. 

- Fold Health, a San Francisco-based digital health stack for primary care, raised $6 million in funding. Former Athenahealth CEO Jonathan Bush, SkyFlow CEO Anshu Sharma, Saama Technologies CEO Vivek Sharma, General Catalyst’s Anand Chandrasekharan, Iron Pillar’s Mohanjit Jolly, Firebolt Ventures’ Gokul Rajaram, and others invested in the round. 

- The Cool Down, a Bend, Ore.-based climate media startup, raised $5.7 million in funding. Upfront Ventures led the round and was joined by investors including Revolution’s Rise of the Rest Seed Fund, Jetstream, Swingbridge, and Niche Capital.

- Tribute Brand, Zagreb, Croatia-based digital fashion brand, raised $4.5 million in seed funding. Collab+Currency led the round and was joined by investors including Alice Lloyd George, Lattice Capital, RED DAO, and Flamingo DAO.

- Arise, a New York-based eating disorder and mental health care startup, raised $4 million in seed funding. Greycroft and BBG Ventures led the round and were joined by investors including Wireframe Ventures and others.

- Wonder Robotics, a Tel Aviv-based autonomous flight and commercial drone landing technology company, raised $4 million in funding. Elron Ventures led the round and was joined by Besadno Investment Group

- Last Crumb, a Los Angeles-based cookie brand, raised $3 million in seed funding. Electric Feel Ventures led the round and was joined by investors including Chetrit Ventures, hospitality entrepreneur David Grutman, fashion retailer Andrew Rosen, and Venus ET Fleur founders Seema Bansal and Sunny Chadha

PRIVATE EQUITY

- ArchiMed, a Trans-Atlantic portfolio company, acquired Title21, a Phoenix-based health care software provider. Financial terms were not disclosed. 

- CTSI, backed by Wind Point, acquired Firecom, a Lake Oswego, Ore.-based fire alarm company. Financial terms were not disclosed.

- Enercon Services, backed by AE Industrial Partners, acquired Ardent Environmental Group, a Corona, Calif.-based environmental consulting firm. Financial terms were not disclosed.  

- IK Partners agreed to acquire a majority stake in IG&H, a Utrecht, Netherlands-based consultancy and technology firm. Financial terms were not disclosed.

- Outdoor Living Supply, a Trilantic North America portfolio company, acquired Norristown Brick, a Norristown, Pa.-based masonry, landscape, and hardscape materials distributor. Financial terms were not disclosed. 

- PestCo Holdings, a Thompson Street Capital Partners portfolio company, acquired Mick’s Exterminating, an O’Fallon, Mo.-based residential and commercial pest control company. Financial terms were not disclosed. 

- Sun Capital Partners acquired Andersen Commercial Plumbing, a La Verne, Calif.-based commercial plumbing services provider. Financial terms were not disclosed. 

EXITS

- Capital Power Corporation and Manulife Investment Management, agreed to acquire Midland Cogeneration Ventures, a Midland, Mich.-based natural gas-fired cogeneration facility, from OMERS Infrastructure. Financial terms were not disclosed. 

- Madison Dearborn Partners agreed to acquire a majority stake in Unison, a Dulles, Va.-based procurement, supply chain, and contract management software provider to U.S. federal government agencies and government contractors, from Carlyle. Financial terms were not disclosed. 

- RAF Industries acquired Ligchine International Corporation, a Darien, Wis.-based designer, manufacturer, and marketer of laser guided boom screeds used for placing concrete, from Blue Sage Capital. Financial terms were not disclosed. 

SPAC

- Falcon’s Beyond Global, an Orlando-based entertainment development and operations company, agreed to go public via a merger with Fast Acquisition Corp. II, a SPAC. 

FUNDS + FUNDS OF FUNDS

- Francisco Partners, a London and San Francisco-based investment firm, raised ~$17 billion across two funds. Their flagship fund raised $13.5 billion and their Francisco Partners Agility fund raised $3.3 billion

- Motive Partners, a London and New York-based private equity firm, raised $2.54 billion for its second fund focused on software, investment, and information services businesses located in North America and Europe. 

- Oak HC/FT, a Stamford, Conn.-based venture and growth equity firm, raised $1.94 billion for a fifth fund focused on health care and fintech companies. 

- Multicoin Capital, an Austin-based investment firm, raised $430 million for its third focused on crypto.

PEOPLE

- Actis, a London-based investment firm, hired Jaroslava Korpanec as partner and head of Central and Eastern Europe. Formerly, she was with Allianz Capital Partners.

- Hildred Capital Management, a New York-based private equity firm, promoted Kevin Regan to vice president.

- IVP, a Menlo Park and San Francisco-based venture capital firm, promoted James Black and Karthik Ramakrishnan to partner.

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