$50M Volt Fund Seeks to Invest in Crypto Startups as Market Continues Downswing
Volt Capital, a “crypto-native venture firm,” has launched a $50 million fund for early-stage crypto investments. This adds to a slew of money raised recently for investments in the digital asset space, which has continued to see dwindling prices.
According to its founder, Soona Amhaz, the $50 million raised would fund infrastructure, DeFi, NFTs, and DAOs in the pre-seed and seed investment phase. This money secured is five times the previous amount the fundraised, with several industry heavyweights supporting the venture.
Marc Andreessen and Chris Dixon of Andreessen Horowitz (a16z), angel investor Elad Gil, and Union Square Ventures Managing Partner Albert Wenger are contributors. Also, global investment firm Tiger Global and European hedge fund manager Brevan Howard are among the fund’s backers.
Volt Raises Liquidity Despite Market Meltdown
Despite seeing the prices of digital assets slump, Volt joins several other crypto funds to raise liquidity and invest in the blockchain. The interest in Web 3 and other crypto sub-sectors has been rising recently, with VCs investing billions of dollars within the space. According to Amhaz, the current climate is the perfect atmosphere for early-stage crypto investors. She said,
“I think it’s a phenomenal time to be investing. This is the exact right time to be doubling down.”
Previously in 2020, Volt Capital, based in San Francisco, had raised a $10 million fund backed by CMT Digital’s Balaji Srinivasan and others. The VC firm invested in Ethereum analytics provider Nansen, crypto retailer BuyCoins.Africa, DeFi trading platform Parsec, and several other startups.
Initially, Volt was one of the original contributors to the crypto accelerator program DeFi Alliance. The funds have continued to back projects in pre-seed, seed, and Series A rounds that more considerable funds sometimes overlook.
Consequently, its latest round of funding has come when interest within the space has declined considerably. Nonetheless, Volt’s move seems to support the Price innovation cycle thesis from one of its backers, a16z.
According to the thesis, the crypto market is driven by a cycle where strong digital asset prices attract talent into the space. During the inevitable downturns, developers innovate, and the resulting projects drive up optimism when the cycle’s winter ends. This hypothesis was proven correct in 2020, and it seems Volt is hoping to drive innovation through its fund as the crypto market currently experiences a winter of sorts.
However, the current global headwinds make it uncertain how long this crypto winter may last. Colleen Sullivan, a co-head of the venture group at Brevan Howard Digital, believes the downturn could last 18-24 months. Nonetheless, she expects early-stage investors to weather the storm and eventually see profits. She said,
“The current crypto downturn could run for another 18 to 24 months. Uncertainty now is higher than during the last crypto crash between 2018 and 2020. What’s different now is the global macro environment. We haven’t invested with rising rates and inflation before. But new investors in early-stage investments should, in theory, be able to ride out the maelstrom and see profits in the end. It’s the absolute perfect time to deploy a new fund,”
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Crypto Market At the Onset Of A Winter Period
Although seemingly inconceivable this time last year, BTC’s price has slumped to under $30,000, according to Coinmarketcap. This has seen bitcoin slump by more than 55% from its all-time high price recorded in November 2021, leading to talk of a crypto winter or bear market.
Crypto winters are typical, and they usually occur in the four-year intervals between Bitcoin halving cycles. With the most recent taking place between 2018 and mid-2020. The period is primarily characterized by a period of hibernation for many cryptocurrencies, during which their values remain stable.
Despite having a somewhat negative connotation, bear markets are essential to the entire crypto industry. Usually, the period helps strengthen the ecosystem by shaking out weaker projects. Only stable, sustainable, and efficient projects, blockchains and digital assets survive when the bull run comes back.
However, with the likes of Volt and other VCs raising liquidity to fund startups and continued institutional adoption of crypto the future seems bright. However, investors would need to remain patient as winter sets in. Eventually, summer would return.
Do you think the current market situation will lead to innovative ideas which will sustain the crypto market cycle? Let us know your thoughts in the comments below.