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Venture Capital Firm Raised $1 Billion to Invest in Crypto Startups

Venture Capital Firm Raised $1 Billion to Invest in Crypto Startups

Grass Hill Alpacas farm offers socks in a variety of sizes, colors, and styles for purchase online. Paying via credit card, PayPal, or Bitcoin is another option. According to Grass Hill owner Jim Forster, accepting the world's top cryptocurrency is now routine. His estimate is that between 5% and 10% of his business is transacted in Bitcoin.

Bitcoin purchases of any kind goods, come with a number of disadvantages. Bitcoin's rapid price swings mean that the transaction could result in gains or losses. Crypto and e-commerce are tying the knot in numerous ways. It's also a good illustration of how the crypto economy is making inroads into the mainstream, as evidenced by the emergence of new investmentopportunities everywhere.

A number of companies in the payments industry, such as Visa and Mastercard, have begun tying credit and debit cards to cryptocurrency exchanges, while PayPal Holdings and Block (formerly Square), both of which were acquired by PayPal in 2014, are integrating cryptocurrency into their own apps. By claiming that they're accepting some of their salary in Bitcoin, the mayor of New York and Miami are marketing their cities as "crypto havens," and they're also generating some tax income from "CityCoins." The largest bank in the United States, JPMorgan Chase (JPM), recently created a virtual lounge in the virtual world of Decentraland to showcase their blockchain business, Onyx.

Using blockchain technology, a decentralized computer network maintains a record of all transactions. Web3 is a term for the next generation of the internet, which no one knows how far into the future it will go. For a decentralized network with cryptos and digital assets, blockchains might be the plumbing, according to the theory.

Metaverse is another title for Web3 that encompasses online games, marketplaces, social media sites, and workspaces, as well as extending the concept. According to a recent J.P. Morgan analysis, "the metaverse will undoubtedly enter every sector in some form in the coming years." Companies, including social media, advertising, and video games, have a "trillion-dollar opportunity" in the metaverse, according to crypto fund sponsor Grayscale Investments.

With record venture investmentand cryptocurrency values at historic highs, Palo Alto-based Electric Capital has secured $1 billion to investin crypto businesses. An unreported $600 million token-only fund closed last month, and a $400 million token-and-equity fund closed last year were also included in this total. For its first two funds, Electric had only raised $125 million.

Avichal Garg, 39, and Curtis Spencer, 40, are the founders of Electric. Garg began his tech career in 2001 while still a high school student, when he cofounded an educational technology business. After graduating from Stanford with a degree in computer science, he moved on to work at Google as a product manager. His co-founders then created Spool, a mobile app that allowed people to save articles and movies on their smartphones. While Garg and Spencer were employed by Facebook for several years before launching Electric Capital in 2018, Spool was purchased by the company in a modest transaction.

In order to set Electric apart from other crypto investment funds, the duo plans to hire a large number of engineers. A greater understanding of its portfolio company's technical operations will allow it to better assist with their technical operations. Software developers make up eight out of Electric's 15 employees, Garg says.

As he sees it, engineers will soon control all major corporations. Most of the world's successful business firms, he asserts, "are run by software developers". In the most successful media platforms, technologists are in charge of running them. We believe that venture capital and all other forms of capital markets are no different. Both Paradigm and Hack VC, which just received $200 million in capital, employ engineering teams.

Electric's "Developer Report" examines thousands of lines of open-source code on the GitHub repository each year to provide an annual of the state of the industry. Electric's investment selections are influenced by the research, which estimates the number of engineers working on various cryptocurrency platforms and which ecosystems are expanding the fastest.

Near Protocol, an Ethereum competitor, is one of Electric's best investments so far. It serves as a cryptocurrency platform on which other applications can run. In 2021, Near was the third-fastest-growing crypto ecosystem, with more than 100 full-time devs. More money was put into Near by Garg and Spencer over the coming years. Electric's overall interest in Near is in the "low hundreds of millions" after a $500,000 venture has grown to over $60 million.

Decentralized finance, or DeFi, is a catch-all term for crypto products that aim to construct financial systems independent of any one corporation or government. Electric has made significant investments in DeFi. Earlier this year, it invested in Dydx, a 27-person crypto derivatives trading platform that overtook Coinbase in daily trading volume last October. Zeta, an options-trading platform, is one of its investments. Furthermore, it has invested in Syndicate, a Silicon Valley-based software business that facilitates the creation of investing DAOs, or decentralized autonomous organizations.

Electric wants to invest between $1 million and $20 million in both equity and token investments to use its new $1 billion in funding. Cryptocurrency infrastructure and decentralized finance will continue to be invested in, and the company plans to enter the NFT sector. He is not yet ready to invest directly in NFTs like digital art or in NFT investment DAOs via his fund. "How do you value this stuff?" he replies, "Was there any basic asset in play, or were you just playing about with the idea of making a profit?” He and Spencer, on the other hand, want to investin "picks and shovels" like NFT marketplaces, digital wallets, and financial instruments that allow you to borrow money and use your NFTs as collateral, such as a bank account.

The volatility of cryptocurrencies should not be taken lightly. Cryptocurrency prices fell by 10% in a single day following Russia's invasion of Ukraine, down to $1.6 trillion in total value. Ethereum, Dogecoin and Solana were all down more than 15% as Bitcoin fell in line with the larger market's decline.