A Look Inside AV’s Blockchain Fund
Our Blockchain Fund offers the chance to invest in companies transforming various industries through blockchain technologies
Blockchain-based technologies offer unparalleled transparency, immutability, and security across a wide variety of industries, sectors, and applications. Innovative companies are utilizing this revolutionary technology to redefine the internet with a focus on digital ownership. Recent investment trends have made blockchain one of the most active sectors of private equity investments. The global blockchain market, which is divided into blockchain platforms and Blockchain-as-a-Service (BaaS), is projected to reach $69 billion in 2027.
The tech’s application in existing industries is also a strong draw for investors. A Deloitte survey found that 86% of senior tech executives say that blockchain offers a compelling business case for their company. Gartner projects that businesses will gain $360 billion in value by 2026 thanks to blockchain-based projects — rising to $3.1 trillion by 2030.
Alumni Ventures’ Blockchain Fund 3 will tap into this thriving ecosystem to identify and source high-potential blockchain opportunities for our investors. To learn more about how AV’s Blockchain Fund operates, we spoke with Alumni Ventures’ Chief Investment Officer Anton Simunovic.
Our Blockchain Fund will invest in a diversified portfolio of ~20-30 companies applying the technology across consumer products, financial services, cryptoassets, and digital infrastructure. The fund will be invested over ~12-18 months, with a large reserve (~20-25%) for follow-ons. Every investor becomes a member of the Blockchain Venture Club, with opportunities to invest in Syndications, learn, and network.
To learn more, click below to review fund materials or connect with a Senior Partner.
Anton Simunovic
Chief Investment Officer, Alumni Ventures.Anton is the Chief Investment Officer at Alumni Ventures. Anton has over two decades of technology experience as a proven venture capital investor, entrepreneur, and operating executive in companies ranging from startups to Fortune 10 organizations. Anton possesses substantial international experience in Canada, China, Europe, and Israel and has served on the board of directors of more than 20 private and public companies.
Q: What is the mission statement of Alumni Ventures’ Blockchain Fund?
Anton: The Blockchain Fund offers the ability to own a portfolio of companies creating revolutionary products transforming the next iteration of the internet. Blockchain-related technology is now used to power NFTs (non-fungible tokens), the next generation of cryptocurrencies, immutable databases, and decentralized autonomous organizations (DAOs). For investors, the blockchain sector is ripe for high-potential opportunities with the chance to fundamentally reshape a broad swath of industries.
It’s important to note that this fund does not exclusively pursue blockchain-derived products, such as cryptocurrencies or NFTs. Most of our investments are centered on the infrastructure underpinning these technologies — in other words, we’re focusing on the platforms and networks used to scale this technology rather than products resulting from it. A prime example of this strategy is Subspace Labs, one of our portfolio companies that’s developing an architecture for efficient and sustainable archival of blockchain transactions. Further, our blockchain strategy is in line with our other funds in building a diversified portfolio of investments across different verticals, investor syndicates, and tech stacks.
The fund’s portfolio will consist of approximately ~20-30 deals diversified by stage, geography, and investor syndicates. We maintain a ~20-25% reserve for follow-on investments in companies that break out from the pack through their operational traction, scale of opportunity, and capital momentum. This strategy ensures we retain the ability to re-up in our best-performing portfolio companies.
Q: What criteria does AV use to determine the potential of a blockchain investment?
The blockchain sector is one of the fastest evolving technology segments in terms of both the pace of innovation and the market sectors being affected. The result is an environment that requires deep technical knowledge, an understanding of how decentralized capital will disrupt industries, and how community behaviors and governance will be impacted by the rise of DAOs. What the internet did for the frictionless distribution of information, the blockchain can now do for the distribution of value. This represents a true paradigm shift.
Every existing industry is now asking itself, “how will blockchains affect or disrupt our present structures?” At the same time, these decentralized technologies have to solve real problems for real people, and so as venture capitalists it’s incumbent upon us to unpack fact from fiction.
We consider other criteria that are a standard part of our process when analyzing potential investments:
- Market opportunity. Is there a market that is in need of a defined solution, and can the market’s size support multiple networks?
- Strong founders / teams. Founder / market fit is critical. Ideally, we like to see previous startup experience and success on their resumes.
- Experienced co-investors. A strong syndicate of investors can help shape strategy, products / services, assist in recruiting, and make valuable introductions.
- Solving difficult problems. This generally means there is a technical complexity / IP and the potential to build strong competitive moats.
- Attractive valuation and terms. We look for prices and terms that will not inhibit management’s ability to raise downstream rounds, we always aim for pro-rata rights, and make sure the potential reward is worth the investment risk.
Q: Who is managing the Blockchain Fund?
Our bi-annual Blockchain Funds are managed by two teams, each with its own network and pool of capital. Our fall 2021 fund team is led by Managing Partner Ray Wu, an experienced venture capitalist with two decades of investing experience at several global venture funds across the U.S. and Asia Pacific. Ray is supported by Principals Jack Statza and Sophia Zhao.
Because of the enormous potential of the blockchain opportunity, and the speed at which the market is moving, we recently added to our blockchain investing capacity. The spring team is led by Edward Tsai, who has over 15 years of investment experience in the U.S and China. Edward also manages Westwood Ventures, Alumni Ventures’ fund for UCLA alumni and friends of the community. His other experience includes leading over $700 million in fundraising at Qianxin, overseeing multiple mergers and acquisitions, and managing a large investment portfolio. Edward is supported by Analysts Drew Wandzilak and Yiwen Li.1
Edward Tsai
Managing Partner, Blockchain Fund Spring VintageEdward has 15+ years of investment experience in the U.S. and China, including a successful track record with investments such as Cruise Automation (acq. by GM), Life360 (IPO), Palantir (IPO), and Brave Software. In addition, Edward has served on the limited partner advisory committees at Cendana Capital and Ten Eleven Ventures, and he has deep operating experience at tech and cybersecurity companies. Most recently, he was Director of Investments at enterprise security company Qianxin, where he led $700 million in fundraising, ran multiple M&A deals, and managed a large investment portfolio. As Assistant GM for Qianxin, he also incubated their cybersecurity spinout fund Security Capital. At 360, he led International Investments and Strategic Development. He started his venture career as Vice President at DCM, a global early-stage VC firm managing $4 billion. He holds BS and MS degrees in Computer Science from UCLA, where he is a Kauffman Fellow (class of ’15).
Ray Wu
Managing Partner, Blockchain Fund Fall VintageRay is a seasoned venture capitalist with over 20 years of investing experience across a wide range of industries and geographies. Before joining Alumni Ventures, Ray was a partner and adviser at several global venture funds focusing on investment opportunities across the U.S. and Asia Pacific. Earlier, he spent more than 10 years in the corporate venture space: He worked at HP — where he served as the managing director for the tech giant’s venture arm, responsible for startup technology evaluation, new business incubation, VC relationships, and minority investments. He was also at Cisco Systems, holding several senior positions leading investment, M&A, internal incubation, and global consulting. Previously, Ray was a managing partner of a leading Internet consulting firm working with Fortune 1000 companies across North America. He earned a dual MBA degree from the University of California, Berkeley and Columbia University.
Q: How does the team identify investments for the fund?
All deals pertaining to the Blockchain Fund undergo a thorough and rigorous due diligence process honed over several years by AV’s team. Companies are graded against our proprietary scorecard and are subjected to three rounds of scrutiny from experienced investment professionals. The process makes it possible for the fund to assemble a portfolio of high-potential projects that follow the fund’s investment thesis.
Beyond our investment approval process, we leverage the deal flow of our more than 60 in-house investing professionals, geographically dispersed across six U.S. offices in key venture hubs. Every member of our team brings unique experience and a broad network of entrepreneurs, industry experts, and fellow VCs to our deal sourcing pipeline.
Q: What kind of investor typically invests in a Blockchain portfolio?
Many products or services tout themselves as revolutionary, but the blockchain space is one of the few that has the true potential to transform whole industries.
As blockchains employ digitally-native currencies, and tokens to many projects are publicly traded, investors require a long-term horizon, a strong constitution, and an ability to withstand the volatility that comes with extreme innovation.
Blockchains services and products have already created entirely new markets, including NFTs, in-game economies, and globally collaborative ownership via DAOs to astonishing success. And to think that this technology has only been around for slightly more than a decade. Blockchains have yet to reach anywhere near their full potential.
To learn more about adding blockchain investments to your portfolio, we invite you to check out our fund materials or reach out to our team.
Our Blockchain Fund will invest in a diversified portfolio of ~20-30 companies applying the technology across consumer products, financial services, cryptoassets, and digital infrastructure. The fund will be invested over ~12-18 months, with a large reserve (~20-25%) for follow-ons. Every investor becomes a member of the Blockchain Venture Club, with opportunities to invest in Syndications, learn, and network.
To learn more, click below to review fund materials or connect with a Senior Partner.
Contact [email protected] for additional information. To see additional risk factors and investment considerations, visit av-funds.com/disclosures.
1These investments are not intended to suggest any level of investment returns. Many returns in investments result in the loss of capital invested. Blockchain Fund 2 was managed by AV with investment team led by Ray Wu. Blockchain Fund 3 to be managed by AV with investment team led by Edward Tsai. Going forward, odd number funds will be managed by Edward Tsai, even by Ray Wu. When Fund Families have more that two investment teams, each team can work collaboratively with each other, but each is responsible for investing its own assets. Blockchain Fund 1 was managed by Green Nonce, which was subsequently spun out such that it and its principals are no longer affiliated with Alumni Ventures. To see the performance of each exited investment for all Alumni Ventures funds over the last twelve months and our historical performance since 2014, click here.