RW3 Ventures announces the closure of its $60 million cryptocurrency fund. Photo illustration: Fortune Original photo from Getty Images
Venture capital money is flowing back into the volatile industry after a cold 2023, as the crypto market creeps up on the back of the approval of a Spot Bitcoin ETF and an expected Federal Reserve rate cut.
On Thursday, venture capital firm RW3 Ventures is expected to announce the successful closing of its first fund, a $60 million war chest led by billionaire Jim Pallotta's family firm, Raptor Group. , has received significant support from Mubadala, a government-backed fund. Abu Dhabi.
In an interview with luck, RW3 founder and managing partner Pete Najarian said that despite the fund's relatively small size compared to the leviathans of the world, the company's big-name brand backers and real-world blocks like music and healthcare He said the chain's work on use cases will help it capitalize on the expected bull market. last cycle.
“We wanted to be nimble and make our first fund successful,” Najarian said. “I actually like the size it is now.”
TradFi meets cryptocurrency
Prior to founding RW3, Mr. Najarian had deep roots in cryptocurrencies, working in the institutional business at Xapo Bank, an early digital asset adopter led by Wences Casares, before Xapo took custody and wallet business to Coinbase. After the sale, he served as chief revenue officer at BitGo.
Mr. Najarian partnered with Mr. Pallotta to create RW3 in 2021. Prior to founding the Raptors, Pallotta served as vice chairman of Tudor Investment Corporation and held executive positions with AS Roma and the Boston Celtics.
Although RW3 is a separate entity from Raptor, Najarian said the fund benefits from the family office's strong network connections, including in the hardware space. One of RW3's investments was in manufacturing, a company Najarian declined to name that is working on a cryptographic technology called fully homomorphic encryption that could disrupt semiconductors.
Najarian said RW3 will begin raising limited partner funding for its first fund in the second quarter of 2022 and has utilized less than 50% of its capital. Mubadala's participation reflects a renewed appetite for sovereign wealth funds to venture into cryptocurrencies after the devastating financial crisis of 2022, with groups such as Singapore's Temasek backing FTX. Mubadala has invested heavily in the industry as Abu Dhabi and Dubai seek to strengthen their position as crypto hubs.
Najarian said RW3's first fund has more than 25 other limited partners, but declined to provide specific numbers.
Actual usage example
Investments in crypto ventures rose slightly in the fourth quarter of 2023, marking the first quarter-on-quarter increase since the first quarter of 2022, according to a new report released by PitchBook on Thursday, according to analyst Robert Lee. He predicts an increase in venture funding in 2024.
RW3 has been active in the cryptocurrency venture field. The buzzword in the digital asset industry has been the tokenization of real-world assets, i.e. products such as carbon credits and fiat currencies, said RW3 and his partner Joe Bruzzesi. luck The company says it is focused on real-world use cases for blockchain. In other words, RW3 wants to support applications that go beyond guesswork.
RW3's initial deals include a lead investment in Rymedi, a health tech platform that uses blockchain to transfer medical records, and a seed in CAT Labs, a cybersecurity and forensics startup founded by a former Justice Department special agent. Includes round co-lead. RW3 is also an investor in his Web3 game studio Gunzilla and his K-Pop music label Titan Content.
Najarian said RW3 also trades token-only, but prefers to invest in a combination of traditional stocks and token warrants, a common strategy among crypto venture funds. RW3 can invest up to 20% of the total portfolio in public market liquidity tokens.
“We believe that many markets that are built solely to satisfy the crypto-native world have limitations,” Najarian said. luck, He added that RW3's targeted investment will help bridge Web2 and Web3.
