Polychain Capital has raised $200 million in the first close of its fourth investment fund

Web3 investment firm Polychain Capital has successfully raised $200 million in the “first close” of its fourth investment fund, indicating continued interest in the crypto sector despite recent challenges. The firm, founded in 2016 by Olaf Carlson-Wee, the first employee of Coinbase, has established itself as a leading venture capital player in the crypto space, Fortune reported.

Polychain Capital has been involved in significant investments, including decentralized exchange Uniswap and African crypto exchange Yellow Card. The firm’s prominence led to its inclusion in the prestigious Fortune Crypto 40 list this year.

The latest fundraising achievement comes as positive news for the crypto industry, which has experienced a “Crypto Winter” resulting in dwindling venture funding for both startups and VC firms. The fact that Polychain Capital was able to secure such a substantial amount indicates ongoing investor interest and confidence in the crypto space.

Polychain Capital founder Olaf Carlson-Wee

While Polychain declined to comment on the matter, it plans to raise a total of approximately $400 million for its fourth fund. This accomplishment highlights the firm’s track record of managing assets effectively. Pitchbook data shows that Polychain has raised three previous funds, amassing around $2.6 billion in assets under management. However, due to its liquid token hedge fund, the reported figure may fluctuate.

In 2019, Polychain’s assets under management reportedly experienced a 40% drop, amounting to nearly $400 million, during a crypto market downturn. Nevertheless, it outperformed the aggregate value of cryptocurrencies, which plummeted by 70% during the same period.

After deploying most of the capital from its third fund, Polychain initiated the process of raising its fourth fund in 2022 and 2023. The successful first close of $200 million signifies that the firm has secured agreements with investors, allowing it to begin deploying capital. However, Polychain will continue to raise funds for its fourth fund from additional investors.

The raise is a positive signal for the crypto venture capital sector, which has seen a significant decline in funding. Pitchbook data reveals that global crypto VC firms only raised $1.7 billion in the first half of 2023 across 12 funds, compared to $22.5 billion across 91 funds throughout 2022. The recent news of CoinFund raising $158 million further highlights the importance of Polychain’s achievement.

Despite the success of Polychain’s fundraising efforts, its $400 million target falls short of some other crypto firms’ achievements in 2022. For example, Haun Ventures raised an impressive $1.5 billion, representing the largest-ever debut by a solo female founding partner.

Alongside the fundraising news, Polychain experienced changes within its team. With a staff of approximately 25 members, three employees from the research team were let go, and a new researcher with a background in data science was added. General partner Niraj Pant also departed to pursue his own project, contributing to the overall staff turnover.

The team restructuring reflects Polychain’s shift in priorities as it prepares to navigate the current bear market. The firm’s focus will now center on Ethereum-based projects, similar to its previous investments in Arbitrum and Scroll, which are both layer-2 networks built on Ethereum, as well as EigenLayer, an Ethereum re-staking protocol.

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