Galaxy Digital Backs Crypto With $100 Million Fund

Galaxy Digital, a leader in the cryptocurrency sector, is expanding its investment horizon with a recently announced $100 million fund. This initiative aims to encourage early-stage crypto startups.

The move builds on Galaxy's existing presence in the crypto ecosystem, which previously relied on internal capital for the company's investments.

Galaxy Digital's latest fund to advance into the crypto space

The fund, known as Galaxy Ventures Fund I, LP, expects to back up to 30 startups over the next three years. Investments start at $1 million, focusing on financial applications, software infrastructure, and crypto protocols.

Galaxy Digital has a strong track record of investing in crypto companies, claiming to have invested $200 million in over 100 projects over the past six years. This funding, however, marks a turning point for the venture group as they meet outside investors for the first time. The company aims to replicate the success of the balance sheet with institutional-level funds.

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“We've been putting our own capital behind these innovators for years. “Now, Galaxy Ventures Fund I LP will partner with outside investors to allow us to continue fueling the digital asset ecosystem,” the company said in a statement.

The launch of Galaxy Digital's Ambitious Fund signals renewed interest in the venture capital sector. Earlier this year, Marc Andreessen, Accelerated Partners and Galaxy Digital partnered with 1kx Network on a $75 million fund. Meanwhile, Paradigm is raising between $750 million and $850 million, and Hack VC plans to raise at least $100 million.

This resurrection corresponds to a study released in January 2024 by Galaxy Digital itself. The company's report describes how fundraising strategies are related to the increased demand for crypto.

As valuations decline, institutional interest declines, creating challenges for crypto venture fundraising. This was evident throughout 2023 as passive investment products dominated the market.

Additionally, Galaxy Digital's report sheds light on the importance of their new fund. Globally, crypto/blockchain-focused venture capital firms received only $5.75 billion in 2023, down significantly from 2022's record of $37.7 billion.

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The company's research says that while venture fundraising in crypto will not be the main vehicle until 2021, the sector is still at a high level compared to pre-2021 levels. The report estimates that crypto venture capital could recover by 2024 if crypto-native allocators choose to reinvest.