Crypto investments firm Valkyrie is moving into venture capital with a planned $30 million venture capital fund that will bet heavily on early-stage startups in Israel.
To helm its effort, Valkyrie has brought on a veteran of Israel’s VC scene: Lluis Pedragosa, founder and former partner of cybersecurity-oriented Israeli VC Team8.
The Spainard told CoinDesk that Israel’s crypto startup scene has been languishing in a “vacuum” and that despite the country’s surging tech entrepreneur landscape, funders, founders and builders were all avoiding crypto. He attributed this to the bad taste left by ICO scams of 2017 and 2018.
“But that has changed in the past 12 to 18 months, with more and more entrepreneurs jumping on the blockchain wagon,” Pedragosa said. Valkyrie’s own VC wing plans to join the fray.
It will do so by throwing relatively small checks ($250,000 to $1 million, he said) at behind-the-scenes infrastructure companies that make crypto businesses run smoothly. He specifically named security and authentication, data management, networking and storage – “all of the technological rails that decentralized applications will need in order to be built.”
Pedragosa said Valkyrie has already invested in a Web3 team called “Bunches” that’s building a messaging platform for wallets. A team member for Bunches did not respond to a Twitter message sent by CoinDesk.
Beyond just runway, Pedragosa said Valkyrie will provide Israeli teams with an even more tantalizing carrot: access to the U.S. market. Valkyrie is a Tennessee company with a largely U.S.-based network of contacts and customers that will help “bridge the gap” for Israeli teams.
Pedragosa said Valkyrie is looking for companies with mass-market potential. Which is to say, projects that help crypto scale into the billions of users. That was his thesis when he first embarked on the VC effort with Valkyrie and “the thesis is the same” today, he said.
One thing that has changed are the valuations of the companies promising to build that on-chain future. Startup valuations have been slashed amid the macroeconomic uncertainty and compounded by the crypto rout. Israel’s own startup scene did not escape the pain.
“We believe it’s an even better time to start a fund because innovation is generally more prominent in times of crisis,” Pedragosa said. Plus, lower valuations mean better deals.
The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.