Dragonfly Fund II is a $225m venture fund to back the next generation of crypto entrepreneurs and projects, according to its managing partner, Haseeb Qureshi, in a blog post.
Given the surging bitcoin price and attention on blockchain and distributed ledger or decentralised financial technology this close is less of a surprise. But it is still unusual to see Sequoia China join the second fund as a strategic limited partner (LP).
VCs have often work with seed investors or accelerators and entrepreneur networks to source the next success stories. But committing capital for another general partner to manage is tricky, as this Quora discussion thread showed a few years back.
Still, corporations have often blended direct and indirect venture strategies to tap regions or sectors or technologies that could be interesting but hard to reach directly. China-listed gaming group Tencent alone has 100-plus LP commitments to funds while also being one of the largest and most successful venture investors itself, as last week’s results showed.
As VCs increasingly professionalise and scale up to match their corporate peers, however, their attitude to LP commitments will change. This is part of the broader upheaval affecting financial services.
US- and UK-based Dragonfly has now partnered with some of the main Asian crypto platforms, including OKEx, Huobi, Bitmain, and Bybit, it said.
Qureshi picked four areas of change: decentralised finance (DeFi) as “a parallel financial universe [that] has emerged, complete with its own trading venues, lenders, underwriters, and boardrooms”; non-fungible tokens (NFTs) and monetisation for creators so “users can own digital-native properties and creators can unlock a collector base that is global from day one”; Layer 2 infrastructure so blockchains scale going forward; and centralised financial infrastructure (CeFi) to “reimagine how crypto and capital markets intertwine”.
It is an exciting time the industry in more ways than one and GCV is delighted to be preparing its Global Financial Council later this year. Reach out for more information.
