OP Crypto Venture Capital is raising $100 Million for a fund of funds outlining its initiative to back emerging fund managers of early-stage crypto startups.
It derives the term a fund for a fund from this initiative. The OP Fund for Fund targets the $100 million hard cap and closes by the end of Q3 2022. The venture capital firm hopes to unlock the next leading crypto firm such as Binance and FTX.
OP Crypto Fund for Funds Initiative
OP Crypto supports early-stage startups in the digital asset economy. Its primary focus is investing in founders developing innovative business models in the blockchain sector. David Gan, a former Huobi executive, founded the venture capital firm in 2021. He stated that the fund for funds is a boost for the cryptocurrency industry. It serves as an underlying diversifying vehicle to steer investors actively seeking involvement in the cryptocurrency industry. He termed it the OP Fund of Funds I (OP FoF I).
It also targets strategic investors diversifying and increasing their portfolios across international borders. Their investment is amongst individuals with a niche vertical expertise. The OP FoF I specialises in fund management in particular subsectors in crypto, including decentralised finance, NFTs, metaverse, infrastructure, and gaming. The fund has a differentiated focus on the Asia-Pacific region. It also targets to invest in global fund managers with a geographical advantage in SouthEast Asia, Latin America, India, and Africa. Emerging fund managers have limited experience while managing digital assets below a certain monetary threshold. The fund will work on identifying and supporting these emerging fund managers.
It is not as typical in crypto but the fund of funds operates as an investment strategy with a pool of capital investing in other funds. The purpose is to minimise the risk by expanding the diversity of investment vehicles under it.
$100 Million Fundraise to back early-stage Crypto VCs
The Venture Capital firm unveiled that despite a declining venture capital interest and a bearish market sentiment, OP Crypto’s latest fund has garnered $50 million in commitments. The commitment amount is from traditional and crypto-focused limited partnerships(LPs). It includes major companies such as FTX subsidiary Ledger Prime and Investment firm FJ Labs as it targets a hard cap of $100 million.
David Gan stated that OP Crypto invests in fintech and blockchain technology both directly and indirectly. The OP FoF 1 is the second fund investing in emerging crypto managers. This latest fund is an indirect method they are pursuing. They invest directly through the OP Venture Fund I. OP Crypto launched this fund in June 2021 and raised $50 million as its flagship venture vehicle. It targets pre-seed and seed projects across the Web 3.0 space. The fund gained support from major companies and institutional investors including Alan Howard and Bill Ackman. Crypto native institutions such as Galaxy Digital, Animoca Brands, and Digital Currency Group were involved too.
Gan claimed that several institutional investors are uncertain where to invest their funds. The latest fund provides a safe haven for them to join the crypto space. He reiterated that it’s a longer-term prospect having projected investments in crypto to be a long-term game with the venture of more reasonable valuations. The fund will serve for several years while spreading exposure in bull and bear markets. It ensures ideal investments in both cycles.
The OP in OP Crypto stands for open, operational, and opportunistic.
Driving force behind the Fund For Funds Initiative
These are the traits that the firm seeks in early-stage crypto firms and ascribes to. Huobi, Bybit, Galaxy Vision Hill, Digital Currency Group, and Republic also back the firm.
OP Crypto Chief Operating Officer(COO) and head of research, Lucas He, is the general partner of the fund. Similar to David Gan, Lucas He also worked at Huobi where they were involved in the first seed rounds of managers such as Dragonfly Capital, 1kx, and Multicoin Capital. David Gan assumes the role of president and advisor to the fund.
Their combined experience provides OP Crypto with a spectrum in CeFi, DeFi, and TradeFi. It enables comprehension of institutional funds and their demands.
Crypto Lists learnt that the firm has a disciplined risk management approach. It deploys its investments slowly. It has only invested 20% of its total operating capital in the previous year. Crypto Lists believes that OP Crypto Venture Capital is key in developing the next big crypto firm such as Kucoin, FTX, Coinbase, and Binance.