RW3 Ventures has announced the closing of its $60 million cryptocurrency fund.
With cryptocurrency markets on the rise, fueled by the approval of spot bitcoin ETFs and expected interest rate cuts by the Federal Reserve, venture capital funding is flowing back into the volatile industry after a chilly 2023.
On Thursday, venture capital firm RW3 Ventures plans to announce the successful closing of its first fund, a $60 million fund led by Raptor Group, the family office of billionaire Jim Pallotta, with significant backing from Mubadala, a sovereign wealth firm. Abu Dhabi money.
In an interview with luckRW3 founder and managing partner Pete Najarian said the company's brand backers and commitment to real-world blockchain use cases like music and healthcare will help it ride an expected bull market, despite the fund's relatively small size compared to giant funds. From the last session.
“We wanted to be smart and have the first box to crush,” Najarian said. “I actually like our size now.”
TradFi meets cryptocurrencies
Before founding RW3, Najarian had deep roots in the cryptocurrency space, having worked in the institutional business at Xapo Bank, an early adopter of digital assets led by Wences Casares, and later serving as Chief Revenue Officer at BitGo after Xapo sold its custodial and private wallet businesses. Take it to Coinbase.
Najarian partnered with Pallotta to create RW3 in 2021. Prior to founding Raptor, Pallotta was Vice Chairman of Tudor Investment Corporation and held executive positions at AS Roma and the Boston Celtics.
While RW3 is a separate entity from Raptor, Najarian said the fund benefits from the family office's strong network connections, including in the hardware space — one of RW3's investments is in a company working on an encryption technology called fully homomorphic encryptions that could disrupt semiconductor manufacturing, Although Najarian declined to share the name.
RW3 began raising money from limited partners for its first fund in the second quarter of 2022 and has deployed less than 50% of its capital, Najarian said. Mubadala's participation reflects a new willingness among sovereign wealth funds to venture into cryptocurrencies after the catastrophic collapses of 2022, with FTX backed by groups including Singapore's Temasek. As Abu Dhabi and Dubai seek to strengthen their position as cryptocurrency hubs, Mubadala has invested heavily in the industry.
Najarian said RW3 has more than 25 other limited partners in RW3's first fund, though he declined to provide a specific number.
Real-world use cases
According to a new report published by PitchBook on Thursday, the fourth quarter of 2023 saw a slight increase in cryptocurrency project investments, the first quarter-on-quarter increase since the first quarter of 2022, with analyst Robert Lu predicting an increase in project funding in 2024.
RW3 has been an active player in the cryptocurrency project space. While the buzzword in the digital asset industry has been real-world assets, or tokenization of instruments like carbon credits and fiat currencies, RW3 partner Joe Bruzzese said, luck The company's focus is on real-world use cases for blockchain. In other words, RW3 wants to support applications that exceed expectations.
RW3's early deals include a lead investment in Rymedi, a health technology platform that uses blockchain to transfer medical records, and co-leading a seed round for CAT Labs, a cybersecurity and forensics startup founded by a former Department of Justice special agent. . RW3 has also invested in Web3 game studio Gunzilla and K-pop music label Titan Content.
Najarian said RW3 prefers to invest through a mix of traditional stocks and token warrants, a common strategy among cryptocurrency venture funds, though the company also does token-only trades. RW3 can also invest in liquid tokens on the public market, although only up to 20% of its total portfolio.
“We think there are limits to the addressable market for a lot of things that are being built just to please the native crypto world,” Najarian said. luckAdding that RW3's targeted investments help bridge the gap between Web2 and Web3.
