- November 11, 2023
- Posted by: [email protected]
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Lightspeed Faction, a venture capital firm focusing on blockchain technologies, has unveiled plans to launch a new fund worth $285 million dedicated to supporting early-stage startups within the cryptocurrency industry. The VC, composed of team members from notable entities like Amber Group, Blockchain.com, and Coinbase, aims to offer “crypto-native” guidance and support to the startups it chooses to invest in, as per a press release on Thursday.
The firm deems its services essential at a time when many industry experts have exited the space, asserting that “Faction offers founders access to a team of experienced blockchain investors and operators, servicing the industry at a time when many have fled.”
This fund announcement coincides with renewed optimism in the crypto sector after an extended bear market. Market participants are increasingly hopeful about the potential approval of a Bitcoin spot exchange-traded fund (ETF) by the U.S. Securities and Exchange Commission (SEC). This optimistic sentiment is reflected in recent successful fundraising efforts, such as Blockchain Capital raising $580 million for two new funds and Nym Technologies securing $300 million to support crypto builders, developers, and communities with a focus on privacy.
Lightspeed Faction, in a joint venture with Lightspeed Venture Partners, a VC firm managing assets worth $25 billion, typically invests in seed-stage and Series A funding rounds. The firm has already made investments in several notable projects, including Crossmint, Lens, Narya.ai, Skip.money, and Matter Labs, the team responsible for developing the zkSync layer-2 network on Ethereum.
Banafsheh Fathieh, Lightspeed Faction’s co-founder and general partner, expressed excitement about collaborating with promising projects within the blockchain ecosystem, stating, “The blockchain ecosystem is full of promising projects looking to disrupt everything from financial systems to telecommunication, and we look forward to collaborating with them to nurture the next phase of blockchain innovation.”
However, there has been a significant decline in crypto VC funding. According to DeFi Llama data, blockchain projects secured a total of $34.7 million across nine deals in the past week, representing a significant drop from the previous week’s total of over $107 million. Furthermore, publicly disclosed investment projects by crypto VCs experienced a decline of 10% month-on-month in October, with only 75 investment projects recorded compared to 83 projects in September 2023. This reflects a significant year-on-year decrease of 45% compared to the 135 projects reported in October 2022. In terms of investment allocation, infrastructure projects received the largest share of funding at approximately 24%, followed by decentralized finance (DeFi) at 21%, centralized finance (CeFi) at 9%, and non-fungible tokens/GameFi at 13%.
