Crypto exchange FTX Trading Ltd. has launched a $2 billion venture fund, one of the largest vehicles to date aiming to tap into the crypto market’s startups.
The large size of FTX Ventures will allow it to invest flexibly across startup stages, with check sizes that could range from as little as $100,000 to hundreds of millions of dollars, said Amy Wu, the fund’s chief.
“We could possibly deploy it all [by] next year but it depends on the opportunities we see in the market,” she added.
Ms. Wu joined FTX this month from Lightspeed Venture Partners, where she led investments in gaming, crypto and other startups, including Nassau, Bahamas-based FTX. She will head FTX’s mergers and acquisitions, partnerships and gaming initiatives in addition to leading FTX Ventures.
The $2 billion for FTX Ventures came from FTX, which was recently valued at $25 billion, and its founder Sam Bankman-Fried, Ms. Wu said, noting that “Sam does everything big.”
Ms. Wu said she is especially interested in investing in crypto gaming companies through FTX Ventures, whether in spinouts from traditional gaming studios or new crypto-native studios. Other areas of interest include insurance and security products for crypto, which could help reduce concerns over hacking, she said.
Developer tools and infrastructure that help applications run on different underlying blockchains, or systems of record, are also interesting, Ms. Wu said.
FTX made more than a dozen investments in startups before launching FTX Ventures, including investments in gaming studio Faraway Inc., financial infrastructure company DriveWealth Holdings Inc., and blockchain authentication company Web3Auth.
FTX has helped Faraway design how its future crypto tokens would function as well as prepare the tokens for a potential listing on a crypto exchange, said Alex Paley, the startup’s co-founder and chief executive.
“There’s a lot of nuance here,” so getting FTX’s help was crucial, Mr. Paley said.
FTX Ventures can invest in equity, liquid tokens and prelaunch tokens globally, Ms. Wu said, adding the fund will be able to lead deals in addition to participating alongside other investors.
FTX Ventures joins other crypto funds tied to corporate entities, including Coinbase Ventures, a venture arm of crypto exchange Coinbase Global Inc.,and Binance Labs, part of crypto exchange Binance, which said in 2018 it would invest as much as $1 billion in crypto startups.
One reason for crypto companies to launch venture arms may be to explore potential acquisition targets, said Grace Isford, principal at Canvas Ventures, where she invests in crypto and other sectors. Large crypto companies aim to expand their offerings with an eye to serving as an all-in-one stop for crypto, Ms. Isford said.
While FTX Ventures is focused on generating returns, it will have strategic connections to teams within FTX, which could help the venture fund’s portfolio companies, Ms. Wu said.
Ms. Wu said she would remain a venture partner at Lightspeed and will continue serving in her board roles at the firm’s crypto and gaming portfolio companies.
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