Venture capital firm Tribe Capital has recently announced the launch of a new crypto fund, aiming to raise $100 million. The firm plans to direct the funds towards early-stage layer 1 and 2 ecosystems as well as DeFi projects. With an impressive $1.6 billion in assets under management, Tribe Capital will invest between $500,000 to $3 million in each project, focusing on bringing real-world assets on-chain.
Tribe Capital has a history of supporting prominent cryptocurrency firms, such as FTX, Kraken, and Bitfinex, particularly during the 2021 bull market. The firm’s co-founder and partner, Arjun Sethi, even joined Kraken’s board in May 2021. However, it is important to note that this new development comes amid a sharp decrease in venture capital investment value within the crypto and blockchain ecosystem.
Tribe Capital aims to bolster growth in DeFi projects and protocols that can offer security, scalability, liquidity, and cross-chain interoperability. They believe that by focusing on these projects, they can help increase user confidence in cryptocurrencies and drive widespread adoption. Their latest fund, the “Digital Future Fund I,” comes hot on the heels of their previous fundraising effort in October 2021, which raised $75 million.
However, there’s no denying that the current climate for venture capital funding in the crypto space has been less than favorable. The prolonged bear market has caused VC funding to drop significantly, with a reported 91% decrease in January 2022 compared to the same month of the previous year. The number of deals, primarily for smaller early-stage firms, also fell.
The downturn in VC investment this year could be attributed to the lingering effects of 2022’s so-called “crypto winter.” Funding value dropped by 34% between Q3 and Q4 of 2022, with Q4’s figures decreasing by 67% from Q1 and 53% from Q2 of the same year. This decline was exacerbated by the collapse of FTX and the unstable macroeconomic conditions in the capital markets caused by rising interest rates.
Despite these challenges and waning VC interest, Tribe Capital remains undeterred in its commitment to investing in the crypto space. Their locked investment portfolio on the defunct FTX exchange has not deterred