Galaxy Digital, a leader in the crypto space, is expanding its investment reach with a recently announced $100 million fund. The venture aims to empower promising early-stage crypto startups.
The move builds on Galaxy's existing involvement in the crypto ecosystem, which has previously relied on internal capital for corporate investments.
Galaxy Digital’s Latest Fund Driving Cryptocurrency Ecosystem Growth
The fund, known as Galaxy Ventures Fund I, LP, plans to back up to 30 startups over the next three years. Investments start at $1 million and focus on financial applications, software infrastructure, and cryptographic protocols.
Galaxy Digital has a strong history of investing in crypto companies, claiming to have invested $200 million in over 100 projects over the past six years. However, this fund marks a shift in the venture team and will involve outside investors for the first time. The company aims to replicate the success of balance sheet investing through institutional funds.
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“For years, we have committed our own funds to supporting these innovators. We are now launching Galaxy Ventures Fund I LP to partner with external investors and are investing in promising early stage companies. By supporting companies in this stage, we can continue to strengthen the digital asset ecosystem,” the company said in a statement.
Galaxy Digital's ambitious fund launch highlights renewed interest within the venture capital sector. Earlier this year, Marc Andreessen, Accolade Partners and Galaxy Digital collaborated on his $75 million fund with 1kx Network. Paradigm, meanwhile, is reportedly raising between $750 million and $850 million, while Hack VC is aiming to raise at least $100 million.
This resurgence is in line with research findings published by Galaxy Digital itself in January 2024. The company's report outlines how venture funding strategies correlate with the growing demand for cryptocurrencies.
Institutional interest tends to wane as valuations decline, creating challenges for raising capital for crypto ventures. This was evident throughout 2023, when passive investment products dominated the market.
Additionally, Galaxy Digital's report also sheds light on the importance of the new fund. Globally, cryptocurrency/blockchain-focused venture capital firms secured just $5.75 billion in funding in 2023, a significant drop from 2022's record $37.7 billion.
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The company's research highlighted that although venture funding in the crypto space was not a major vehicle until 2021, the sector is still progressing compared to pre-2021 levels. The report predicts that crypto venture capital could regain momentum in 2024 if crypto-native investors choose to reinvest.
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