Variant Launches $110M Crypto Startup Fund

The Growing Appeal of Crypto Investment for Silicon Valley VCs

Despite ongoing debate regarding the potential for cryptocurrency to overshadow conventional venture capital, current trends indicate a significant influx of attention from prominent Silicon Valley investors into the blockchain sector.

Variant Fund's New Capital and Strategic Partnership

Jesse Walden announced to TechCrunch that his crypto-focused venture capital firm, Variant, has secured a new $110 million early-stage fund. This achievement comes just over a year after the firm’s initial launch with a $22.5 million debut fund.

Notably, this fundraise occurred alongside investor Li Jin, who has joined Variant as a third general partner. This move involves the merging of her firm, Atelier Ventures, with Variant, following the complete deployment of her creator economy-focused debut fund.

Shared Investment Philosophies and Pandemic-Era Collaboration

Jin and Walden previously worked together at Andreessen Horowitz. Although their individual firms were founded on distinct investment principles, they discovered considerable common ground while deploying their respective funds during the pandemic.

“We observed a substantial overlap and convergence in the investment themes we were pursuing – the passion economy, in my case, and the ownership economy, for Jesse,” Jin explained to TechCrunch. “We jointly led and co-invested in numerous deals, leading us to recognize that these two philosophies represented different facets of the same concept.”

Li Jin's Expertise in the Creator Economy

Jin has established a strong reputation within the tech investment community, particularly for her ability to identify emerging trends in the creator economy. Prior to founding Atelier Ventures last summer, she spent almost four years at Andreessen Horowitz sourcing investment opportunities.

Atelier Ventures officially launched its $13 million fund in February, although Jin had already begun making investments throughout 2020. Throughout 2021, Jin increasingly voiced her belief that blockchain-based technologies, such as NFTs, could be instrumental in shaping the next generation of creator monetization tools.

The Power of Crypto for Incentive Alignment

“I initially established my fund as a traditional consumer Web2 fund,” Jin stated. “However, as I began deploying capital and immersing myself in the ecosystem, I realized that cryptocurrency offered a remarkably effective toolkit for aligning incentives between platforms and their users.”

2021: A Landmark Year for Crypto Investment

A surge in cryptocurrency values during the pandemic, coupled with heightened interest in institutional NFT art sales and crypto gaming platforms like NBA Top Shot and Axie Infinity, resulted in a substantial increase in crypto investment within the venture capital landscape in 2021.

Andreessen Horowitz made headlines earlier this year with the announcement of its largest vertical-specific fund to date – a $2.2 billion crypto fund. This growing pool of capital earmarked for crypto ventures has positioned a16z as a dominant force, particularly for smaller crypto funds seeking to support promising companies.

Portfolio Overlap and Strategic Investments

Atelier’s investment portfolio has shown significant alignment with investments led by a16z, especially within the crypto space. Beyond backing conventional creator platforms like Substack, Atelier’s holdings include NFT startup Yield Guild Games, DAO platform Syndicate, protocol XMTP, and crypto publishing platform Mirror. Variant has participated in several deals alongside both Atelier and Andreessen Horowitz, while also investing in competing ventures as it expands its presence in the evolving realms of NFTs, DeFi, and DAOs.

Variant’s portfolio encompasses decentralized crypto exchange Uniswap, NFT platform Foundation, and crypto wallet Phantom.

Expanding the Team and Leveraging Network Effects

Earlier this year, Variant welcomed Spencer Noon as its second GP, who transitioned from a Miami-based crypto fund. Walden emphasized that many founders within the firm’s portfolio have also become investors in the new Fund II – a strategy Variant adopted to enhance its competitiveness against larger funds.

“As the industry continues to grow, we recognize that we cannot realistically expand our internal team to 100 people,” Walden explained to TechCrunch. “Therefore, we decided to adopt a network-driven approach. To build a network that expands more rapidly and delivers greater value to all stakeholders, we turned to our core thesis: that growth is accelerated by granting ownership to users. In our case, our users are the founders we support and other builders in the space, and over 100 of them are now invested in the fund, effectively owning a portion of it.”