The venture fund is accepting minimum investments of $1 million for up to three years.

Polychain Capital’s second venture fund, which targets a war chest of $200 million, opened at the beginning of 2020. The firm’s first fund launched in Q1 of 2018, raised $175 million and was fully invested by end-2019. Both funds back early-stage crypto startups raising pre-seed, seed and Series A funding rounds. (Coindesk)

Investing objectives

Polychain’s first venture fund split its investments [40:60] between startups that were improving blockchain infrastructural applications and those that were exploring innovative new ideas in the crypto industry. Thus, the fund prioritized cryptocurrency exchanges and custodians, with Coinbase being a flagship investment.

According to Coindesk, Polychain also invested in cryptocurrencies and its own crypto hedge fund launched in 2016. This hedge fund trades short and long term positions in digital assets. It had AUM of about $550 million as of October 2019.

In its second, more novel category the fund backed DeFi (decentralized finance) entities. These included MakerDAO, margin trading book dYdX, blockchain bank Dharma and lending protocol Compound.

Polychain’s second fund will look for opportunities to invest in blockchain networks with improved privacy, engineering and flexibility features.

Investors in Polychain funds

Some of the top-flight investors in Polychain funds include venture capitalists Andreessen Horowitz, Sequoia Capital, Founders Fund and Union Square Ventures.

Not much information is given away by the rather bare-bones website of Polychain. Further, its Portfolio tab doesn’t lead anywhere.

However, the Wall Street Journal reported in April 2019 that Polychain’s assets had dropped 40% from the $1 billion mark as of the end of 2018, according to a March 2019 filing. “Fund’s decline in assets largely due to a drop in the value of its holdings, rather than redemptions, say people familiar with the situation,” explained the WSJ.

Olaf Carlson-Wee, the first employee and former head of risk at Coinbase, founded Polychain Capital as a new digital currency hedge fund in San Francisco in 2016.

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