While investment firms ponder ICOs, this team is barreling ahead with a $100 million ICO fund
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Most investors are trying to get a handle on initial coin offerings, which have begun racing through the tech ecosystem like a fire, veering off in multiple directions and causing excitement and confusion and some degree of terror as they grow in number. Because the offerings are unregulated, most venture capitalists remain wary of them, even as their very line of work suddenly looks threatened. Why sell equity to an investor when your customers are willing to throw money at you?
Pantera Capitalfounded 14 years ago by Tiger Management veteran Dan Morehead, whose team was among the first to launch funds focused exclusively on bitcoin and other digital currencies.
ICOs have taken off this year, and in the last couple of months in particular. How long have you been thinking about this fund? The rest are institutions and individuals who are interested in getting exposure to the token market. But a number of VCs and venture funds have invested in the ICO fund because they want to become better educated; they also want some financial exposure [to these new assets].
Either way, can you explain how the fund will work? Meanwhile, we help provide the right connections, whether in terms of marketing or recruiting or business development. Regulators seem to be waiting to see what happens with ICOs, but you can imagine them coming in.
My understanding is these tokens are being structured as sales of services or products rather than as securities that are subject to certain disclosure and registration requirements. What if something changes? All these new currencies are along a spectrum and have various attributes, and various regulatory bodies around the world, including the CFTC and the IRS, have taken clear stances on them already.
Our preference is protocols where the token is integral to the functioning of service itself — in protocols where tokens are the only exposure to the network. We look at each project on an individual basis. We often want to be the largest investor, but it depends on the size of the token sale itself. And if these companies are raising hundred-million-dollar token rounds, this can get large really quickly.
Are you looking to invest in founders with a certain type of background? Being an entrepreneur before has some advantages, because you know how to run something. These token projects are so different. In the long run, you could see the disintermediation of venture capital. Are some of those institutions venture firms? Are you looking for a particular allotment of tokens? How many positions would you hold at any one time?
Are you looking for a certain academic background?
