Is crypto back?
Readers, I fear the answer, but at the very least, I can report one trend: Venture firms focused on blockchain investments are raising again, although not quite like it’s 2021.
The pre-seed crypto venture fund Portal Ventures is close to the final close of its second fund, a $75 million vehicle that its founder and general partner, Evan Fisher, tells me was oversubscribed to the tune of $90 million. An August SEC filing reflects an initial fund target size of $70 million, although Portal later decided to expand the cap by another $5 million.
Portal’s new fund is the latest in a string of recent raises across crypto funds, including Hack VC and the funds of funds Lennertz and Accolade. The latter is an investor in Portal, alongside a16z’s Chris Dixon and Marc Andreessen through a shared family office, KKR’s Henry Kravis, and managing directors from Insight Partners, where Fisher used to work.
Portal has mostly flown under the radar amid flashier crypto megafunds like Paradigm, Haun Ventures, and a16z crypto, and its latest fund reflects a more muted fundraising environment than the days when firms were out raising billions of dollars. But Fisher and Catrina Wang, Portal’s other general partner, tell me that it has carved out a path different from other firms in the space: writing first checks into companies and finding the “deals before deals,” as Wang put it. The caliber of Portal’s LPs reflects its success so far.
“Before you have a product, you're just an idea: Is this real or not?” Fisher said. “That’s what we’re best at, and when you do that right, the result is you just have really outsized ownership relative to fund size.”
Fisher and Wang both came up through more staid institutions than crypto—Fisher, working at Goldman Sachs and Insight, and Wang at Deloitte. They both discovered blockchain around the same time however and tried to persuade their employers to show interest. Fisher admits that Insight’s multibillion-dollars in assets under management meant it probably wouldn’t be interested in million-dollar token deals. But he convinced several of its directors—and Insight portfolio company founders—to back Portal when he founded the firm in 2022. And Wang cofounded Deloitte’s blockchain venture program before decamping to the crypto industry.
Portal closed its first $40 million fund at the height of the crypto craze in early 2022, but Fisher said he made most of its investments the next year during the sector’s winter when there were more opportunities for greenfields. The first fund has been fully deployed since this May, with Fisher telling me that he expects to begin making distributions next year.
The second fund will have a similar strategy of pre-seed, first checks into companies, though Fisher said that capital will also be used to support investments from the first fund. While it might seem strange that crypto titans like Dixon and Andreessen are backing another blockchain fund, Fisher reasoned that they’re attracted by Portal’s investment thesis.
“What we’re doing is the highest alpha and the highest risk-reward,” he said.” Fisher added that about 50% of its LPs have a crypto background, while the other 50% want Portal to be their crypto exposure.
In an industry that seems to shed its identity in search for a new buzzword every month (or week), racing from shiny baubles like tokenization to memecoins to stablecoins to RWAs (real world assets, for those not in the know) at breakneck speeds, Fisher and Wang point to one trend they predicted in 2023 and built investments around: The supremacy of Bitcoin. Now a foregone conclusion with the cryptocurrency nearing $100,000, Bitcoin was still in the doldrums at around $30,000 when Portal made bets on platforms like Arch, a Bitcoin-native DeFi platform that later raised additional funding from Multicoin.
So what’s next for Portal—and for crypto? Wang said she’s looking at the tokenization of “dormant asset classes” like air rights (for drone use and real estate development), which would create new marketplaces for seldom traded holdings. Another one? Tokenized uranium, which Wang argued could spur trading of yet another commodity, albeit without physical settlement, for obvious reasons.
“There’s really nothing that’s too early for us,” said Wang.
Welcome back to the rollercoaster.
Leo Schwartz
Twitter: @leomschwartz
Email: leo.schwartz@fortune.com
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