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On May 18, Recode reported that it has discovered Lightspeed Venture Partners, the main investment firm which backed many successful technology companies like Snapchat operator Snap, is planning to establish a fund that is exclusive to the cryptocurrency market.
Three Options
Sources of Recode confirmed that the venture capital firm is actively investigating into various methods that could be utilized to invest in blockchain projects and focus on cryptocurrency investments. However, the plan is not finalized as of yet, primarily because the firm is still yet to decide the scope of investments.
Similar to Bitmain, the multi-billion dollar cryptocurrency mining equipment manufacturer, it could prioritize blockchain projects and emerging blockchain protocols or initial coin offerings (ICOs. It also could ease the burden on its partners and simply invest in major cryptocurrencies like bitcoin and ethereum, which is significantly easier than being an early-stage investor in ICOs as a venture capital firm.
Currently, the venture capital firm is exploring three possible strategies that could be used in the short-term to enter the cryptocurrency market. The first is an Andreessen Horowitz-like fund, which operates independently from the main technology-focused initiative of Lightspeed Venture and solely focuses on the cryptocurrency market.
The second strategy is investing directly in blockchain projects to be heavily involved in the cryptocurrency sector, and rebrand the image of Lightspeed Venture as a cryptocurrency investment firm. The third option the company is considering is to create a new company that will operate outside the umbrella of Lightspeed Venture with complete autonomy.
Direct ICO and Blockchain Project Investment Likely
Based on several reports, Lightspeed Venture has already invested in the ICO of Telegram, one of the most widely utilized messaging applications that raised more than $1.7 billion in its presale. Due to its massively successful presale, Telegram revealed that it will no longer initiate a public ICO.
Lightspeed also invested in Basis, a stable cryptocurrency that aims to compete with juggernauts like Tether, a USD-backed cryptocurrency that has been implemented by exchanges like Binance as a substitute to the US dollar. In April, Lightspeed led a $133 million funding round for Basis, participated by Andreessen Horowitz, Bain Capital Ventures, and Google Ventures.
In consideration of its previous investments, it is highly likely that Lightspeed will lean towards the second strategy, which is to rebrand the image of Lightspeed from a technology-focused venture capital firm to a cryptocurrency investment firm.
Lightspeed is expected to ramp up its direct investments into blockchain projects and ICOs like Telegram and Basis and become heavily involved in the cryptocurrency sector as one of the major large-scale venture capital firms alongside Andreessen Horowitz and the Digital Currency Group.
Although many billionaire angel investors and venture capital firms like Peter Thiel’s Founders Fund, Mike Novogratz, and Tim Draper found monumental success by investing in bitcoin, ethereum, and other major cryptocurrencies, most of the short-term returns can be found in ICOs and smaller blockchain projects that have the potential to become multi-billion dollar networks.
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