The crypto VC space is seeing renewed interest from high net-worth individuals and family offices after a year of relative quiet, according to Struck Capital founding partner Adam Struck.
Struck highlighted in an interview with Cryptonews Thursday that US Spot Bitcoin ETFs have rapidly altered the VC industry’s mindset. Significant involvement from institutions like BlackRock and Fidelity has played a key role.
“Most of our Limited Partners that we’re speaking to… they are realizing that crypto as a whole is an asset class,” he said. “It’s something that should be maybe a small part of a very diversified portfolio. And the fact that the SEC is legitimizing it with Spot ETF approval, it’s dramatically changed sentiment. So we are noticing much more pull from LPs.”
Struck manages a $115m fund focused on investing in crypto-native tech companies rather than cryptocurrencies themselves. Some companies in Struck’s crypto portfolio include 1inch, Algorand, CoinFLEX, Liquify, and Shardeum.
Despite many investors stepping back during a prolonged downturn last year, he remained committed to his strategy.
Currently, many partners are recognizing the importance of having exposure to cryptocurrency. So, they are actively seeking fund managers who have navigated both bullish and bearish markets with a calm and prudent approach, Struck said.
“It’s a very nice time to be a fund manager in the space,” he added.
Struck Capital’s Quest for Improved User Experience and Security
Looking ahead, Struck is on the lookout for exceptional founders with unique insights and driven by the right motivations when building their ventures.
“We’re gonna pay attention to things like tokenomics and vesting periods,” he said. “And we want to make sure that they’re not just trying to launch an unnecessary token to get rich quick and do some sort of pump-and-dump type situation.”
The VC fund is specifically interested in modular blockchains. These specialize in specific functions rather than attempting to cover all aspects. Struck has already invested in Eclipse Labs, a company in this sector that recently raised $50m.
What aspects of modular blockchains have caught his attention? He explained that instead of relying solely on one Layer-1 blockchain to address all aspects of the blockchain trilemma (scalability, security, and decentralization), it may be more effective to borrow different features from various blockchains and integrate them into a Layer-2 capacity.
Struck further broke down key areas his fund is interested in. Core infrastructure is where companies could focus their efforts, he said.
“We’re constantly looking for projects that are leveraging new ecosystem proposals to make the user interface and user experience more intuitive. Just easier for people to use,” he said.
“So companies that are leveraging things like machine learning models and AI to try and stay a step ahead of the hackers and just make the infrastructure more safe for the average person to use.”
Enduring Impact of Spot Bitcoin ETFs on BTC Prices
Regarding Bitcoin’s long-term trajectory, Struck pointed to fundamental principles of supply and demand.
He said that Spot Bitcoin ETFs will remain a significant price influencer. When large entities like Fidelity or BlackRock introduce a Bitcoin ETF, they must purchase thousands of Bitcoin to back it up, driving demand and potentially impacting prices.
“The ETFs alone, from my perspective, are generating extreme buy pressure and that’s increasing the price substantially,” he said. He also mentioned rumors about the Saudis or Emiratis considering purchasing substantial amounts of Bitcoin. If true, this could contribute to pushing the price even higher.
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