Polychain Raises $200M for Its Fourth Crypto VC Fund

San Francisco-based investment firm Polychain Capital has raised approximately $200 million in the “first close” for its fourth crypto venture capital (VC) fund.

The successful first close means the investment firm has signed an agreement with investors or limited partners to deploy funds to crypto startups. However, it will continue to raise capital from investors for its fourth fund.

Polychain to Raise $400M for Its Fourth Fund

According to a report by Fortune that cited a person familiar with the matter, the company still plans to raise approximately $400 million for the fourth fund.

Established in 2016 by Olaf Carlson-Wee, Coinbase’s former employee, Polychain is an investment firm focusing on cryptocurrency and blockchain-related investment. The company’s investment portfolio includes the decentralized exchange Uniswap, the African crypto exchange Yellow Card, the blockchain platform Tezos, and more.

According to Pitchbook data, Polychain has raised three funds with a reported $2.6 billion in assets under management (AUM). However, the figure could have fluctuated due to the company’s liquid token hedge fund. Reports suggest that Polychain’s AUM had declined 40%, or nearly $400 million, amid the bear market. At the same time, crypto asset prices dropped by 70%.

After raising a third fund between 2022 and 2023, Fortune stated that Polychain deployed most of the capital across the sector.

VCs Remain Optimistic 

Polychain’s latest fundraiser indicates that some VC firms remain optimistic about crypto despite the decline in crypto startups’ valuation over the past year.

Per report, valuations in the crypto sector have dropped significantly by 50% from the first half of last year to the second half of last year. This has led crypto startups’ valuations to drop an additional 15% to the first half of 2023, resulting in nearly 70% year-over-year (YoY).

Meanwhile, Polychain isn’t the only VC firm bullish on crypto. Coinfomania recently reported that investment firm CoinFund has raised $158 million to support early-stage crypto startups.

According to Pitchbook, global crypto VC firms raised $1.7 billion in the first half of 2023 across 12 deals.