Crypto investment firm Valkyrie is moving into venture capital with a planned $30 million fund that will bet heavily on early-stage startups in Israel.
Valkyrie has hired Lluis Pedragosa, a veteran of Israel’s VC scene and former partner of cybersecurity-oriented Israeli VC Team8, to lead Valkyrie Ventures.
The Spaniard told CoinDesk that the crypto startup market in Israel has been languishing in a “vacuum” and that despite the country’s surging tech entrepreneur landscape, funders, founders and builders were all avoiding crypto. He attributed that to the bad taste left by the initial coin offerings scams of 2017 and 2018.
“But that has changed in the past 12 to 18 months, with more and more entrepreneurs jumping on the blockchain wagon,” Pedragosa said.
Valkyrie will invest $250,000 to $1 million in behind-the-scenes infrastructure companies that make crypto businesses run smoothly, he said, pointing to security and authentication, data management, networking and storage firms – “all of the technological rails that decentralized applications will need in order to be built.”
Pedragosa said Valkyrie has already invested in a Web3 team called “Bunches” that’s building a messaging platform for wallets. A team member for Bunches didn't respond to a request for comment.
Pedragosa said Valkyrie will provide Israeli teams with access to the U.S. market. Valkyrie is a Tennessee-based company with a largely U.S.-based network of contacts and customers that will help “bridge the gap” for Israeli teams.
Pedragosa said Valkyrie is looking for companies with mass-market potential with projects that help crypto ventures scale into the billions of users. That was his thesis when he embarked on the VC effort with Valkyrie and “the thesis is the same” today, he said.
One thing that has changed are the valuations of the companies promising to build that on-chain future. Startup valuations have been slashed amid the macroeconomic uncertainty and compounded by the crypto rout. Israel’s own startup market didn't escape the pain.
“We believe it's an even better time to start a fund because innovation is generally more prominent in times of crisis,” Pedragosa said. Plus, lower valuations mean better deals, he said.
CORRECTION (7/20/22, 19:21 UTC): Lluis Pedragosa is not a founder of Team8, as previously stated by this article.
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