L1 Digital AG (L1D), a Zurich-based investment advisor focused on digital assets that has $400 million in assets under management, has raised $152 million for its second venture capital fund, the firm exclusively told CoinDesk. L1D will invest 70% of the funds directly into crypto startups and the other 30% into early-stage crypto-focused investment firms. L1D currently backs notable industry investors Multicoin Capital, DeFiance Capital, Castle Island Ventures and 1kx.
L1D is registered with FINMA, Switzerland's independent financial markets regulator, and manages one alternative investment fund plus the now two venture capital funds, which are backed by professional and institutional clients, including Swiss pension funds, family offices, wealth managers and banks. Founded in August 2018, L1D has had experience with both raising and deploying funds during a bear market.
"We're most active during bear markets. If you look at our fund allocation, this is when it makes a lot of sense to onboard funds for two reasons. Number one, the effect of advantage is really important and acute,” said Ray Hindi, co-founder and chief executive officer of L1D, in an interview with CoinDesk.
"The second benefit of investing in bear markets is to de-risk operations. In bear markets, competition is pretty low, typically," he added.
The new L1D Blockchain Venture II SLP fund has already deployed about one-third of its capital. Investments have included institutional credit ecosystem Centrifuge, blockchain-backed REIT manager Groma, crypto custodian Safe, decentralized bridge aggregator Li.Fi and treasury management startup Squads. The average check size for direct investments is between $1.5 million and $7 million per project, said Hindi.
When it comes to direct investments, L1D is interested in backing digital infrastructure, decentralized finance (DeFi) and the nascent field of decentralized science (DeSci), the last of which is exemplified by L1D portfolio company VitaDao, a Pfizer-backed project focused on longevity.
"Our thesis is really that the [crypto] space will mature as time goes on,“ L1D investment researcher Jake Lynch told CoinDesk. He noted that potential areas of strength coming out of the bear market could include security or user interface improvements. “We're long term bullish here," Lynch said.
UPDATE (Aug. 8, 16:43 UTC): Corrects the name of portfolio project Chroma to Groma.
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