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Coinbase Turns Early Seed Investor with New Venture Capital Fund

Last Updated March 4, 2021 5:06 PM
Josiah Wilmoth
Last Updated March 4, 2021 5:06 PM

Coinbase, the first cryptocurrency “unicorn,” is launching a venture capital fund to incubate early-stage startups in the burgeoning industry.

The San Francisco-based cryptocurrency exchange and brokerage firm made the announcement on Thursday, stressing that the fund — dubbed Coinbase Ventures — will invest solely in companies, not cryptoassets.

“We’re going to invest off our balance sheet into crypto companies,” Coinbase President and COO Asiff Hirji told CNBC’s Fast Money . “We will invest in companies that are in the space and are aligned with our values.”

“By giving them access to capital we hope that they will grow great businesses,” he added. “It’s not about investing in the token, it’s not about trying to line up tokens that we would put on our exchange.”

The fund will start at $15 million and grow along with Coinbase, but Hirji said that the company does not expect to generate any meaningful profits from the venture beyond helping the ecosystem mature.

Coinbase is famous for its alumni network, and the company said that it expects to “enthusiastically invest in ideas” and startups created by former Coinbase employees.

Moreover, it also suggested that it will have no qualms about investing in startups that are also potential competitors.

“You may also see us invest in companies that ostensibly look competitive with Coinbase,” the company said in a blog post . “We’re taking a long term view of the space, and we believe that multiple approaches are healthy and good.”

The announcement of Coinbase Ventures comes just weeks after the firm unveiled its eponymous index fund, the first product in a new line of asset management products that are currently restricted to accredited investors.

As for when Coinbase will add a fifth cryptocurrency to its platform, Hirji said that will likely depend on regulators providing more clarity on the legal status of specific types of cryptoassets.

“We are not in a position where we would look at [other coins] and say ‘Ah, there is sufficient clarity and we can list them,'” he said.

Featured image from Shutterstock.