Mar 4, 2022
Electric Capital’s Fund: Being a long-term investor
Author: Nianqing, ChainCatcher
“Developers will rule most of the leading companies with no exception in the financial market” said Avichal Garg, the co-founder of Electric Capital
Electric Capital, a Blockchain VC company, has raised $1 billion for two start-up funds. Respectively allocated $400 million for a venture fund and $600 million for a spot fund.
Electric Capital disclosed that both the $1 billion round, and the $110 millions round in August 2020, are from University Endowments, NPOs, and Charity Organizations. These organizations solely work with the crypto industry and are known for long-term investing.
Garg said those funds perfectly match with Electric Capital’s long-term investing strategy. He also believed that with the power of 10-year compounding, the fund performance will be enormous.
Investing Strategy and Roadmap
Being a long-term investor has always been the top priority since the start of Electric Capital.
The company’s portfolio invests across multiple protocols such as Anchorage, Bitwise, Celo, Coda, Derivadex, Elrond, Mobilecoin, Oasis, and NEAR.
By far, NEAR is the best performer in its portfolios. As Near Protocol rocketed, and become the 3rd fastest growing blockchain in 2021, its $500,000 bet is now valued at over $60 million.
According to Electric Capital, the $1 billion funds will invest in DAO, NFT, Defi protocols that focus on building crypto infrastructure and improving user experience. Electric explains the reasons, as followed:
- DAO distributed its voting right for both whales and small retail.
- NFT will be the hard asset in Web3, and the emerging financial derivative market.
- Defi makes financial products available for everyone.
- Crypto infrastructure help revolutionizes and secures the next-gen Dapps.
- The User-friendly experience attracts more Web3 users.
(A more in-depth investing thesis can be found on Electric’s blog, link)
Avichal Garg also stated that Electric will pay more attention to community-focus protocols that have fair token distribution. As Garg noticed community-focus protocols have grown fastest in 2021 like Yearn Finance.
Besides, community incentives help token holders build for the protocols and become long-term holders
Electric believes in its emerging investing technique and management style. 8 out of 10 Electric employees are software engineers, and the rest are UI designers. This employment style differentiates Electric from regular crypto VC firms.
Electric is more than just funds, it also provides project consulting service, community management, data analysis, and technical support to increase the liquidity for its projects. Moreover, the annual developer report from Electric has become a standard reference for the blockchain developer ecosystem.
By far, Electric has invested in more than 100 crypto start-up companies. The total value invested is currently worth more than $50 billion and provides billions of trading volume. The investing portfolios are as followed:
Think and Invest as Developers
Electric is founded by entrepreneur Avichal Garg and software engineer Curtis Spencer.
In 2001, Avichal Garg started an education tech company when he is still a high school student. With his computer science degree at Stanford University, he became a product manager at Google. Then, Garg and Spencer started Spool, a mobile caching start-up company, which was acquired by Facebook in 2012. Garg and Spencer left Facebook later and decided to proceed in blockchain technology with Electric Capital.
Garg and Spencer have started eight companies together and sold six out of all. They also invested in multiple crypto companies such as Airtable, Boom Supersonic, Color Genomics, Cruise, Figma, Newfront Insurance, Notion, Thread, etc.
As mentioned, software engineers made up almost the entire team of Electric, and “Developers will rule most of the leading companies with no exception in the financial market” said Garg. Almost all protocols have their own developers, including Hack VC which has raised $200 million in funds recently.
Many developers and designers from Electric come from top firms and top universities, including Facebook, Microsoft, Google, YouTube. Developers’ resource is the key for Electric to use its background knowledge to understand the source code in Github and value each protocol by analyzing the number of developers, and quality of the code. And, even evaluate which blockchain ecosystem is growing faster, which is crucial for Electric to make an investment decision.
