Fidelity alumni raise $250 million to invest in cryptocurrency startups

  • Castle Island Ventures II will focus on financial services and web3 technology.
  • Bitcoin’s price decline has yet to dampen crypto investment activity.

Castle Island Ventures, a four-year-old digital-asset firm, raised $250 million, the largest amount ever raised by the firm, to target startups involved in building monetary networks, financial services, and internet architecture such as web3.

According to the firm, endowments, asset managers, and family offices are among the investors in the Castle Island Ventures III fund. Castle Island, founded by Fidelity alumni Nic Carter and Matt Walsh, has previously raised funds of $30 million and $50 million.

The sectors targeted will be added to a portfolio that already includes companies like Bitwise and BlockFi Inc. In addition to pre-seeding stage investments, Castle Island plans to lead more Series A rounds, according to Walsh.

“The market opportunity and the wave of entrepreneurs who are actually starting things is just a lot bigger,” Walsh explained over the phone. “We’ve beefed up our team in response to the explosion in space to give ourselves the ability to go out and be a lot more aggressive in deploying capital in some of these companies.”

Along with closing the round, Castle Island promoted principal Ria Bhutoria, a Fidelity alum, to general partner, joining Carter, Walsh, and Sean Judge.

Despite Bitcoin’s 36% drop from all-time highs and dwindling trading volume across exchanges, investment in the cryptocurrency universe has not slowed. FTX Trading Ltd., a cryptocurrency exchange, raised another $400 million last month, which CEO Sam Bankman-Fried said will be used for acquisitions. The Financial Times reported in January that Andreessen Horowitz is looking to raise $4.5 billion for cryptocurrency funds.

In Carter’s opinion, a sustained drop in cryptocurrency prices could benefit Castle Island.

“It was a great time to invest as long as you kind of fundamentally believe in what was going on.” “Valuations were lower, and entrepreneurs were more active,” Carter said, referring to Castle Island’s first fund, which closed in May 2018. “Selfishly, if we had a sustained selloff, that would be convenient timing for us because obviously, we don’t believe crypto is going away.”

Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.

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