Hack VC Raises $150 Million for Bets on Battered Crypto Industry
(Bloomberg) -- Despite a steep downturn in crypto startup funding over the last year, Hack VC has raised a $150 million fund dedicated to the digital asset industry, the venture capital firm announced Tuesday.
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Based in New York, Hack VC has already deployed about a third of the new fund, which focuses on early stage startups, according to managing partner Alex Pack. Hack VC, which has invested in companies including blockchain startup Mysten Labs and crypto financial firm Amber Group, previously raised a $200 million fund in 2022.
“It was a bit more of a challenging environment now than a few years ago, but we did it because we’re just very excited about the infrastructure opportunity and everything we’re seeing in early stage VC,” Pack said in an interview.
Pack's new fund arrives with Bitcoin recovering its 75% plunge in 2021-22 but the industry still reeling from several companies going bust. Pack called the collapse of startups like Terraform Labs, Three Arrows Capital, FTX and BlockFi “genuinely traumatic events” for the sector. Hack VC had invested in Terraform and BlockFi, but Pack said he’s ready to move forward.
“There is still a whole industry of nerdy people building things underneath and that didn’t stop after FTX,” he said.
He likened the crypto industry to “the mid-90s equivalent of where the internet was.”
“Which is to say: a lot of users and a lot of things happening, but the experience of using crypto is really poor from an infrastructure perspective,” Pack said in a Bloomberg Television interview. “It's slow, it's insecure, there are hacks happening.'”
Hack VC, which invests in startups as well as crypto tokens, is looking to back projects working on decentralizing the internet, startups developing infrastructure for decentralized finance and companies working in the intersection of crypto and artificial intelligence. Pack said he’s interested in startups that are using blockchain to make it easier and cheaper to gain access to computing power, which is necessary for tasks like training the large language models used in AI.
Access to computing for generative-AI applications “is probably a multitrillion-dollar topic right now,” he said.
Pack has been involved in crypto investing for almost a decade, noting that the industry has transformed quickly — first revolving around bitcoin and then branching out into a variety of tokens and sectors. He expects the rapid change to continue: “I just think we’re very early.”
(Updates with comments from Bloomberg Television interview in seventh paragraph.)
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