Alexander Pack and cofounder Bo Feng will invest $100 million in crypto projects, funds and companies.Dragonfly Capital Partners

Its founders make an unlikely pair. But in the fast moving-intersection of capital and cryptocurrency, a new $100 million fund is looking to turn that into a big advantage.

Called Dragonfly Capital Partners, the fund is the result of a partnership between one of Silicon Valley’s young crypto investor enthusiasts and one of China’s most experienced investors. Founders Alexander Pack and Bo Feng will look to invest in a mix of crypto-first funds, protocols and applications, as well as tech startups building infrastructure for crypto-driven economies.

“Crypto is a new asset class, and it made sense to have a new firm to support it,” says Pack. “We thought older ones would have a disadvantage.”

Dragonfly’s founders are banking on Asia continuing to be one of the most, if not the single most, important markets for crypto use cases, especially in financial applications. They structured the fund to operate “unconstrained,” says Pack, without the kinds of restrictions on what types of companies or coins to back that can limit larger, more established firms.

The fund has already deployed $20 million into more than 20 startups and funds, including price-stable currency Basis, and protocols, including Spacemesh and Oasis Labs, as well as funds like MetaStable Capital, in which Dragonfly invested and alongside of which it has already co-invested in several deals. “Despite crypto being a global and 24/7 market, it can often feel like two separate ecosystems between Asia and the West,” says MetaStable general partner Haseeb Qureshi. “Having a fund that can toe the line between the two hemispheres is a powerful advantage in being able to identify future trends and preempt where crypto is moving.”

Though Dragonfly is new, Pack’s and Feng’s reputations in the emerging category are not. Pack was working with Arbor Ventures and serving in a Princeton in Asia teaching fellowship program in Hong Kong in 2014 when he realized there were more crypto opportunities in the area than startups. Joining AngelList in San Francisco the following year, he built a crypto micro-fund and led investments in Polychain Capital and Numerai—though he passed on Ethereum—before moving on to Bain Capital Ventures to lead its “network investing” in crypto funds and other nontraditional VC opportunities, backing 16 funds and 11 startups. He met Feng as the 20-year-plus veteran founder of Ceyuan Ventures co-invested with him in several deals including Basis and cryptocurrency exchange OKEx.

Dragonfly cofounder Bo Feng brings more than 20 years of VC experience in Asia.

When the two struck out on their own, they did so with a who’s who of Silicon Valley and China tech support. Pack’s old boss, Forbes Midas List member Salil Deshpande of Bain Capital Ventures, invested, as did Andreessen Horowitz cofounder Marc Andreessen and its crypto fund co-leader Chris Dixon, as well as Founders Fund’s Cyan Banister and Polychain’s Olaf Carlson-Wee. In Asia, the founders of Baidu, Meituan-Danping, Meitu and China Renaissance Bank invested alongside Midas List VCs Neil Shen of Sequoia China and Bob Xiaoping Xu of Zhenfund, among others. Strategic investors like OKEx and Bitmain also joined.

Dragonfly will need to carve out a niche in a highly competitive and fast-growing market offering capital to promising crypto projects—efforts that are also well-versed in alternatives to venture capital altogether. The founders’ credibility and their cross-Pacific pitch has resonated so far, at least with founders like Basis CEO Nader Al-Naji. Pack met Basis while at Bain Capital Ventures and helped lead it to invest in a seed funding round with Andreessen Horowitz and a group of crypto funds, while Feng invested from Dragonfly’s fund. Pack was instrumental in helping Basis navigate a private pre-sale, Al-Naji says, as well as in bringing on recent Federal Reserve chairman candidate and Stanford economist John Taylor as an adviser.

In an interview, Al-Naji tells Forbes he values Dragonfly as an investor not just for its Asian expertise but also for efforts that goes beyond what its total dollars invested would dictate. “I think VC firms can sometimes be hands-off when they’re not lead investors, but they’ve been the complete opposite,” he says. “They reach out frequently for advice and support.”

That’s the reputation that could help Dragonfly find a seat at the table even in a complex funding environment where many crypto funds compete in one moment and invest in each other in the next. Pack says the hype—and deflation of hype—of cryptocurrencies such as bitcoin hasn’t lowered the quality of projects for investors to support, just their prices. “We try to take a very long-term perspective,” Pack says. “Crypto has the power to transform things at a deeper layer. Not just money—transforming what we think of as property.”

Source: Forbes
By Alex Konrad