Lightspeed, a successful venture capital firm, has set all plans to launch a dedicated cryptocurrency fund.
Menlo Park-based Lightspeed Ventures Partners (LSVP), has reportedly raised over one billion dollars for entering multiple sectors which also include the trending cryptocurrency and blockchain market. The firm aims to expand its operations in South East Asia by actively investing in biotechnology, the blockchain, cryptocurrency, and cosmetics.
Lightspeed is prepared to invest repeatedly over an extended period to ensure a substantial ownership stake, so that huge profits are ensured when the company is sold or conducts an Initial Coin Offering. Lightspeed monopolized the limelight in 2018 after a $485,000 seed financing in Snap Inc. turned into billions of dollars after the latter’s IPO. Lightspeed was originally founded in the year 2000.
The investment strategy of Lightspeed is that it typically funds small to medium scale enterprises where the possibility of an enormous return is high and hence it financed Snap Inc. The company also holds a stake in blockchain-based payments processor Ripple Labs.
A Lightspeed partner, Jeremy Liew, explains:
“That trend has only been increasing over time, and as a result, our funds have been getting bigger over time as well. Later-stage companies are less likely to go belly up, but are also less likely to provide extraordinary returns.”
A few days back, it was known that Lightspeed was considering three structures for a potential cryptocurrency bifurcation – Carve-out, new fund, or spinout model.
Carve-out – In this case, the venture firm branches out investments and profits from their existing money and publicizes the holdings for cryptocurrency businesses. It is similar to Kleiner Perkins Caufield & Byers’ “iFund” – solely dedicated to Apple and related projects.
Lightspeed starting a new fund – The fund will be separate from their existing business, with same partners but a different strategy and legal structure. This model is similar to Andreessen Horowitz’s cryptocurrency fund.
Spinout model – Here one or more Lightspeed partners set up their personal cryptocurrency funds as wholly-separate entities without carrying the brand name. As per the sources, Lightspeed was known to back the efforts.
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