XAnge, a European VC firm with more than €600m in funds under management, has quietly stopped fundraising for its inaugural crypto VC fund even as the Web3 market shows signs of recovery, according to two people with knowledge of the matter.
In 2022, the Franco-German firm announced it was raising for a crypto-specific fund — the Digital Ownership Fund — targeting a close of €80m. To head up the endeavour, which planned to focus on seed and Series A blockchain investments, the firm recruited cofounder of Paris-based Web3 luxury platform Arianee, Luc Jodet.
The two people say the crypto fund struggled to gain enough backers to hit a first close; one source said European limited partners — the backers of VC funds — were hesitant to allocate capital to digital assets.
XAnge CEO Cyril Bertrand confirmed to Sifted that it’s no longer raising for a crypto-specific fund. Jodet remains on the team but will now invest in crypto companies from its latest flagship generalist vehicle, a €220m fund raised closed in 2022.
While the firm may have failed to convince LPs that a standalone crypto fund was a good idea, it’s had better luck with regulators. XAnge last year obtained a licence from the French financial regulator to invest in crypto tokens, which blockchain companies sometimes issue as an alternative to traditional equity fundraising. This enables Xange to invest in crypto tokens through its generalist fund.
The crypto winter
Jodet was tasked with raising capital at a volatile time for the crypto industry, which was rocked by the collapse of the once-reputable crypto exchange FTX in late 2022. Investment globally into crypto startups plunged from $21.2bn in 2022 to $4.1bn in 2023 — an 80% decline — as many VCs, previously bullish on crypto, pulled back.
The asset class has so far this year experienced a resurgence, however, with landmark regulation in the US and Europe coming into force since the start of 2024. As a result, the price of bitcoin — a key measure of the market’s health — reached a new peak of $64k earlier this year.
Still, crypto industry insiders say the bounceback has yet to be reflected in the venture fundraising environment in Europe; a lack of valid exit routes, a history of regulatory troubles and difficulties in reaching profitability continue to put off LPs.
XAnge’s Web3 fund was one of the handful of venture vehicles in existence in France — including Cathay Capital’s crypto fund with blockchain wallet maker Ledger — to focus solely on digital assets. In Germany, Cherry Ventures closed a $34m Web3 fund in 2022 and at the tail end of last year, Denmark’s Heartcore raised €15m to invest in blockchain startups.
Read the orginal article: https://sifted.eu/articles/xange-web3-fund/
