10T Private Equity Firm Seeks $200 Million for New Crypto Startup Investment Fund

Crypto-focused investment firm 10T Holdings is launching a new digital-asset startup investment fund seeking to raise $200 million from investors.

The new venture, dubbed TenSquared Capital, or 10SQ, aims to back digital asset startups at various stages of growth, Bloomberg reported, citing people familiar with the matter. 

The firm already has two investments planned, including one in a crypto wallet infrastructure startup expected to close in the coming months.

The 10SQ fund will be led by Stan Miroshnik, a co-founder and partner at 10T, who will join the company as CEO and managing partner. Elaine Co, a founding strategic advisor at StillBrook Capital, will also join the platform as a general partner.

10T Holdings has $1.2 billion in assets under management and has invested in companies like digital exchange Kraken and crypto wallet-maker Ledger, which have both raised funds at valuations of over $1 billion. 

TenSquared Capital will seek to follow the path of other venture firms, such as Sequoia Capital and Andreessen Horowitz, by becoming a registered investment advisors. 

The new fund has already secured some commitments from limited partners of 10T for its upcoming investments, according to people familiar with the matter.

This fundraising effort comes at a time when cryptocurrency investing has slowed down amid recent scandals and setbacks that have shaken the industry. 

VCs invested 80% less in crypto startups in Q1 2023 compared to the previous year. 

Nevertheless, TenSquared Capital is determined to back startups that demonstrate viability and innovation.

The firm also plans to focus on equity investments rather than token investments, which reflects a greater caution among investors toward the use of crypto tokens that have been highly volatile and subject to regulatory scrutiny. 

VC Funding Now Goes to AI Startups

During a recent interview, Mysten Labs founder Evan Cheng claimed that the recent increase in AI funding has impeded funding for the crypto industry. 

Cheng explained that AI startups are now receiving a significant portion of the venture capital money that was previously earmarked for crypto. 

He added that early-stage crypto companies can still secure funding, although their valuations have taken a hit due to the recent downturn in crypto. 

However, late-stage funding has become increasingly difficult for startups, with only the top-performing companies being able to receive support.

“But once you get to the late Series A and Series B stage, the growth capital is hard to come by. It has to be an exceptional startup to get funded, unless you’re in the bubble of the excitement around generative AI right now, it’s going to be a lot harder for any startup to raise money.”