Crypto Exchange Coinbase Launches Early-Stage Venture Fund

Announcements, Investing, News | April 9, 2018 By:

Cryptocurrency exchange Coinbase is launching a venture capital fund to provide financing to early stage companies to help spur on the development of the blockchain ecosystem.

Dubbed Coinbase Ventures, the new fund will finance “early stage companies that have the teams and ideas that can move the space forward in a positive, meaningful way.” Coinbase Ventures will seek to help most compelling companies in the cryptocurrency space to flourish.

Coinbase President and COO Asiff Hirji said the fund will start at $15 million and grow along with Coinbase, but the company does not expect to generate any meaningful profits from the venture beyond helping the ecosystem mature.

“We’re going to invest off our balance sheet into crypto companies,” Hirji said. “We will invest in companies that are in the space and are aligned with our values. By giving them access to capital we hope that they will grow great businesses. It’s not about investing in the token, it’s not about trying to line up tokens that we would put on our exchange.”

Coinbase said they may invest in firms that are competitors with their own company to build a healthy relationship with the crypto ecosystem.

“You may also see us invest in companies that ostensibly look competitive with Coinbase. There may be nuance to the way these startups are building out their products,” the company said. “Or, in some cases, we may be comfortable investing in companies that are potentially competitive, because it’s in everyone’s interest to see the ecosystem innovate. We’re taking a long term view of the space, and we believe that multiple approaches are healthy and good.”

The company, however, said that it will refrain from investing in security tokens, which are issued in initial coin offerings (ICOs).

In addition, Coinbase also announced its intention to support the withdrawal of bitcoin forks across its products in the coming months. This means that holders of certain coins will get free access to some of the newly created coins.

“We are not announcing support for any specific assets at this time,” the company said. “As always, we look at technical, operational, and legal considerations when deciding which Bitcoin Fork assets to support and will always state on our website which particular assets are supported.”

Last month, Coinbase introduced a new cryptocurrency index fund, allowing people to invest in cryptocurrencies such as bitcoin through the fund, rather than buying them directly. The index fund will be available only to US accredited investors, those who have annual income of at least $200,000, or a net worth of at least $1 million.