Lightspeed Faction, a blockchain-focused venture capital (VC) firm, has announced its plans to launch a new fund worth $285 million. The fund aims to provide early-stage funding for projects in the crypto industry, offering “crypto-native” advice and support to the startups it backs. The team behind Lightspeed Faction comprises experts from notable entities such as Amber Group, Blockchain.com, and Coinbase, who are poised to guide and assist entrepreneurs during a time when many industry experts have exited the space.
With the ongoing revival of the crypto sector after a prolonged bear market, the announcement of the new fund comes at an opportune moment.The market sentiment is increasingly optimistic about the approval of a Bitcoin spot exchange-traded fund (ETF) by the U.S. Securities and Exchange Commission (SEC). Recent successful fundraising activities, like the $580 million raise by Blockchain Capital for two new funds, indicate a growing confidence within the industry. Venture capital firm Nym Technologies also secured $300 million to support crypto builders, developers, and communities, with a specific emphasis on privacy. Through its partnership with Lightspeed Venture Partners, a VC firm managing $25 billion in assets, Lightspeed Faction mainly invests in seed-stage and Series A funding rounds.
Investing in Promising Projects
Lightspeed Faction has already made notable investments in several projects, including Crossmint, Lens, Narya.ai, Skip.money, and Matter Labs. Matter Labs is responsible for developing the zkSync layer-2 network on Ethereum. Co-founder and general partner of Lightspeed Faction, Banafsheh Fathieh, expressed excitement about the potential of the blockchain ecosystem and its ability to disrupt various industries. Fathieh stated, “The blockchain ecosystem is full of promising projects looking to disrupt everything from financial systems to telecommunication, and we look forward to collaborating with them to nurture the next phase of blockchain innovation.”
Decline in Crypto VC Funding
Although Lightspeed Faction is launching a significant fund, the overall crypto VC funding has experienced a decline in recent times. In the past week, blockchain projects secured a total of $34.7 million across nine deals, a notable drop from the previous week’s total of over $107 million. Even in October, publicly disclosed investment projects by crypto VCs saw a decrease, with only 75 projects recorded compared to 83 projects in September 2023. This represents a year-on-year decrease of 45% compared to the 135 projects reported in October 2022.
Despite the decline, there were specific areas that received significant investment allocation. Infrastructure projects garnered the largest share of funding at approximately 24%, followed by decentralized finance (DeFi) at 21%, centralized finance (CeFi) at 9%, and non-fungible tokens/GameFi at 13%.
