’Allo! Leo Schwartz here, reporting in Allie's stead today.
Crypto may paint itself as an industry of lone wolves and iconoclasts, but its promise of riches (and sure, disruptive technology) has attracted some of the world’s biggest capital allocators, from sovereign wealth funds to endowments. And despite the turmoil of the past three years, the money continues to pour in, with major VCs from Paradigm to Polychain continuing to raise massive new funds.
Another institutional mainstay in the digital asset space is joining the crowd of venture firms with fresh powder: the Washington, D.C.-based Accolade Partners, a fund of funds that has operated in blockchain since 2018. According to documents filed with the Securities and Exchange Commission last month, Accolade has raised just over $135 million across two blockchain vehicles. The firm declined to comment, suggesting that it is continuing to market—and raise—for the funds, which are shaping up to be some of the largest raised in the sector this year.
While Accolade may not have the public cachet of crypto VCs like Haun Ventures and a16z crypto, it has served a critical role as a funding source for blockchain’s top investors. Accolade’s website lists a who’s who of the blockchain venture space, from “degen”-leaning firms such as Framework to more conventional outfits such as Electric Capital, which is run by a former Y Combinator partner and Facebook director.
Founded by venture capital vet Joelle Kayden in 2000, Accolade made its first blockchain investment into a16z’s first crypto fund in 2018. “The blockchain manager universe today reminds us of the venture manager universe in the late ’80s or early ’90s,” the firm wrote in a Medium post in 2020. “If a fund of funds had constructed a portfolio of the best names of that era, it would have backed the early funds of Sequoia, Benchmark, or Kleiner Perkins.”
Given crypto’s explosion the following year, the approach proved to be a prescient bet, with Accolade doubling down on blockchain through a second fund in August 2021—just before Bitcoin hit its then-peak. One of the firm’s partners told the Wall Street Journal that some of the crypto funds it had backed were returning 10 times or more capital invested than its traditional bets.
Accolade has continued to actively invest in VC firms through crypto’s so-called winter, including backing the $75 million fund for 1kx in early 2024 and a $70 million fund for web3 investor Lemniscap over the summer.
Crypto may still carry the stain of high-profile collapses such as FTX, but deal activity has continued to heat up as top digital assets like Bitcoin and Ethereum have recovered. According to a report published by Pitchbook in August, fundraising increased in the second quarter of 2024, with startups clearing $2.7 billion across 503 deals.
The documents filed by Accolade show the new funding split over two vehicles—one named “Blockchain III Venture” and the other named “Blockchain III Seed,” though it is unclear whether the firm will deviate from its previous strategy of investing in the sector’s largest managers. Its previous funds have not included the distinction in its filings.
Blockchain is not the only area where Accolade has kept busy. In February, it announced over $1 billion raised for three funds of funds in the growth and venture sectors. But as the crypto industry seeks to find its footing between the rebels and the institutions, Accolade is ready to make more bets.
See you tomorrow,
Leo Schwartz
Twitter: @leomschwartz
Email: leo.schwartz@fortune.com
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