Nic Carter’s Castle Island Ventures Raises $250M for Third Crypto Fund

Castle Island Ventures, a digital asset firm founded by Fidelity alums Nic Carter and Matt Walsh, has raised $250 million for a new crypto fund targeting startups in the monetary network, financial services and internet architecture spaces, including Web 3.

The Castle Island Ventures III fund is the largest fund ever for Castle Island since it was founded in 2018, following its first $30 million fund and then a $50 million second fund that closed in February 2021. Investors in the third fund included endowments, asset managers, family offices and fund of fund groups, according to the announcement post on Medium.

The Castle Island portfolio of early-stage crypto investments has included asset management firm Bitwise and crypto lender BlockFi.

The new fund will continue Castle Island’s investments at the “convergence of blockchains and the more regulated financial services market,” said Carter, a CoinDesk columnist, in a phone call. “That’s going to remain a big component. Anything from brokerage to custody to exchanges to lenders and banks.”

“Of late, we’ve also become much more active in Web 3, whether that’s internet infrastructure or decentralized applications that allow people to interact with the internet without relying on the Silicon Valley oligopolies,” Carter continued.

Castle Island also said it promoted Ria Bhutoria, another Fidelity alum, to general partner, joining Carter, Walsh and Sean Judge.

Equity focused

Carter said Castle Island Ventures differs from other funds in its equity investment approach, which can prove attractive to potential limited partners (LP) who are interested in crypto but more familiar with equity as opposed to token sales.

For potential portfolio companies, the firm offers deep connections to the asset management and financial services world, a benefit for those wanting to become more integrated with traditional finance.

Cryptocurrencies pulled back at the start of the year, but the lower prices and trading volumes haven’t discouraged venture capitalists from making investments.

Carter acknowledged that the deployment window exposes the firm to “what’s happening in terms of valuations,” but Castle Island Venture has a history of launching in choppy waters.

“When we launched our first fund in early 2018, it was an amazing time to deploy. There was a prolonged bear market. The founders we met were the ones that cared very deeply about this stuff. And the valuations were modest at the time,” said Carter.

“A sell-off would make sense for us. I don’t want anyone to lose money. But from the perspective of being an allocator, the froth coming out of the market a little bit would be pretty welcome,” Carter noted.

Read more: Head of Bitstamp US Departs to Join Castle Island Ventures