VC Fund NFX to Go Deeper Into Crypto With $450M Seed Fund

Venture Capital firm NFX has lined up $450 million to invest in seed-stage companies of all stripes, including crypto.

The fund, perhaps best known in crypto as Libra co-creator Morgan Beller’s post-Facebook landing spot, is double the size of the San Francisco-based VC’s previous early-stage war chest from 2019. It’s also the first fund NFX has organized since Beller became a general partner (GP) in September 2020.

NFX was already “all in” on crypto when Beller joined, Pete Flint, another GP, said in an interview with CoinDesk. But her “unique network expertise” from the Libra project (now Diem) could help her master the VC’s crypto fluency.

That fluency has translated into a bigger allocation for crypto startups. NFX is “increasing investment” in crypto as well as biotech, a press release said. It also invests in gaming, fintech, marketplaces and tools supporting the real estate sector.

The $450 million pie will be split across some 70 early-stage companies from those sectors. A common theme is their potential for “network effects”: to exponentially increase in value as their user base grows.

For Beller, it means searching out crypto companies that can convince “the muggles” (or those unfamiliar with crypto) that using their internet money to participate is worth a shot. And not just some of the newcomers; she wants the lot.

“We are broadly looking for companies, products, platforms that are going to onboard the next billion users into crypto,” Beller said, massaging Google’s oft-borrowed vision for future internet growth.

Crypto’s VC moment

Plenty of VCs and founders have searched for crypto’s “killer use case,” Beller said. Facebook’s Libra project was founded on the ambitious belief that hundreds of millions of people could use cryptotech and stablecoins to unlock global finance. It hasn’t succeeded yet.

“I think early hypotheses were like, ‘Well, Bitcoin,’ but then stablecoins or various wallets;” all had their turn under the sun, she said. “It feels increasingly clear that that answer might actually be NFTs – more so than DeFi – or gaming.”

Indeed, non-fungible token (NFT) gaming has exploded in popularity as the core notion of digital jpeg ownership spreads globally. Axie Infinity, a crypto-gaming crossover, saw its revenue explode 48x last quarter, according to Messari, as tens of thousands of play-to-earn gamers piled in.

“We’re trying to look a lot more in gaming. Stay tuned, we’re gonna be doing something cool in gaming,” Beller added.