Valkyrie To Debut VC Fund Focused On 'Web 2.5' Firms

Alternative asset management firm Valkyrie plans to launch a venture capital fund focused on “web 2.5” startups. The firm hired investor and CFO of Team8 Lluís Pedragosa in April who will be leading the firm's VC arm, Valkyrie Ventures, as a managing partner.

Valkyrie will focus on startups in the U.S. and Israel, which are the areas of expertise for Pedragosa as he has spent around 10 years investing in these two countries, mostly in B2B software, TechCrunch reported Tuesday. Pedragosa, in an interview with the publication, said that he jumped into crypto investment with Israeli crypto custody startup Curv in 2018.

“The idea for us is we want to invest in what we call the middleware layer, which is kind of like the infrastructure layer — anything that is between an application and the layer one protocols and in what we call web 2.5,” Pedragosa said, explaining that Valkyrie aims for a “web2 user experience” but have “web3 infrastructure” laying underneath as a solid foundation.

Furthermore, Pedragosa also revealed that Valkyrie Ventures is different from other VC arms as it won't invest in the asset manager's balance sheet capital.

As per TechCrunch, the firm is also looking to raise $25- $30 million for its VC arm and Pedragosa is in talks with institutions and high-net-worth individuals for the same.

Pedragosa said that he will allocate funds ranging between $250K and $1 million to startups, confirming that the investment size will vary with the region. “In the US, I think you can write smaller checks … But in Israel, you need to be more concentrated on the bets that you make, because the exits may not be as big.”

Pedragosa believes that in the current bearish market, he will be able to find promising startups at cheap valuations. He added that the fundraising is also going well and Valkyrie aims to close the fund by the end of 2022.

“Those [funds] that were [investing in crypto] just because they thought it was the next big thing and they were just investing left and right just to follow the trend will probably have less liquidity to move forward right now. But I think that many of the institutions and many of the sophisticated investors have been waiting for this and they still have firepower to invest,” Pedragosa said.