Crypto-Focused VC Lightspeed Faction Announces $285 Million Fund for Startups

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Lightspeed Faction, a blockchain-focused venture capital (VC) firm, has revealed plans to launch a new $285 million fund aimed at investing in early-stage projects within the crypto industry.

The VC, consisting of team members from prominent entities including Amber Group, Blockchain.com, and Coinbase, intends to provide “crypto-native” advice and support to the startups it backs, according to a Thursday press release.

The firm believes its services are particularly crucial at a time when many industry experts have exited the space.

“Faction offers founders access to a team of experienced blockchain investors and operators, servicing the industry at a time when many have fled,” the firm said.

“The team is primed to provide crypto-native advice, with team members hailing from.”

The announcement of the new fund comes as the crypto sector experiences renewed optimism following an extended bear market.

ETF Optimism Leads to Renewed Interest in Crypto

Market participants are increasingly hopeful about the approval of a Bitcoin spot exchange-traded fund (ETF) by the U.S. Securities and Exchange Commission (SEC).

The sentiment is reflected in recent fundraising activities, such as Blockchain Capital’s successful raise of $580 million for two new funds.

Additionally, Nym Technologies secured $300 million from venture capital firms to support crypto builders, developers, and communities, with a specific focus on privacy.

As a joint venture with Lightspeed Venture Partners, a VC firm managing assets worth $25 billion, Lightspeed Faction typically invests in seed-stage and Series A funding rounds.

The firm has already made investments in several notable projects, including Crossmint, Lens, Narya.ai, Skip.money, and Matter Labs, the team responsible for developing the zkSync layer-2 network on Ethereum.

“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,” Banafsheh Fathieh, co-founder and general partner of Lightspeed Faction, said.

Meanwhile, there has been a notable decline in crypto VC funding as of late.

Over the past week, blockchain projects secured a total of $34.7 million across nine deals, according to data tracked by DeFi Llama.

The figure represents a significant drop from the previous week, which saw over $107 million raised.

Aside from last week, publicly disclosed investment projects by crypto VCs also experienced a decline in October.

As reported, VC funding in October declined 10% month-on-month, with only 75 investment projects recorded compared to 83 projects in September 2023.

Furthermore, this reflects a significant year-on-year decrease of 45% compared to the 135 projects reported in October 2022.

In terms of investment allocation, infrastructure projects received the largest share of funding, accounting for approximately 24% of the total, followed by decentralized finance (DeFi) at 21%, centralized finance (CeFi) at 9%, and non-fungible tokens/GameFi at 13%.

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