Bain Capital Ventures Launches $560M Crypto-focused Fund as Ecosystem Booms

Asset manager Bain Capital has launched its first $560 million crypto fund, the company confirmed to Blockworks Tuesday.

The firm, which has about $155 billion in assets under management, launched the early-stage crypto-native fund and its new venture arm Bain Capital Crypto to take promising stakes in Web3 founders and builders, partner Alex Evans told Blockworks.

The capital will be invested mainly in crypto-focused infrastructure and DeFi. The team will assemble a portfolio of 30 new companies or protocols to invest in across the fund, Stefan Cohen, managing partner at Bain Capital Crypto, told Blockworks.

Evans and Cohen will co-lead the fund. For the time being, the team will focus on deploying this capital into the crypto ecosystem but may look into launching future funds, Evans said.

“The fund was oversubscribed by a little bit, but in the classic spirit of Bain Capital, we started with a modest fund size and plan to expand significantly from there,” Evans said.

This fund was created in response to the firm’s ongoing investments in the crypto space over the past seven years, Cohen said in a post.

Bain has invested in 14 DeFi (decentralized finance) and crypto infrastructure businesses to date, including B2B infrastructure platform Zero Hash, asset manager ParaFi Capital and crypto lender BlockFi. In general, its venture arm invests anywhere from $1 million of seed capital to $100 million in growth equity.

It’s also a large investor in Compound Finance, an algorithmic, autonomous interest rate protocol for developers, and has the third highest voting weight for the protocol’s governance. 

“Those crypto investments will stick with their capital venturist funds, we’re not transferring positions or anything like that,” Cohen said. “This fund is entirely a net-new portfolio we’re building, and we’re very focused on early-stage investments but have flexibility to buy liquid tokens, as well.”

Over the next 10 years, the team anticipates crypto getting integrated and embedded into traditional consumer and business software stacks and plans to invest in companies that will bridge protocols into established software ecosystems, Cohen said. 

“We also believe that this crypto-native economy and services around it are going to grow quite quickly,” Cohen said. “We’re starting to see some of that with DeFi [decentralized autonomous organizations] that formed and have treasuries, which use the capital in the crypto economy. So, we think that the snowball effect will continue to accelerate and create entirely new sectors of activity supporting the crypto ecosystem.”

While a number of firms have invested in crypto for years, the heat has been ramping up in the past 12 months as crypto adoption and growth builds globally. 

Last month, the 50-year-old investment firm Sequoia Capital launched a new $500 million to $600 million sub-fund focused on liquid tokens and digital assets. Separately, the traditional venture capital firm Andreessen Horowitz, a16z, has dove deep into the digital asset world and plans to raise another crypto fund around $4.5 billion, more than double the size of its last $2.2 billion crypto fund.

“The reality is, we felt like we couldn’t service this market well from a generalist venture fund,” Cohen said. “There will be lots of generalist venture firms that will try to access this space and invest in it, and we’re excited that they’re going to be putting capital into it, but we think to properly support founders you need to take the approach we’ve taken here.”

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