Pantera Capital, the longest-running crypto-focused venture firm, has more recently generated the majority of its returns from betting early on digital tokens, as well as opportunistic deals, rather than from its traditional VC investments.
The skewed results underscore how stretched out venture capital’s J-curve has become. And it also highlights the industry’s crypto-native strategy to displace traditional finance.
Pantera’s $1.25 billion fourth fund, raised in 2021, has gained only $78 million from venture equity. Its investments include Offchain Labs, Vauld and Globe.
Digital tokens with lock-up periods, meanwhile, contributed a $181 million gain, with “special opportunities” bringing in $431 million. Token and cryptocurrency trades, alongside digital asset treasury stakes, chipped in $239 million.
“What institutional investors want is to be in this space for a long time,” said Paul Veradittakit, one of the firm’s two managing partners. “There’s other hedge funds out there, where you might not be able to time the market right in terms of entry and exit. If you are in this asset for a longer period of time, you will see a lot of progress. You will see a lot of value being created. [LPs] want to be in a venture fund where there’s more than just traditional venture capital.”
Pantera’s first venture fund debuted in 2013, and since then, a number of its early bets have turned into big wins, including Coinbase‘s direct listing in 2021 and the recent IPOs of companies like Circle.
The firm’s later vehicles started blending startup investments, growth equity, token holdings and trading. The explosion of “initial coin offerings” around 2017 incited much of the industry’s VCs to embrace—and even advocate for—digital tokens becoming an alternative to traditional equity (although, the SEC was not so keen on the idea). Some firms began adding tokens to their venture funds, while others created separate vehicles for them.
By the time of its fourth fund in 2021, which also coincided with a crypto market boom, Pantera was fully committed to its hybrid approach. That fund currently sits at more than $2.2 billion.
And it’s taking the same approach for its fifth fund, which has a $1 billion target. It held a first close on Oct. 31, Pantera confirmed to PitchBook, without sharing an exact amount.
“If you think of how things were designed for VCs, it was designed in a way where you’re a pre-seed fund, then you have a Series A fund, then you have a growth fund,” said Joris Delanoue, CEO and co-founder of Fairmint, a tokenization startup founded in 2019. “Now, you have the ability to think of liquidity as a spectrum and being able to invest and allocate their bets on whatever the spectrum is—whether that’s super-early or [late-stage].”
One of Pantera’s notable contrarian bets in its fourth fund was the purchase of a sizable amount of Solana tokens from FTX‘s bankruptcy proceedings at a 50% discount on its market price at the time.
Meanwhile, crypto equity deals have broadly declined this year. But Pantera has maintained its crypto focus even as some peers, including DCG, have expanded into AI and other sectors. Other firms, such as Polychain Capital, founded in 2016, have predominantly backed early-stage token investments and blockchain infrastructure.
The firm expects to see more IPOs in 2026, as US regulation has progressed more recently, including President Donald Trump’s signing of the GENIUS Act and a market infrastructure bill making its way on Capitol Hill.
“The risk-reward for investing in blockchain today is better than it has been in many years,” said Cosmo Jiang, a Pantera GP and portfolio manager of its liquid strategy. “All headwinds seem to have become tailwinds. … At the same time, a lot of prices for venture rounds and for public assets are still well below their peaks. The fundamentals are better. The tailwinds are there,” he said, adding that few firms are still focused on the sector.
And to take advantage of this environment, Pantera believes a multi-pronged strategy is the way to satisfy its investors.
“Earlier on in the fund, I would say that a higher percentage of value will be on the token side of things, because it does take a bit longer for equity to really take off,” Veradittakit said. “There’s a little bit of a lag in terms of progress to valuation—and, of course, a lot longer to exit and crystalize. … Ultimately, there will be a lot of value created on each side, and thus, if you want to have optimal value in investing into crypto, you really do need to be in a fund that can provide access to both.”
Featured photo by MicroStockHub/Getty Images
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