Former DCG, Blockchain Capital traders launch $20M early-stage fund at crypto advisory agency Reverie

After a pair years of dabbling in angel investments, crypto advisory agency Reverie is now bringing a much bigger checkbook to bear. The agency is launching a flagship $20 million fund to spend money on pre-seed and seed-stage crypto corporations, its co-founder Larry Sukernik solely advised starcrypto.

The fund, anchored by two U.S.-based institutional traders that Sukernik declined to call, follows two years of comparatively smaller investments in about 40 corporations, together with decentralized trade Osmosis, blockchain scaling-focused Sovereign Labs, and Solana-focused crypto market Orca. The agency has additionally suggested tasks like crypto tax and accounting supplier, Compound, and buying and selling platform, dYdX, however plans to focus the fund on decentralized social media and safety.

Whereas the fund’s funding thesis isn’t precisely unusual for the house, it stands a great probability of standing aside from the majority of its friends as a result of it needs to favor corporations constructing merchandise that aren’t speculative in nature.

“We realized through the years you could’t money in IQ factors for customers,” Sukernik mentioned. “Each profitable firm on the earth – whether or not it’s Apple or Fb or Google – it began with constructing merchandise folks need, not technical analysis. We need to construct a house that goes again to fundamentals and focuses on the fundamental components that historically made corporations nice, iterating on product-market match.”

Many traders are targeted on technical improvements or speculative progress for his or her portfolio corporations, however Sukernik thinks it’s a greater thought in the long term to concentrate on constructing merchandise that individuals need.

Whereas which will appear an apparent factor to purpose for, I can let you know from my expertise protecting this business that numerous crypto corporations battle to search out demand for the tasks they’re constructing — even when they’re distinctive and progressive!

Normally, Sukernik thinks numerous VCs don’t take into consideration constructing sustainable corporations or protocols, however use hypothesis as an onboarding software into crypto. “They’re going to assist create a product for a playing casino-like expertise. That approach, persons are drawn to it they usually keep when you get them within the on line casino. However we reject that premise… There’s a approach bigger market in non-speculative merchandise and constructing issues folks love.”

Sukernik mentioned he isn’t making an attempt to indicate that every one speculative tasks are inherently unhealthy, on condition that his agency has invested in a number of the largest exchanges, however he needs to transcend that space and concentrate on founders that take options of crypto and blend and match them to create “particular merchandise” that shall be sustainable in the long run.

Sukernik pressured that the fund was strategically set to $20 million as a result of Reverie needed to start out small, and it’s tougher to deploy a $100 million fund, for instance, “in a worthwhile approach.”

“You’ve more cash than there are startups… We don’t want that a lot cash, there’s not that many corporations being began in crypto, and [the $20 million] is sufficient for us to show the thesis {that a} hands-on investor could make generational companies.”

Sukernik and his co-founder Derek Hsue had been traders at Digital Forex Group and Blockchain Capital, respectively, earlier than they began Reverie with an purpose to have a extra hands-on function in serving to founders construct corporations.

Reverie co-founders Larry Sukernik and Derek Hsue

The 2 had been fed up with the best way crypto enterprise was being executed when the agency launched in 2021, Sukernik shared. Many VC companies have small groups which are accountable for managing portfolios of 100s of corporations. “When you’ve a big fund and a small workforce, you don’t actually have time to spend with founders. So, to me and Derek it was necessary for us to look again and say we had been part of the method of constructing an organization.”

Most crypto traders are “simply cash guys, they’ve by no means run corporations or if they’ve it was a very long time in the past to allow them to’t give good recommendation or latest recommendation founders want,” Sukernik mentioned. “And we didn’t like that… we needed to get extra hands-on.”

“Clearly, on this enterprise, most issues don’t work out,” Sukernik mentioned. “That’s simply the secret; I don’t know what Reverie goes to appear to be 10 years from now, however I do know for positive we’ll all the time be investing in early-stage founders and going to be long-term companions to them. All the things else stays to be seen.”