Plenty of VCs have made big crypto bets that could actually pan out

Good morning Term Sheet readers—it’s Fortune Crypto editor Jeff Roberts tagging in. In recent weeks, an interesting storyline has emerged concerning the intersection of venture capital and crypto. Discussions on the topic have mostly revolved around VC firms getting burned by ill-advised crypto bets—most notoriously, Sequoia vaporizing $200 million on FTX—but there is another aspect to the story. 

I’m referring to crypto companies’ forays into venture investing. The topic has been in the news this month as a result of a strange twist in the FTX debacle: It turns out that, while alleged fraudster Sam Bankman-Fried was squandering his customers’ money left and right—including massive loans to FTX executives and a promised $55 million be-my-friend deal with Tom Brady—he stumbled on a jackpot.

The bonanza in question comes from a $500 million bet by FTX on the buzzy AI company Anthropic. The startup, which was founded by disgruntled ChatGPT employees, raised $300 million from Google to make the tech giant its “preferred cloud provider”—and then turned around and raised $4 billion from Amazon Web Services. Now, there are rumors Anthropic is raising another $2 billion at a $30 billion dollar valuation. Ironically, this could lead to a handsome return and ease some of the pain for FTX’s fleeced customers and investors. 

The Anthropic situation is an outlier, but FTX is hardly the only crypto firm with a VC portfolio. There is also Celsius, another bankrupt crypto firm whose founder liked to help himself to customer money and that ended up as roadkill during last year’s meltdown. The defunct firm was acquired by a group—appropriately named Farenheit—led by Silicon Valley veteran Michael Arrington, in part because of its venture capital portfolio.

The portfolio consists of startups focused on “DeFi infrastructure, trading tools, treasury management and Bitcoin mining innovation. We are very excited to help these companies grow and reach their full potential,” Arrington told Term Sheet. Fahrenheit does not for now hold any soon-to-be unicorns in its portfolio, but it’s early enough some diamonds in the rough could emerge.

Meanwhile, the big dog when it comes to crypto firms making VC bets is Coinbase Ventures, which owns shares in hundreds of startups. In March of 2022, Oppenheimer said the portfolio had “hidden value” and estimated it was worth over $6 billion. That assessment is 18 months old and it’s unlikely that valuation has held up following the recent carnage in the crypto industry, but don’t be surprised if there are some thoroughbreds in that stable.

Things will get really interesting if crypto can turn the corner and embark on another bull run—an event that’s a matter of time if previous cycles are any indication. If that happens, the industry’s current reputation as a blackhole for VCs could quickly change, and the biggest crypto firms will not be not asking for funds but instead talking about exits for their portfolio companies.

Jeff John Roberts
[email protected]
@jeffjohnroberts

Joe Abrams curated the deals section of today’s newsletter.

VENTURE DEALS

– SHINE Technologies, a Janesville, Wis.-based fusion technology company for the inspection of industrial components, production of medical isotopes, and recycling of nuclear waste, raised $70 million in new funding. Baillie Gifford, Fidelity Management, and existing investors led the round and were joined by others. 

– Prophecy, a Palo Alto, Calif.-based data engineering and analysis platform, raised $35 million in Series B funding. Insight Partners and SignalFire led the round and were joined by J.P. Morgan, Singtel Innov8, Databricks Ventures, and Dallas Venture Capital. 

– JetCool, a Littleton, Mass.-based liquid cooling company for data centers, raised $17 million in Series A funding. Bosch Ventures led the round and was joined by In-Q-Tel, Raptor Group, and Schooner Capital.

– AOA Dx, a New York City, Boston, Mass., and Boulder, Colo.-based company developing tests for the early detection of ovarian cancer, raised $17 million in new funding. Good Growth Capital led the round and was joined by RH Capital, Y Combinator, Astia, Adaptive Capital Partners, Gore Range Capital, and others.

– Carefull, a New York City-based platform designed to help banks and wealth advisors protect aging customers from scams and mistakes, raised $16.5 million in Series A funding. Fin Capital led the round and was joined by Bessemer Venture Partners, TTV Capital, Commerce Ventures, Montage Ventures, and Alloy Labs.

– Modal Labs, a New York City-based cloud infrastructure platform for engineers and data teams, raised $16 million in Series A funding. Redpoint Ventures led the round and was joined by Amplify Partners, Lux Capital, Definition Capital, and others. 

– Untangled Finance, a London, U.K.-based platform that uses blockchain technology to tokenize real-world assets, like private credit, raised $13.5 million in funding. Fasanara Capital led the round and was joined by others. 

– Conveyor, a San Francisco-based platform designed to automate security and compliance processes in sales, raised $12.5 million in Series A funding. Cervin Ventures led the round and was joined by Maverick Ventures, Thrive, and others.

– Moonhub, a San Francisco-based recruiting platform that uses AI to source and screen candidates, raised $10 million in seed funding. Khosla Ventures and GV led the round and were joined by AIX, Day One Ventures, and others. 

– Bedrock Energy, an Austin, Texas-based geothermal heating and cooling systems company, raised $8.5 million in seed funding. Wireframe Ventures led the round and was joined by Overture Climate VC, Long Journey Ventures, Cantos, Toba Capital, First Star Ventures, Divergent Capital, and Climate Capital.

– Lopay, a London, U.K.-based payment platform for businesses, raised £6 million ($7.4 million) in seed funding from Backed VC, Portage, The Venture Collective, and angel investors.

– Phasio, a Singapore-based manufacturing interface that manages communication and workflow between manufacturers and customers, raised $2.5 million in seed funding. Airtree Ventures led the round and was joined by 500 Global, Entrepreneur First, Gattaca Ventures, and others. 

– CNaught, a San Francisco-based seller of carbon credits that allow the owner to emit carbon or other greenhouse gasses, raised $2.3 million in pre-seed funding. Greycroft led the round and was joined by Carthona Capital, Long Run Capital, and angel investors. 

– Kodex AI, a Berlin, Germany-based AI platform designed to help financial professionals analyze documents, raised €1.6 million ($1.7 million) in funding. Signals VC led the round and was joined by Techstars, Deutsche Bank, and angel investors. 

PRIVATE EQUITY

– Citation Capital agreed to acquire a majority stake in Cibo Vita, a Totowa, N.J.-based snack company. Financial terms were not disclosed.

– Cloud Technology Solutions Group, a portfolio company of Marlin Equity Partners, agreed to merge with Appsbroker, a Swindon, England-based company designed to modernize other company data and infrastructure. Financial terms were not disclosed.

– Connetic Ventures acquired a minority stake in Harmony, a Twin Cities, Minn.-based AI bot that helps employees cater their messages to other employees’ specific communication style. Financial terms were not disclosed.

– GHK Capital Partners acquired JohnsByrne, a Niles, Ill.-based carton packaging and print solutions provider. Financial terms were not disclosed. 

– Jones Fish Hatcheries & Distributors, backed by Fort Point Capital, acquired Water & Wetland, a Grafton, Mass.-based pond and lake management services provider. Financial terms were not disclosed. 

– A group of investors led by Sixth Street agreed to acquire Greensky, an Atlanta, Ga.-based financial technology platform where banks and merchants provide loans to consumers for home improvement, health care, and other uses, from the Goldman Sachs Group. Financial terms were not disclosed. 

– Talent Groups, backed by Osceola Capital, acquired Abacus Technical Services, a Dallas, Texas-based IT staffing company and The InSource Group, a Dallas, Texas-based IT staffing company. Financial terms were not disclosed.

– TradePending, backed by Capstreet, acquired Fixed Ops Digital, a Greenwood Village, Colo.-based marketing platform for automotive service companies. Financial terms were not disclosed.

EXITS

– SK Capital agreed to acquire J&K Ingredients, a Paterson, N.J.-based manufacturer and supplier of food and beverage ingredients, from CORE Industrial Partners. Financial terms were not disclosed.

– TPG Rise Climate agreed to acquire a majority stake in AmSpec Group, a Cranbury, N.J.-based performance and emissions inspector and certification provider for the energy, commodities, and fuel industries, from Olympus Partners. Financial terms were not disclosed.

OTHER

– Exxon Mobil agreed to acquire Pioneer Natural Resources, a Dallas, Texas-based oil and gas production company, for around $60 billion.