Dec 29, 2021 - Economy

Scoop: Multicoin Capital's mega returns

Multicoin's multi-coin approach brings mega returns.

Illustration: Aïda Amer/Axios

Crypto investment firm Multicoin Capital recently told investors that its hedge fund assets have soared 20,287% since inception in October 2017, and that its first venture capital fund has returned more than 28x (net of fees), per two sources who saw the presentation.

Why it matters: These returns offer a tantalizing glimpse into why limited partners who were once wary of digital assets are now clamoring to get behind it.

Big picture: Most things related to web3 have gotten the Midas touch in 2021, but Austin, Texas-based Multicoin has managed to dwarf most other industry returns. Bitcoin, for example, has risen over 900% in the same period.

  • Multicoin Capital’s hedge fund holds relatively little Bitcoin. Instead, much of its recent surge has been thanks to bets on newer crypto companies and currencies.
  • Its biggest kahuna is Solana, the blockchain network billed as an Ethereum competitor with faster transaction speeds. Solana has risen about 21,609% since its token began trading in April 2020, per Coinbase data, but Multicoin invested even earlier— locking in a lower price during a July 2019 seed round.
  • Other winning investments so far also include Helium and Arweave, both of which's tokens gained more than 9,000% from the start of trading through October.

Look ahead: Multicoin raised $100 million for its second VC fund in May, and is now raising $250 million for its third one, according to The Information.

  • That may look like small pickings compared to recent mega-raises by Paradigm ($2.5 billion) and Andreessen Horowitz ($2.2 billion), but Multicoin is now a multi-billion firm in terms of assets under management.
  • The firm declined to comment.

Lucinda co-authors the daily Axios Pro Fintech Deals newsletter. Sign up here.

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