Main Highlights:
- Investors behind the virtual hack.summit(), the world’s largest blockchain developer event, has launched a $200 million cryptocurrency venture fund called Hack VC.
- Ed Roman was previously a sole general partner, investing in early-stage technology and cryptocurrency companies through Hack VC for over a decade before partnering with Pack, who previously co-founded global crypto fund Dragonfly Capital and oversaw Bain Capital Ventures’ entry into digital assets.
- Hack VC closed its fundraising last autumn and has been relatively active since then, according to Pack, making “at least” 15 investments worth tens of millions of dollars.
According to fund partner Alexander Pack, the investors behind the virtual hack.summit(), the world’s largest blockchain programmer event, has formed a $200 million crypto seed fund under the Hack VC banner.
Ed Roman, initially a sole general partner, investing in early-stage technology and cryptocurrency firms through Hack VC for over a decade before teaming with Pack, who previously co-founded global crypto fund Dragonfly Capital and oversaw Bain Capital Ventures debut into digital assets. Before founding this fund, Pack and Roman both invested in many early-stage crypto firms, including DeFi platforms Compound Finance and Terra, Pack said.
Hack VC completed its financing last autumn and has been reasonably busy since – according to Pack, the firm has made “at least” 15 investments totaling tens of millions of dollars. Its latest assets cover a range of cryptocurrency sectors, from NFT emoji firm Yat to DeFi loan site Goldfinch Finance to metaverse game startup SynCity.
Hack’s thesis is built on investing in what Pack refers to as the “scaffolding” for an internet-wide digital rights system, concentrating on emerging economies.
Pack’s Statement on Hack VC
Alexander Pack stated that the most straightforward use of a digital-native property rights system is to create a digital-native store of value, such as Bitcoin. However, he admitted that this is not as exciting as developing a digital gold. He noted that while he believes it has a role, he believes that establishing a property rights system that allows everybody globally to participate in the open financial system is far more significant.
Pack stated that The Hack VC team consists of about ten employees, almost half of whom work in the venture firm’s specialized in-house Crypto Lab, which Pack views as a source of competitive advantage. Because cryptocurrency networks are decentralized, it is critical for investors in cryptocurrency enterprises to be early adopters of new protocols.
Pack stated that they must remain innovative. They must be more than financial. They must be more than a random trad VC; they must genuinely use these protocols.
Hack VC’s Crypto Lab, led by a former senior trader at quant hedge fund Jane Street, accomplishes this goal by employing engineers and quantitative researchers. Its staff takes to secure networks and is “one of the most active actors” in the DeFi ecosystem, Pack said.
This includes market-making, governance assistance, and liquidity provisioning on numerous protocols. Additionally, he noted that the lab assisted Hack in sourcing transactions by analyzing on-chain data.
Hack VC received cash for the seed fund from institutional investors such as Sequoia Capital, Fidelity, and a16z’s Marc Andreessen and Chris Dixon. Several of these LPs are active crypto investors, including Sequoia, who created a $500 million fund to invest in tokens last week.
Investments by businesses like Sequoia and a16z in other crypto funds while simultaneously managing their funds in the same sector is a somewhat regular occurrence in the crypto realm, even though these firms are ostensibly competing for the same kind of transactions.
Pack explained that this overlap is a holdover from the early days of cryptocurrency investing when it was “the polar opposite of competitive.”
Pack stated. Previously, they all backed each other’s funds. Now, the market is becoming more competitive. We used to have to mail each other offers, or our businesses would go bankrupt. However, they remain friends.
Hack VC now has “excellent investor connections” with other venture companies in the industry, partly because of Pack’s initial investment of over a dozen crypto funds, including Multicoin, Polychain, Paradigm, Standard, and Parafi.
Nonetheless, he feels Hack VC adds unique value to the ecosystem by investing in cutting-edge, early-stage cryptocurrency firms. Hack VC does, however, explore co-investments with some of its limited partners in other sectors — it recently invested with Twitch creator Justin Kan in a metaverse firm, utilizing Kan’s extensive expertise of gaming, he noted.
Pack attributed Hack VC’s success to the unique developer community it has developed through Hack. Summit.
Pack stated that they spent years establishing one of the largest blockchain programming communities in the cryptocurrency industry, relatively rare. Due to structural constraints, it’s difficult for a typical venture capital company to construct [that].
This is why he left Bain Capital Ventures in the first place – a lean team cannot just add a big community arm or a 10-plus person engineering or quant trading staff, he noted.