Thursday 29 July 2021 3:38 pm

Fabric Ventures announces $130m million fund to invest in digital assets and decentralisation

Fabric Ventures, a venture manager that backs ‘open economy’ founders across the globe, today announced Europe’s biggest fund of its type, valued at $130 million, which includes $30 million from the European Investment Fund (EIF).

Other notable limited partners in the new fund include Niklas Zennstrom’s venture firm Atomico, Mike Novogratz’s Galaxy Digital, Barry Silbert’s DCG, German multi-family office Lennertz & Co, Blockchain Coinvestors and Hutt Capital.

Also investing are 42 partners, executives, contributors and founders drawn from Ethereum, (Transfer)Wise, PayU, Polkadot, Sorare, Ledger, Ebury, PPRO, Aztec Protocol, Raisin, Aragon, Orchid, MySQL, MariaDB, NEAR Protocol, Curve, Blackpool, StakeDAO, Stake Capital, PayPal, Google, The New Institute, Verifone, Earlybird, Accelerator Ventures, Felix Capital, LocalGlobe, Matrix Partners China, Cambridge Associates, Evanston Capital, Brunswick, OpenOcean, DN Capital and Claret Capital. Fabric Ventures views an open, broad and active community as central to attracting the finest founders and propelling them on their path.

Fabric Ventures’ 2021 fund is the very first EIF-backed fund specifically mandated to invest in digital assets. It will back traditional equity as well as the software tokens and other digital assets native to these new, inclusive and collaborative networks and applications.

These are all underpinned by the recent invention of digital scarcity and hence ownership. The founders of the open economy frequently have the explicit objective of delivering solutions to many of humanity’s most fundamental challenges. Fabric Ventures Group is registered as an AIFM with the CSSF in Luxembourg and includes an advisor entity which has been made an appointed representative in the UK*. 

This new fund will continue with the thesis of its 2017 vintage whose portfolio of projects encompass open web, open finance and open media; include Polkadot, TheGraph, Sorare, 1Inch, SkyMavis and Near; and have a combined value north of $42bn today.

The fund has attained approximately a 20x multiple on the invested capital. The Fabric team comprises experienced founders and operators tirelessly serving the next generation. Together they continue to participate actively in these new decentralised networks and to invest in the fundamental research upon which they are built. 

The Vision: An open economy

Today’s omnipresent digital platforms are closed economies that are optimised to trap data and power centrally in the pursuit of profitability. Over time, these platforms cease to innovate for their users or to protect their well-being and privacy. By contrast, the new technologies of the open web, such as digital assets and blockchain, support the free flow of users, identity, data, and value, incentivising collaboration and facilitating an open economy with more benign outcomes, greater overall economic returns for all participants, and ultimately a fairer, more stable and sustainable society. Fabric Ventures sees this as an upgrade to capitalism itself. 

In just ten years, the network capitalisation of Bitcoin and Ethereum has attained one trillion dollars, fuelled by corporate adoption from the likes of Tesla, Goldman Sachs, Coca-Cola and PayPal. In just two years, a $100 billion decentralised finance sector has emerged. In just two months, the $1.5 billion market in user-owned media and crypto collectibles has shaken up the media and art worlds – including Fabric Ventures’ portfolio company Axie Infinity’s incredible rise. 

Axie Infinity, an NFT based breeding and battling game, has become the dApp or blockchain with the most cumulative revenue over the last seven days** (after Ethereum). Their pioneering ‘play-to-earn’ model means that if ranked against national averages, Axie Infinity would have the 25th highest monthly salary of all countries in the world.

Individuals in the Philippines are now in a position to quit their day job and earn up to four times the local minimum wage by just playing the game for a few hours each day. 

“Fabric’s new fund will be put to work partnering with the most daring and relentless entrepreneurs of the open economy on their journey to architect lasting protocols and platforms, not simply companies,” said Richard Muirhead, Co-Founder and Managing Partner at Fabric Ventures (main photo).

“It is now well acknowledged that there is a need for a web that is user-owned and, consequently, more human-centric.

“There are astonishing people crafting this digital fabric for the benefit of all. We are excited to support those people with our latest fund.”

Commenting on the funding round, EIF Chief Executive Alain Godard said: “We are very pleased to be partnering with Fabric Ventures to bring to the European market this fund specialising in blockchain technologies. Despite their rich engineering talent, deeptech entrepreneurs in the blockchain sector in Europe often struggle to find financial support and investors that have a deep understanding of their space.

“This partnership seeks to address that need and unlock financing opportunities for entrepreneurs active in the field of blockchain technologies – a field of particular strategic importance for the EU and our competitiveness on the global stage.”

Collaboration with the EIF

Thierry Breton, European Commissioner for Internal Market, said: “As we see an ever-growing need for investments in Europe for the increasing number of highly innovative start-ups and SMEs in the Blockchain and AI space, I welcome this step in our collaboration with the EIF on this investment fund. We will continue to support the incubation and scale-up of highly innovative AI and Blockchain technologies, which are critical in ensuring that Europe is home to the thriving digital innovators of the future.”

In backing this latest fund, Gav Wood, founder of Polkadot and former CTO of Ethereum comments: “Fabric supported an early Ethereum meetup I led in January 2014 and followed my team as we spun out Parity in 2016. So we were very happy to have them as a backer in 2017 when we launched Polkadot. They have supported the Web3 Foundation ecosystem throughout and ongoing.”

Commenting further, Richard Muirhead says: “Humankind’s greatest challenges and exciting opportunities require broad stakeholder collaboration. The new software of the open web makes it easier than ever to kickstart these new digital ecosystems and ensure that concentration of market power never leads to their corruption and demise.

“Opportunities stretch from accounting for environmental impact and driving financial inclusion of individuals and businesses to harnessing the untapped power of health data. As these new equitable and inclusive digital networks become pervasive and interconnected, Fabric Ventures believes we shall see the global rise of a fairer and more open economy and a fairer society.”

About Fabric Ventures

Since 2012, Fabric Ventures (initially as Firestartr) has backed the founders of the open economy. It focuses on being the “first institutional cheque” invested in companies, crypto assets and digital networks on a path to be global winners, identified primarily through its peerless pan-european footprint. The team has built companies to greater than $3 billion in value and holds operational and investing experience from Google, PayPal, Sun Microsystems, Visa, Accel, eVentures, and EQT.

Since 2017, Fabric Ventures has led the curation of the annual Open Web Forum with over 10,000 in-person attendees since then and 37,000 online attendees for the 2021 Open Web Forum alone. Please see www.openwebforum.org for further information. 

Fabric Ventures’ current portfolio includes Polkadot, NEAR Protocol, Sorare, Decentraland, Orchid, 1inch, Coinbase, Sky Mavis (the team behind Axie Infinity), and The Graph. Historically the team also invested in Tagomi, Bitstamp, Bitcoin, Ethereum, Maker, Supermetrics, Thimble, Bitrise, Railsbank, Wagestream, Citymapper, Tray.io, Pusher, Modulr, Codat, Shazam, Raisin, PPRO, Tink, (Transfer)Wise, iZettle, and many more incredible teams. For more information on our portfolio, opportunities or our thesis please see www.fabric.vc

About European Investment Fund 

The European Investment Fund (EIF) is part of the European Investment Bank group. Its central mission is to support Europe’s micro, small and medium-sized businesses by helping them to access finance. EIF designs and develops both venture and growth capital, guarantees and microfinance instruments which specifically target this market segment. In this role, EIF fosters EU objectives in support of innovation, research and development, entrepreneurship, growth and employment.

About European Fund for Strategic Investments 

The European Fund for Strategic Investments (EFSI) is the main pillar of the Investment Plan for Europe. It provides first-loss guarantees enabling the EIB to invest in more and often riskier projects. The projects and agreements approved for financing under the EFSI are expected to mobilise €546.5 billion in investment, supporting over 1.4 million start-ups and small and medium-sized enterprises across the European Union.

About InnovFin Equity

InnovFin Equity is part of InnovFin – EU Finance for Innovators, a generation of EU financial instruments and advisory services developed under Horizon 2020 to help innovative firms access finance more easily. “InnovFin – EU Finance for Innovators” will help to inject around EUR 50 billion in investments in Research and Innovation across Europe. InnovFin Equity provides equity investments and co-investments to or alongside funds focusing on early stage financing of enterprises operating in innovative sectors covered by Horizon 2020, located or active in the EU or Horizon 2020 Associated Countries. Businesses can contact selected financial institutions in their country to access InnovFin and other brands of EU Finance: http://www.access2finance.eu/.

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