(Bloomberg) -- Digital-asset firm Castle Island Ventures raised $250 million, the largest amount ever by the four-year-old firm, to target startups involved in building monetary networks, financial services and internet architecture such as web3.
Investors in the Castle Island Ventures III fund include endowments, asset managers and family offices, according to the firm. It’s a big step up for Castle Island -- founded by Fidelity alumni Nic Carter and Matt Walsh -- which previously raised funds of $30 million and $50 million.
The sectors targeted will add to a portfolio that includes firms such as Bitwise and BlockFi Inc. In addition to pre-seeded stage investments, Castle Island will look to lead more Series A rounds, Walsh said.
“The market opportunity and the wave of entrepreneurs that are actually starting things is just a lot bigger,” Walsh said in a phone interview. “The way we’ve reacted to the explosion in the space is to beef up our team and give ourselves the ability to go out and be a lot more aggressive in deploying capital in some of these companies.”
In addition to closing the round, Castle Island promoted principal Ria Bhutoria -- also a Fidelity alum -- to a general partner, joining Carter, Walsh and Sean Judge.
Despite Bitcoin’s 36% drop from all-time highs and waning trading volume across exchanges, investment in the cryptocurrency universe has yet to cool. Crypto exchange FTX Trading Ltd. raised another $400 million last month, money that CEO Sam Bankman-Fried said will be used for acquisitions. In January, the Financial Times reported that Andreessen Horowitz is looking to raise $4.5 billion for crypto funds.
In Carter’s eyes, a sustained slump across cryptocurrencies could be to Castle Island’s benefit.
“As long as you sort of fundamentally believe in what was going on, it was a great time to invest. Valuations were lower and entrepreneurs were active,” said Carter, referring to Castle Island’s first fund that closed in May 2018. “If we did have a sustained selloff, selfishly, that would be convenient timing for us because obviously we don’t believe crypto’s going away.”
©2022 Bloomberg L.P.