COINVESTING WITH BLOCKCHAIN COINVESTORS
Fifth Era/Blockchain Coinvestors Newsletter
Vol. 3, No. 12, June 2021
Coinvesting with Blockchain Coinvestors
We are often asked why we are called Blockchain Coinvestors? With the successful first closing of the third blockchain venture fund of funds, we have almost 50 new investors joining us, so in this newsletter we summarize how the coinvestment program that gives rise to our name works.
What is the Purpose of the Coinvestment Program?
The coinvestment program identifies the emerging unicorns of the blockchain space and adds additional capital into their follow on rounds. The fund of funds' invest very early and cast a broad net - the coinvestment program deploys more capital as momentum builds.
What Coinvestments Have you Made to Date?
So far we have completed equity coinvestments into Bitwise, Braintrust, Brex, Coinbase, DappRadar, Ripple, Securitiize, Valui and Wyre and early stage token coinvestments into DFinity, Filecoin, NEAR, Polkadot and Structure. The equity coinvestments have been accessible to all of our investor circle, and the token opportunities only to those who have specifically approached us with an interest in early stage token investments.
How do you Select the Coinvestments?
On an ongoing basis, we monitor the combined portfolio - the more than 300 companies that the fund of funds' are now invested in - and we watch for the category leaders as they emerge. If we hear of a follow on round taking place we see if it meets our filters:
Backed already by leading blockchain VC'sBeginning to emerge as a leader in its category or strategyRound being led by leading VCWe can be direct investors into the companyThe company supports us having an allocationWe can see at least some of the Due Diligence (although we are a coinvestor and do not do primary due diligence on the company ourselves)
If the opportunity meets all or most filters, then we contact the company directly and ask for an allocation.
Fund, SPV or Syndicate investment?
We have three ways to take advantage of the allocations we secure:
Each of our fund of funds has a 20% allocation for coinvestments. Depending upon the degree to which the fund is already exposed to the opportunity, we may invest further capital directly from the fund.Secondly, the SPV coinvestment program gives our investors the chance to select specific coinvestments into which they wish to allocate additional capital. These are made through our dedicated special purpose vehicle.Finally, we make certain coinvestments available through our Blockchain Coinvestors AngelList syndicate (see below).
What is the Investor Circle?
While we use the term 'investor circle' loosely, we think of our investors as being in the following categories:
Coinvestment Class Investors have committed more than $1 million to one or more of our investment vehicles. They receive the largest share of the allocations we receive (e.g. 75%).Non-Coinvestment Class Fund investors have invested in at least one of our funds and can also invest in coinvestments since we reserve a portion of each allocation for them (e.g. 25%). Finally, we maintain a list of other investors who have expressed interest in Blockchain Coinvestors, but who have not invested in one of our funds. If allocations permit, we may offer opportunities to this broader list.
In practice, as our funds have more investors in them, we expect to have fewer opportunities reaching the third category.
What is your Coinvestment Process?
Once we receive an allocation the process is as follows:
We send out a summary email to investors letting them know about the opportunity;If you are interested you email us back and indicate your potential interest level;We then open up a data room;If there is sufficient interest we create a class of our SPV and close the round.
The AngelList syndicate works a little differently as indicated below.
What are the Terms and Conditions?
All the SPV's are 1% annual management fee and 10% carry with a one time 1% org fee. So very low cost compared to the VC LP's who are paying 2% and 20% to get into the same rounds. We take four years of the management fee upfront to avoid micro capital calls. However, investors are returned any unused portion on an exit.All SPV's have a minimum commitment of $50,000.What is the Role of Blockchain Coinvestors AngelList Syndicate?
We also have the Blockchain Coinvestors AngelList syndicate for investing in coinvestments from $1,000 and up. We typically put very small allocations that do not justify a purpose created SPV, or opportunities that don't meet all of the filters above into that syndicate.
We believe that Blockchain Coinvestors operates a compelling and efficient way for our investor circle to allocate additional capital into the emerging unicorns of the blockchain space.
We are happy to answer any other questions.
Thank you for reading.
Alison Davis
Matthew C. Le Merle
ABOUT BLOCKCHAIN COINVESTORS
Since 2014 our goals have been to provide broad coverage of the emerging unicorns and fastest growth blockchain companies and to capture superior returns from investing in the leading blockchain venture partnerships. The strategy is now entering its 8th year, and so far we are investors in 25 pure-play blockchain venture funds in the Americas, Asia and Europe and in a combined portfolio of more than 300+ blockchain and crypto projects including 30+ blockchain unicorns. Simply put, our funds, SPVs and syndicates represent the best way to invest in blockchain businesses.
FUND PERFORMANCE
Blockchain Coinvestors Funds are continuing to generate strong returns. To date, over 80% of the funds we are invested in are performing as top quartile funds against the Cambridge Associates benchmark. This remarkable performance results from powerful tailwinds driving the world towards a future in which digital monies and digital assets are ubiquitous and the businesses and projects providing blockchain and crypto products, services, and infrastructure benefit disproportionately.
BLOCKCHAIN COINVESTORS FUNDS
Blockchain Coinvestors’ goals are to provide broad coverage of the emerging unicorns and fastest growth blockchain companies and to capture superior returns from investing in the leading blockchain venture partnerships:
Fund III is open only to investors who meet the Qualified Purchaser definition with a minimum subscription of $250,000.A “qualified purchaser” is an individual or a family-owned business that owns $5 million or more in investments. The term “investments” shouldn't include a primary residence or any property used for business.Fund III Parallel is open to investors who meet the Qualified Client definition with a minimum subscription level of $250,000 at the discretion of the Manager. Please contact ir@blockchaincoinvestors.com if the minimum is of concern.Currently, an individual or entity is a qualified client if he, she, or it: (i) has a net worth of $2,100,000 prior to investment in the fund (excluding the value of his or her primary residence).While the two funds are substantially the same, there may be some funds and investments that are only available in the Qualified Purchaser vehicle. Blockchain Coinvestors funds can take investments via IRAs. We support several providers, including AlgoIRA, Kingdom Trust, Millennium Trust Company and Pacific Premier Trust Company (Pensco).
Please visit the Blockchain Coinvestors website to learn more about our offerings. You can also reach our Investor Relations team directly at ir@blockchaincoinvestors.com.
BLOCKCHAIN COINVESTORS SWISS
We are excited to announce that Blockchain Coinvestors Funds are now available through Swiss certificates for those of our non-US investors who prefer this approach. The underlying fund is the same, however, our Zurich based team at Blockchain Coinvestors Swiss, who will introduce in future weeks, can provide detailed information regarding this investment option. Email us at mlemerle@fifthera.com to learn more.
LINQTO
'Private Investing Made Simple'
While our funds are only available to Accredited Investors who are also Qualified Clients we believe in the democratization of investment access to all investors and look forward to that day. In the interim, we have partnered with Linqto which is an easy to use Mobile and Web app that makes it exceptionally easy to invest into attractive opportunities. The provide access to Accredited not Qualified Client investors as well as much lower minimums. Go to Linqto.com or download the app from your App store to use this approach.
BLOCKCHAIN COINVESTORS ANGELLIST SYNDICATE
Continuing the theme of the democratization of investing, we have a rapidly growing Blockchain Coinvestors syndicate on AngelList providing access to selected coinvestments. Please join us and our partner Lou Kerner on AngelList.
Click here to receive the insightful weekly crypto newsletter and webinar invitations from our Blockchain Coinvestors partner Lou Kerner.
REGISTER NOW FOR UPCOMING WEBINARS AND CALLS
Our investment team hosts bi-monthly webinars and calls to help educate our community about the Fifth Era, fintech, blockchain and crypto. We discuss important trends, tailwinds and investment themes including what we have learned and how we are using our knowledge to inform our own investment thesis and actions. Below is a list of upcoming webinars for which you can register by clicking the links:
Options for Investing in Blockchain & Crypto
- June 28th, 7:00am PST
- June 28th, 12:00pm PST
Meet the Blockchain Unicorns - Mid-Year Update
- July 12th, 7:00am PST
- July 12th, 12:00pm PST
Investing in Early Stage Tokens
- July 19th, 7:00am PST
- July 19th, 12:00pm PST
Recordings of past webinars and calls can be found at www.fifthera.com/webinars.
RECENT PRESS
Irish Tech News: A review of our book Blockchain Competitive Advantage that provides clear advice on strategies for investing in blockchain technologyIrish Tech News: A review of our book The Intelligent Investor: Silicon Valley which has practical wisdom from leading Silicon Valley angels and VCsNBC San Francisco: An interview on what are NFTsUS News & World Report: What to know about Bitcoin ETFsCrypto Unstacked: Podcast on the Fifth Era and the evolution of digital assetsBusiness Insider: Which digital asset to hold right now - Bitcoin or EthereumSan Francisco Business Times, Venture Capital Journal (paywall), and CrowdFund Insider: Coverage on the recent close of Blockchain Coinvestors Fund IIVICE and CNNBusiness: Press coverage of the recent COINBASE public offeringInc Magazine: An explanation of NFTsPensions & Investments: How institutional investors are getting closer to blockchain and crypto investmentsOn the Brink with Castle Island: An overview of technology trends and the cryptoasset marketsIrish Tech News Podcast: An overview of the Fifth Era, digital monies and assets, and how bitcoin fits inNasdaq's Trade Talks: A discussion on the concerns accredited investors have for allocating to Bitcoin
"The best way to invest in Blockchain businesses"