10T Holdings, a venture capital (VC) investment firm with over $1.2 billion in assets under management, is looking to start a new $200 million fund to invest in crypto startups, Bloomberg reported Thursday. The move comes amid a significant slowdown in VC interest in crypto.

Alan Howard-backed 10T to Register as Crypto Investment Advisor

Crypto-oriented investment firm 10T Holdings‘s co-founder is pursuing investors to launch a new $200 million fund to back crypto startups, according to Bloomberg, citing sources familiar with the matter. The fund, called TenSquared Capital (10SQ), is being launched by 10T’s co-founder after the firm reportedly spent all its capital and is planning to stop making new investments, sources added.

The new venture will seek to invest in digital asset startups across various growth stages and focus more on investing in equity rather than tokens. Additionally, 10SQ intends to register as an investment advisor, similar to successful crypto-friendly VC firms, including a16z and Sequoia Capital.

The Bloomberg report states that some 10T limited partners have already invested in the new fund. According to sources, 10SQ is currently looking to invest in two startups, one of which is building a crypto wallet infrastructure.

10T Holdings is a prominent VC investor in crypto. The firm, which manages over $1.2 billion in assets, previously invested in crypto exchange Kraken, Web3 firm Yuga Labs, and crypto wallet developer Ledger. Several prominent investors, including hedge fund manager Alan Howard back the VC firm.

VC Investments in Crypto Fell 80% in Q1

The planned launch of a new major crypto fund indicates that some investors remain interested in crypto startups, despite the negative impact of collapses and frauds on the industry. The 2022 crypto winter has resulted in a significant slowdown in crypto investments, with VCs spending 80% less on crypto startups in Q1 2023 than last year.

But the drop should not surprise, given that VC activity has plummeted across the board this year. Record high-interest rates, alongside the recent banking turmoil, have scared off numerous VC investors.

Meanwhile, the recent AI craze led by the sensational chatbot ChatGPT has stolen some of the attention of VC firms, mainly at the expense of crypto startups. In the first quarter of 2023, the AI industry secured roughly $18 billion in VC funding.

This article originally appeared on The Tokenist. 

Editorial Update: On May 22, Tokenist updated this story and headline to clarify that the fund will be created by 10T Holdings’ co-founder, not the VC firm itself.

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