NEW YORK (Reuters) - U.S.-based venture capital firm Blockchain Capital LLC said on Thursday it plans to raise $50 million for a third fund through capital from its partners and a sale of its own digital tokens.
Blockchain Capital invests in companies and start-ups that use blockchain, a ledger of transactions that first emerged as the software underpinning bitcoin and is maintained by a network of computers.
The company’s co-founder and managing partner, Brock Pierce, told Reuters in an interview that the bulk of the capital will come from the firm’s partners, and the rest will be raised through an “initial coin offering” (ICO) of its digital tokens, called BCAP.
Over the past year, digital technology start-ups have raised cash by creating and selling their own currencies in offerings without the help of banks or venture capital firms.
The sale of Blockchain Capital’s BCAP tokens would be the first by a venture capital firm.
“Our view is that these ICOs are going to be hugely disruptive to the early stage ecosystem because the biggest problem with early stage ventures, whether you’re a limited partner in a fund or an angel investor, or a VC (venture capital) investing in a start-up is just a general lack of liquidity,” said Pierce.
The firm’s co-founder was a former Hollywood child star who has appeared in films like “First Kid” and the “The Mighty Ducks”.
Pierce said the tokens would be issued by a Singapore entity that will be created by the U.S. venture capital company. The tokens would represent a fraction of ownership in a new fund called Blockchain Capital III Digital Liquid Venture Fund, LP.
Details of the token sale will be disclosed in an offering memorandum to be published on April 3.
The tokens, when issued, may be traded on digital asset exchanges.
“The token issuance will be a small part of our fund,” Pierce said. “We’re doing it to pioneer the market. We also believe we are democratizing access to an asset class traditionally only available to elite institutional investors.”
About $225 million has been raised in 2016 in 40 initial coin offerings (ICOs), compared with just $9.8 million in 2015, data from crypto-currency research firm Smith + Crown showed.
Reporting by Gertrude Chavez-Dreyfuss; Editing by Bernadette Baum