Soona Amhaz is the founder of crypto-native venture firm Volt Capital.Volt previously backed blockchain research firm Nansen and treasury management startup Coinshift.Other LPs for the fund include hedge fund manager Brevan Howard and a16z partner Chris Dixon.Amid market carnage, the crypto-native venture firm Volt Capital announced a new $50 million fund on Wednesday, backed by industry heavyweights like Tiger Global and Brevan Howard.
Volt’s thesis, founder Soona Amhaz said, is that volatility in crypto markets isn’t going away anytime soon.
“So you need to have battle-hardened VCs who are going to stay disciplined, take the long-term view, and not forget the fundamentals when the market gets frothy,” Amhaz told Insider.
The $50 million raise will go towards plays in decentralized finance, nonfungible tokens, decentralized autonomous organizations, and its related infrastructure.Past investments include blockchain research firm Nansen, key management service Magic, and treasury management startup Coinshift.
The fund’s other backers include Andreessen Horowitz General Partners Marc Andreessen and Chris Dixon, along with Union Square Ventures Managing Partner Albert Wenger, and solo investor Elad Gil.
“These are investors that are not afraid to invest in emotional markets,” Amhaz said, when asked if there was any hesitancy to participate in the fund amid volatile trading.”When the markets start taking a tumble, they realize that it’s the best time to be backing founders.”
Markets are in a rut, as of late, with both bitcoin and ethereum down more than 55% from their all-time highs, according to pricing dashboard Messari.Altcoins solana and avalanche declined 16.6% and 23.66% in the past week, respectively.The total crypto market cap has stumbled to $1.1 trillion from its $3 trillion peak in November .
This is in part due to the downfall of UST and LUNA and quantitative tightening by the Federal Reserve over inflation concerns.
Investors have maintained a risk-off appetite, leaving bitcoin and ethereum to trade in tandem with risky-technology stocks.
Capital formation for Volt’s recent fund took 2 to 3 weeks, Amhaz said, with most of the LP base returning from Volt’s first $10 million raise.The initial fund, which was unveiled in April, 2021 , took almost a year to close due to the pandemic’s impact on the markets.
“It took a long time,” she said.”Our second fund was also started in a bear market because that’s honestly when we think it’s a phenomenal time to invest.”
Phenomenal time to invest? Venture capitalists, Amhaz said, have the opportunity to capitalize on funding rounds while lowering pre-seed risk during bearish cycles.Six months ago, she said, investors were paying Series A and Series B figures for very early-stage ventures.
“When you’re investing at those prices, you’re assuming perfection,” Amhaz said.”You assume that the team is going to perfectly hit product-market fit, that they’re going to hire the perfect team to do it, and that everything is going to work flawlessly.”
A bear market, she says, gives investors a margin of safety while valuations simmer.
“As an investor, you shouldn’t be skittish about that,” Amhaz said.”The exact right time to be investing in founders is when the markets cool down.”
Second, bear markets are a stress test.
This means that when tokens are consistently going up and to the right, it may be difficult to cut through the noise i.e.suss out if the project is just hype or actually worth investing in.
“If you stick around during a bear market, you get to see which projects fail and why they failed and which ones succeed and why they succeeded,” she said, citing now-booming ventures like OpenSea and Uniswap.
If you’re a VC, Amhaz recommends building your reputation in a bear market by further investing your time.
“Founders are going to remember the investors who helped them navigate downturns and who invested in them as the markets rotated and tumbled versus the ones who withdrew term sheets,” she said.
Volt isn’t the only firm unveiling sizable raises this week, however.
Andreessen Horowitz announced a $4.5 billion Web3 fund on Wednesday, bringing the VC giant’s total crypto investments to $7.6 billion.
“Bear markets are often when the best opportunities come about, when people are actually able to focus on building technology rather than getting distracted by short-term price activity,” Arianna Simpson, General Partner at Andreessen Horowitz, told CNBC .
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