shima capital, led by a venture capitalist with a background in crypto, has raised $200 million for a new vehicle that is based on early-stage private crypto games.
The limited partners in the company led by yida gao include hedge fund billionaire bill ackman, former US presidential candidate andrew yang and dragonfly, a venture firm focused on digital assets.
Reading: New yorkbased bitcoin 200m
gao, who previously founded crypto hedge fund firm divergence digital capital (ddc), which now has over $100 million in assets under management, will focus on nascent private token games alongside seed capital holdings and prior to the initial The fund also aims to acquire debt-to-equity convertible notes in promising startups.
Gao left DDC at the end of the first quarter of 2021 to establish Shima, named after the small Chinese city where he was born. the company’s flagship vehicle imposes an extended six-year lock-in, with optional extensions at the discretion of most limited partners.
The shima team has already started putting outside money to work on a handful of crypto startups. The fund requires a minimum investment of $1 million for institutional investors, with some backers putting up $5 million to $10 million, Blockworks has learned. yang and other limited partners were not immediately available for comment, according to their representatives.
“why now? some of the backgrounds have gotten so big that we see a component missing,” gao told blockworks. “it’s impossible for them to support [early-stage startups] and move the needle [returns] in any meaningful way.”
the founder of shima capital is no stranger to venture capital
Gao has been in the venture capital space since raising its first special purpose vehicle (SPV) in 2014. He said the digital asset sector is still small enough by market cap that a small to medium fund is poised to “make more changes” to web3 than web2, especially as markets tanked following the explosion of terra stablecoin ust and the ensuing collapse of cryptocurrency lenders.
Billion dollar crypto companies still rise and fall at the whims of the world’s largest hedge fund firms.
Shima typically targets investments of $500,000 to $2 million, totals that the big venture firms, including a16z and sequoia, generally don’t favor, because they have so much dry powder at their disposal.
The startup focuses on companies working to solve consumer problems, blockchain-based gaming, metaverse, sustainable decentralized finance (defi), regenerative finance, and infrastructure in crypto, among other areas.
“We see a missing bag of opportunity in the capital stack for Web3 being the first institutional capital in the pre-seed,” Gao said.
gao’s team includes chief technology officer carl hua, a celsius alumnus; head of research alex lin, former venture partner at a company run by former binance executives, old-fashioned research; and chief talent officer Chris Adams, who previously held the same role at Atomic VC.
cryptocurrency growth brings institutional support
shima plans to establish an incubation model, in which the team would work with several portfolio companies each year in an advisory capacity. more hirings are in process.
The incubation approach also includes consulting on tokenomics, especially when it comes to governance and inventive structures. “We’re trying to be the missing layer in web3,” she said.
shima also offers limited partners exposure to joint ventures. Gao solicits capital from most investors at the fund’s inception and then draws from that group as investment opportunities arise, though he has made pay-as-you-go arrangements with some investors.
Going forward, it is considering parking investors’ capital in a market-neutral, yield-generating liquid hedge fund strategy that would target low-volatility returns in the 7%-8% range. that effort could, in turn, lead to a crypto hedge fund focused on domestic digital assets.
Shima’s other first day investors include Animoca Brands, Mirana Ventures, Okex and Republic Capital.
Prior to founding DCC, Gao was the General Partner of Los Angeles-based venture firm Strike Capital. He also spent time at Private Investor New Enterprise Associates and Morgan Stanley.
Resume aside, Gao said that even a couple of years ago pulling off such a launch with sticky institutional capital would have been difficult, if not impossible.
“I think it would be very difficult to get institutional support… cryptocurrencies have grown a lot since then,” he said.
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