Polychain Fund I LP, the cryptocurrency fund of San Francisco-based Polychain Capital, remains at the vanguard of cryptocurrency investing, attracting nearly $20 million in new investments last year.
According to SEC filings, currently Polychain has more than $300 million in assets under management, which is mainly invested in cryptocurrencies and related businesses. That figure comprises cryptocurrency assets, equity in companies and unspent cash pledged from investors.
The fund, which did not disclose the name of investors, has yielded 1,332.3 percent in total returns for investors who kept their money there through the four years of the hedge fund’s lifetime. Also Polychain Fund I LP lock-up period is at least six months.
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The new fund signals that some investors are still willing to back blockchain projects despite the recent volatility in cryptocurrency prices and uncertainty surrounding the Covid-19 outbreak.
The crypto hedge fund industry has grown significantly over the last year along with the price of bitcoin, which has emerged as one of the best-performing assets in 2020. Investors have been drawn to crypto hedge funds by the promise of big returns compared with the weak yields from counterparts in the mainstream investment space. However, in 2018 and 2019 price dips were bad news for all crypto investment vehicles, forcing many to close and others to explore creative ways to stay afloat.
Earlier in May, Silicon Valley investment powerhouse Andreessen Horowitz (a16z) collected $515 million for its second crypto, which will back new cryptocurrency-related ideas. It had originally aimed to raise $450 million but has not placed a hard cap on its size.
Crypto firms have turned to venture capitalists as the collapse in digital asset values has made new investments through ICOs, which were once plentiful, drying up for blockchain-related startups, including the so-called crypto hedge funds. Retail investors who poured money into crypto assets in 2017, are seeking to benefit from a sector-wide boom. They are now trying to head for the exits, prompting funds to find alternatives to stay the course.