Pantera Capital – Visionaries of the VC World
Venture capital is the bridge between today and tomorrow's success. Our last article on VC was published last year. Since then, much has changed, but we have only strengthened our positions in this sector.
Today, we will continue our exploration of VC and tell you about a fund that is standing tall with the likes of Andreessen Horowitz and Paradigm. About the first digital assets fund in the US. About a fund that was one of the first to invest in web3.
This fund is Pantera Capital. A visionary in the venture capital industry, which sees the future where others only begin to recognize it.
The article was written by the team @zeroxcholy and @demidas_com, with the assistance of @cryptofilya.
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Introduction
It is commonly accepted that the first prototype of VC was ARD - "American Research and Development Corporation," founded in 1946. At that time, it was something entirely new. In Europe, the first funds began to emerge only decades later.
Today, after an enormous amount of time, venture capital has remained and become a well-oiled mechanism of financing in many developed countries around the world.
Despite this, the US still accounts for nearly half of all venture capital activity in the world. The sector originated in the US, and the most influential VC players started here.
And so did Pantera Capital, a venture fund established in 2003 in the US.
There is relatively little information available about the fund's initial development, as it was a conventional VC that invested in many startups with a focus on global macroeconomics and building a portfolio. However, everything changed in 2013.
In the early years, when many people were still skeptical about cryptocurrencies, Pantera Capital was actively investing in this market and became the first VC fund in the US focused on digital assets. At that time, its activities shifted exclusively to the Blockchain (BTC was priced at $65).
We believe that digital currency is at a turning point, and it's now the right time to transition to more institutional management.
The fund has gone through a tremendous journey and today has significant influence on the entire web3. But how did it achieve this? Why did one person from the "Tigers" decide to bet everything on an industry that seemed unknown?
This will be the subject of our article today. The development, key theses, strategies, and transformation of a "Tiger" into a panther.
Fund Development
Dan Morehead's letter (Co-Founder of Pantera Capital) dated August 29, 2013:
I am convinced that BTC is about to take off. I understand that from a standard market perspective, this sounds absurd, but I believe that within 6-8 weeks, Bitcoin will soar above $200…
Yesterday, I talked about BTC with an investor, and he was somewhat skeptical: "This is similar to buying gold."
No, it's similar to buying gold in the 1000 BC era. 99% of financial wealth has not yet touched Bitcoin. When this happens, Bitcoin will either be worth zero or $5,000.
At the time, the founder of Pantera Capital had a clear understanding that BTC was about to rise and the sector would continue to develop. Dan Morehead became a visionary, carving out his path into the future of digital assets.
At the time of writing the first letter, BTC was priced at $122, and when the second letter was sent (November 6, 2013), the price had risen to $253. Dan expected this price.
I think this is like taking the decision to buy Microsoft stocks when they were priced at $0.20. This was a tough decision, even at $0.10. In the future, it will be an absolutely excellent purchase.
Today, BTC is in such a position. The first global currency after gold and the first non-recognized payment system with a market capitalization of $3 billion?
Silk Road is no more, and a new wave of sophisticated investors has emerged.
Today, the market capitalization of Bitcoin is $1.3 trillion, a 43,000% increase since the letter. Dan believed in the asset, and his investments turned out to be probably the best decision of his life. This is the philosophy of VC. Believe in an idea at an early stage, when most people are not paying attention.
Over time, a new wave of sophisticated investors appeared. The sector gradually began to attract large investors, and Pantera Capital was one of those who believed in the potential of the changing trends.
Today, the fund manages a capital of $4.7 billion. It specializes exclusively in web3, but has a large experience and in traditional finance. Strong connections have enabled the implementation of a strategic investment philosophy, creating a diversified portfolio and providing resources for value creation.
The fund's mission is to serve as a catalyst for the widespread adoption of Blockchain and innovation.
But let's go back a bit. Imagine it's 2013, and you are Dan Morehead, a person holding executive positions at Goldman Sachs, Deutsche Bank, and Tiger Management, and a member of the board of Bitstamp.
At Goldman Sachs, you began your career as the first trader of assets-backed securities. At Tiger Management, you led global macro-trading. You have immense experience in managing funds, trading, and consulting.
But at one point, you start seeing completely different perspectives that lie ahead in the future of digital assets.
You become one of the "Tigers" from the huge list of those who really got it right.
"Tigers" - a group of former Tiger Management employees who founded their own hedge funds.
You find a partner, Joey Krug, open offices in New York and Puerto Rico. You were never more determined. A plan designed for years to come, perfectly worked.
"We believe that in the next few years, Blockchain and digital currencies will take a permanent place in the global economy, will be responsibly managed and regulated, and soon will become intermediaries in numerous industries."
Joey Krug - former co-founder. In his early years, he worked as a programmer. In 2014, he developed MariPoSa (a tool simplifying BTC transactions). He is also the co-founder of Forecast Foundation (the Augur project - a decentralized prediction market with Vitalik Buterin as a consultant) and the Eco project.
In 2016, he also became one of the founders of the leading syndicate AngelList. Joey led investment rounds in companies such as Starkware, Arbitrum, and Alchemy.
At present, he is no longer part of Pantera Capital due to FTX-related events, but his contribution was enormous. Today, he can be found on the list of partners at Founders Fund.
Fund Strategy, Investments, and Startup Evaluation
As we mentioned earlier, Pantera manages $4.7 billion across three strategies:
The main purpose of Pantera's activities is to open specific funds for key directions and collect money from investors. In the process, it directs them to the startups it considers most promising in the future.
Pantera Capital has 5 funds, each managing specific branches: Venture, Bitcoin, Early-Stage Token, and Liquid Token.
The fund named "Venture" was first launched in 2013 with $12 million, focusing on BTC. The next fund was based on payments and developer tools, another on mass adoption, and in 2021, Blockchain Fund IV (size $1.25 billion, 80 investments) on Blockchain assets, equity, etc.
At present, most of the funds continue to operate (launched in 2013-2017). They focus on BTC, early-stage tokens, and liquid tokens. In the first quarter of 2025, the next fund will open, which will be based on the same things as Blockchain Fund IV.
Over the period from 2013, they have invested in approximately ~200 projects, with 75% of them being lead investors. On average, Pantera Capital invests in ~20 projects per year, but this depends on the market.
The most popular narratives in which the fund has invested in recent times are:
Quite interesting categories, as a significant portion is dedicated to a specific Blast ecosystem.
Throughout its existence, Pantera Capital has invested in key web3 projects. Its portfolio includes names such as Circle, Starknet, NEAR, Arbitrum, 1inch, Injective, Alchemy, Balancer, Deso, Terra, and many others.
An interesting fact is that Pantera Capital was able to cash out around 80% of its investments in Terra before the project's collapse. This fund managed to avoid the "fifth reboot" of the crypto market, which once again confirms the importance of tracking key VC players.
"Over the past year, the market has become severely detached from fundamental valuations, so we closed a large portion of our Terra position before anything happened. Roughly 80% was done fairly gradually."
Then, Pantera Capital partner Paul Veradittakit said that exiting investments at early stages allowed them to turn $1.7 million into approximately $170 million.
Time passed, and the fund released a report stating that even if you went back 250 years, you wouldn't find a worse year than 2022.
It's worth touching on how the fund evaluates startups. Pantera Capital views each startup through a strict process involving experienced investors and consultants.
Typically, the fund considers several key factors:
- Team: Pantera Capital places significant emphasis on the startup team, evaluating their expertise, experience, and track record in the industry.
- Technology: A thorough analysis is conducted of the project's underlying technology, assessing its innovations, scalability, and potential for revolutionary market disruption.
- Market potential: Pantera Capital evaluates the size of the target market, the startup's competitive advantages, and its ability to capture market share.
- Attraction: The fund seeks startups that have already demonstrated popularity, such as user growth, partnerships, or revenue generation.
- Normative legal framework: Pantera Capital considers the regulatory environment and any potential risks or barriers that the project may face.
- Alignment with Pantera's investment thesis: The fund evaluates whether the startup aligns with its overall investment strategy and vision for the web3 future.
Forward to Knowledge
At the end of last year, Pantera Capital launched Catalyze (a research fellowship).
This special program is designed to accelerate in-depth, systematic research in web3.
We invite all enthusiasts, network researchers, experienced writers, and blockchain experts!
We're excited to launch Pantera Catalyze, a fellowship aimed at expanding rigorous research in DeFi, DAOs, tokenomics, infrastructure, NFTs, game theory, etc.
The fund has supported key founders and innovators in the crypto industry since 2013. Therefore, they decided to expand their support and include the brightest minds in research.
Within this fellowship, 10 participants are selected to undergo a 5-week intensive program. Currently, the first program is underway, and the list of participants has been announced (with 210 candidates).
Participants receive mentorship, with a dedicated mentor from Pantera or a specific project in the fund's portfolio. The mentor helps and provides ongoing consultation. They also stimulate leadership, develop ideas, and explore possible narratives.
Thus, Pantera awards up to $100K to participants who complete the program with a successful research outcome, and awards will be given for the most significant works.
It appears that the fund is not only investing in projects but also preparing the ground for future founders, similar to what well-known brothers do.
Perhaps, in the future, this will evolve into something akin to a16z css.
Pantera Capital also shared the sectors they are most interested in:
- DeIP/DeSci (Decentralized IP and/or Decentralized Science) Mechanisms
- Blockchain Gaming: The Player's Perspective
- Network State in the Blockchain Era
- DePIN (Decentralized Physical Infrastructure Networks)
- LSDFi
- Real World MEV
- Token Distribution & GTM Strategies
- Blockchain Architecture: Monolithic vs Modular
- The Landscape of Data Availability Solutions
- Unique Primitives on Enterprise App Chains
The largest investment was in TON.
One of the most significant deals in recent times from Pantera Capital is the investment in TON.
Earlier, the largest purchase from the fund was the acquisition of SOL tokens from FTX. At the time, the exchange sold blocked tokens worth approximately $1.6 billion to the fund, along with Galaxy Trading. However, even these investments did not reach the ceiling.
The investment in TON became the largest in the fund's history. This fact demonstrates the maximum enthusiasm for the ecosystem.
Citation from Pantera Capital's report:
"I'm so excited about BTC and blockchain that it will change the world. It will have a huge positive impact on billions of people. And not in some distant, theoretical sense, but in concrete improvements for billions over the next decade.
In this community, I've met so many wonderful people - all united by a common goal. It's so uplifting.
Recently, I had lunch with Pavel Durov, the founder of Telegram. The purity of his convictions is captivating.
For us, it's an honor to collaborate with people with strong convictions. Pantera has made the largest investment in its history in TON.
The investments followed significant developments, including the integration of USDT, expanding the possibilities for Telegram users. The fund looks to the future of TON with optimism, committed to actively supporting its development.
This step demonstrates our long-term confidence in the potential for web3 development within digital communications.
Lately, we've been paying close attention to the TON ecosystem. We also believed in its future development, even when many underestimated it. Today, TON is our main bet, just like Pantera.
We also believe that this blockchain is still in its early stages of development. We're witnessing, perhaps, the largest changes in the history of the crypto industry.
Conclusion
On this note, we conclude our brief story about one of the key funds in the history of web3 - Pantera Capital. This venture capital giant made its first big bet on digital assets in the New World.
The fund now occupies a prestigious position among the titans of web3, with its vision helping to stay ahead of the competition. Projects that have received investments are forever etched in the history of the digital era.
The fund invests in the very future of web3 that many are waiting for. They support innovations that promise to change the world.
Pantera Capital is a vital driving force in the crypto industry.
We will continue to tell you about the importance of VC in web3, which should not be overlooked.
The golden age of web3 has not yet arrived; it's time to start making the right moves. Thank you for reaching the end and reading this article.
We tried to immerse you in the dark world of Pantera Capital. Share your impressions with us and tell us which fund you'd like to learn more about in the next article.
Don't forget to click here: @zeroxcholy & demidas_com
