C1, a venture capital firm founded by former Coinbase lawyer and investor, is planning to invest in the cryptocurrency field in Australia. The firm has a fund size of $500 million and aims to purchase private stakes in cryptocurrency companies that were valued at least $300 million in the previous funding round.
This year, investment in the Web3 sector has shown a downward trend. According to data from CrunchBase, the total funding amount for Web3 projects in the third quarter reached $1.3 billion, a 72% decrease compared to the same period last year. However, data from DeFiLlama shows that the financing amount in November has shown a 1.3 times monthly growth rate, which may be due to the recovery of the cryptocurrency market since mid-October.
Against this backdrop, according to a report from the Australian Financial Review (AFR), C1, a venture capital firm founded by former Coinbase lawyer and investor, is actively seeking investment opportunities in the cryptocurrency field in Australia. The company plans to use its $500 million fund to purchase private stakes from investors at a discount below the previous valuation.
C1’s “bargain hunting” investment strategy aims to purchase private stakes in cryptocurrency companies that were valued at least $300 million in the previous funding round, with planned investments ranging from $20 million to $50 million. C1 proposes to purchase these shares at a discount of 50% to 80% compared to the previous valuation, believing that the current market conditions offer attractive valuations in the secondary market for digital assets. A financing presentation obtained by the Australian Financial Review stated:
C1 Targets Animoca Brands and Chainalysis
According to the report, C1’s target companies include Animoca Brands, a blockchain-based gaming company that was previously listed on the Australian Securities Exchange (ASX). Since delisting from ASX in 2020 and converting its stocks into cryptocurrency tokens, Animoca’s valuation has grown from $120 million to $7.8 billion. C1 has proposed to purchase Animoca’s shares at a price of $1.12, representing a 75% discount compared to the last funding round price of $4.5.
In addition, C1 is also interested in Chainalysis, a company that provides blockchain analysis services. Chainalysis is valued at $8.4 billion in 2022, and C1 states that there are approximately $30 million of secondary preferred shares available for purchase at around $15 per share, representing a 63% discount compared to the last funding round.
However, not all notable Australian companies are within C1’s scope of interest. For example, the highly recognized cryptocurrency game developer Immutable stated that C1 has not approached them or their investors to purchase secondary shares, and their last secondary share sale was conducted at a valuation of $2.5 billion by the US-based venture capital firm PrinceVille.
Despite promoting itself as a partner to assist venture capital investors in exiting investments, it seems that few local investors are willing to give up investments that have persisted in the cryptocurrency market during years of downturn.
According to a report by Coindesk, Dr. Najam Kidwai, co-founder and managing partner of C1, stated that C1 has not authorized the Australian Financial Review’s report and has not directly met with any of the aforementioned companies to date.
Animoca Brands and Chainalysis have not publicly responded to this report.