Dragonfly Capital eyes $500M for fourth crypto fund

San Francisco-based venture capital firm Dragonfly Capital plans to raise $500 million for its fourth crypto fund, according to a Sept. 17 Bloomberg report citing an unnamed source. 

The new fund has reportedly reached its halfway mark, with $250 million raised so far. The firm expects to complete the fundraising by the first quarter of 2025, according to the source. 

The fund will focus on early-stage investments in crypto and blockchain-based projects. Dragonfly has invested in over 100 digital-asset companies and projects, including Ethena, Andrena, Cosmos and Monad Labs. In 2022, the firm closed its third fund, worth $650 million.

Cointelegraph reached out to Dragonfly but did not receive an immediate response.

Dragonfly’s perspective on Ethereum

In a recent interview with Cointelegraph, Dragonfly’s partner Anirudh Pai discussed the company’s portfolio, stressing that Ethereum layer-2 scaling and liquidity fragmentation are some of the industry’s biggest opportunities. 

“Caldera, one of our portfolio companies, has done a great job here as they address the liquidity fragmentation issue that currently exists on Ethereum,” Pai said. “Their upcoming Metalayer will connect the universe of disparate rollups that exist on Ethereum today.”

Another Ethereum-based project in Dragonfly’s portfolio is MegaETH. The firm participated in the startup’s $20 million seed funding round along with Ethereum creator Vitalik Buterin and Consensys founder Joseph Lubin. The MegaETH smart contract platform promises to process 100,000 transactions per second —100 times faster than Ethereum’s native smart contract platform.

Related: Crypto venture capital funding surges to $633M in August rebound

VCs are back

The upcoming fund comes with a resurgence in venture capital activity in the crypto space, fueled by the January approval of Bitcoin exchange-traded funds (ETFs) in the United States. 

Venture firm Pantera Capital, for instance, is seeking to raise $1 billion for its new “all-in-one” fund, Pantera Fund V. This fund will focus on a broad spectrum of blockchain-based assets, marking one of the largest fundraising efforts in the space. 

Another noteworthy VC that has raised funds for crypto ventures is Paradigm. The company recently secured $850 million for its third fund, which will primarily focus on investing in early-stage blockchain projects. 

This new fund represents Paradigm’s largest capital raise since its $2.5 billion fund in 2021. Its portfolio includes previous investments in Coinbase, Uniswap and Optimism. 

Venture capital funding for crypto startups has jumped by 2.5% in the second quarter of 2024.

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