Venture capital firm Northzone launches a €1 billion web3 fund

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Northzone is the latest venture capital firm to enter the web3 ecosystem and has established a fund to fund projects in space.

London-based venture capital firm Northzone announced on Tuesday 13 September that it has launched a €1 billion fund. The fund will focus on investments in cryptocurrency and fintech startups.

Northzone has been around since 1996 and is a generalist investor. The VC firm has invested in numerous tech projects over the years, including fintech firms such as open banking specialist TrueLayer, buy now pay later giant Klarna and music streaming platform Spotify.

The company has already invested in a number of crypto firms such as Magic Labs, web3 privacy company Sunscreen and DeFi protocol Gro. Northzone is now looking to dig deeper into the crypto ecosystem with the launch of its new fund.

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Wendy Xiao Schadeck, a partner at Northzone, described web3 as a critical sector for the company. She said that Northzone started its crypto investment journey in July 2018, during the crypto winter. She added;

“Web3 and web2 two are likely to converge over the life of this fund cycle. For example, some of the web2 fintech companies in our last fund have launched tokens and some of our gaming companies have decided to base their follow-up rounds on web3 VCs – so it’s very hard to say exactly where the demarcation will be.

The VC firm said it has the necessary infrastructure to support through both equity investments and token sales. Northzone added that it has previously participated in token staking.

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Xiao further suggested that under the right circumstances, the venture capital firm would be open to investing in a decentralized autonomous organization (DAO). The VC firm has yet to invest in non-replaceable tokens (NFTs), but the company said this latest fund could change all that. Xiao said;

“We are considering new ways of investing that are aligned with what we do. But it’s not at a point where we say we’re going to spend some of the funding on buying NFTs or anything like that. So far, we have not discovered that NFTs themselves are an investment case that meets our risk criteria.”

Xiao added that the challenges within the DeFi ecosystem would not stop Northzone from investing further in the space. She concluded that;

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“We would discuss and evaluate with our LPs to see if the time is right. I think most likely we will continue to invest in web3 companies from our core funds and if they decide to launch tokens we will hold them – we are not restricted that way at all.