Sequoia may have written down its $214 million investment in the now-defunct global crypto exchange FTX which filed for bankruptcy at the end of last week. Paradigm appears to be out $278 million, according to a letter it sent to limited partners last week. And the Ontario Teachers’ Pension Plan plan had thrown in a $95 million investment into FTX’s global and U.S. businesses.
But also on the line are the venture capital or hedge funds that stored digital assets on what was, merely two weeks ago, one of the largest and most trusted exchanges in the crypto market.
Some 9.7% of crypto investor Multicoin Capital’s Bitcoin, Ethereum, U.S. dollars, and other assets from one of its funds are still frozen at FTX—even after the firm withdrew about 24% of its assets being held at the exchange early last week, according to a letter the investment firm sent to limited partners last week, obtained by Fortune. (The Block first reported Multicoin Capital’s investor letter.)
Genesis said last week that its derivatives business had $175 million locked in with FTX. Meanwhile, the crypto hedge fund Ikigai has all but thrown in the towel, as manager Travis Kling tweeted yesterday that a “large majority of the hedge fund’s total assets” were held at FTX, and that the fund had not been able to withdraw its holdings in time. “I lost my investors’ money after they put faith in me to manage risk and I am truly sorry for that. I have publicly endorsed FTX many times and I am truly sorry for that. I was wrong,” Kling wrote on Twitter. (Kling declined to speak with Fortune at this time.)
Yesterday I spoke with a crypto investor at a family office, who told me that one of the hedge funds they invested in had alerted them that 95% of its assets were with FTX—currently all frozen. (The investor declined to disclose the name of the hedge fund.)
Other investors in the space are exposed to the FTX freeze, though less directly. VC firm Hard Yaka doesn’t trade or have any tokens on FTX themselves, but the firm’s capital is exposed through portfolio companies like wallets and exchanges that use FTX to trade and hold deposits.
“Everybody’s frozen, everybody’s hosed,” investor and Hard Yaka cofounder Greg Kidd told Fortune. Hard Yaka does have a small equity investment in FTX US, and when asked whether he’d mark it to $0 as other firms have done, Kidd said he’s considering the investment “toast.” Kidd explained that they have exposure via the firm’s investments in portfolio companies that trade on FTX and have funds “tied up” with FTX. Kidd estimates less than 2% of AUM is in play with FTX between their small equity investment in FTX and more indirect exposure via portfolio companies and their activities. Kidd says that Hard Yaka doesn’t have external LPs, so “every stupid thing I do, it’s just on me.”
The wide reach of the fallout of Sam Bankman-Fried’s sprawling crypto empire is only beginning to be understood. On Friday, Bankman-Fried filed for Chapter 11 bankruptcy for all the 29 entities affiliated with FTX, including its U.S. exchange, trading company, and the venture arm run by Amy Wu (here’s a Fortune chart of all the investments tied to FTX and here’s a Financial Times chart of the company’s various business entities). Bankruptcy filings indicate that FTX owes somewhere between $10-50 billion to its customers—though it also says it has somewhere between $10-50 billion in assets as well, so who knows how it will ultimately pan out. You can look at FTX’s troublesome balance sheet yourself, which was published by the Financial Times this weekend.
Since the Binance deal fell apart and FTX filed for bankruptcy, crypto startups have come out of the woodwork, disclosing that their entire treasuries were held on the exchange. Late yesterday, crypto startup Exotic Markets, which had been backed by Alameda Research, published what it calls its “post-mortem.”
“Given the developments over the past week, we have low confidence in being able to recover any significant amount soon,” the Exotic Markets team wrote.
Paradigm told investors in a letter last week seen by Fortune that it was “actively partnering with founders to help” its portfolio companies that would be impacted by the FTX collapse.
We haven’t even touched on the impact of the token Serum, created by FTX and Alameda Research on the Solana blockchain…I’ll leave that to Matt Levine.
The good news is that FTX’s touch doesn’t seem to be all-encompassing. I reached out to 13 crypto-focused investment firms for this story, many of which said they had no assets at FTX, or at least not anymore.
“Our funds have never invested in FTX, its affiliated companies, or tokens,” says an a16z crypto spokeswoman. “We do not hold any assets in FTX wallets nor do we have any direct counterparty risk related to FTX.”
And, in true VC fashion, many firms are still rather optimistic.
“This technology is larger than any one company’s mistakes,” Paradigm wrote in its letter last week.
As we better understand how all this will evolve, Sequoia has taken down its now-viral, glowing profile of SBF, former SoftBank investor Marcelo Claure is posting lessons learned, and Fortune’s own Jeff John Roberts is contemplating our cover story from August.
In the meantime, I’m sure that several funds will be waiting in enthusiastic anticipation as the bankruptcy proceedings continue on, waiting to discover whether they will see their deposits again.
What SBF is saying…Sam Bankman-Fried still has a lot to say. In an interview with the New York Times, he explains his most recent (and very peculiar) Twitter thread and discusses the collapse of FTX and its related entities. What he doesn’t have much to say about are his current whereabouts, or how the exchange is handling customer funds. You can read the full story here.
40 under 40…In some slightly more light-hearted news, Fortune just published its annual 40 under 40 list, which includes a section just for venture capital and startups. You can visit the list here.
See you tomorrow,
Jessica Mathews
Twitter: @jessicakmathews
Email: jessica.mathews@fortune.com
Submit a deal for the Term Sheet newsletter here.
Correction: The headline and body of this article have been corrected to reflect that 9.7% of the total AUM of one of Multicoin Capital’s funds were held at FTX, not of the firm’s total AUM. Fortune had reached out to Multicoin Capital the afternoon before the column ran, but did not get a response until after publication. This story has also been updated to correct the mention that Hard Yaka is an investor in Race Capital’s fund exposed to FTX. A spokesperson for Hard Yaka confirmed prior to publication that Hard Yaka was an investor in said fund, but later informed Fortune they were mistaken.
Jackson Fordyce curated the deals section of today’s newsletter.
VENTURE DEALS
- Maven Clinic, a New York-based virtual clinic for women and family health, raised $90 million in Series E funding. General Catalyst led the round and was joined by investors including CVS Health Ventures, La Famiglia, Intermountain Ventures, Sequoia, Oak HC/FT, Icon Ventures, Dragoneer Investment Group, and Lux Capital.
- Contentstack, an Austin-based content management system, raised $80 million in Series C funding. Georgian and Insight Partners co-led the round and were joined by Illuminate Ventures.
- BeZero Carbon, a London, U.K.-based carbon ratings agency, raised $50 million in Series B funding. Quantum Energy Partners led the round and was joined by investors including EDF Pulse Ventures1, Hitachi Ventures2, Intercontinental Exchange, Molten Ventures, Norrsken VC, Illuminate Financial, Qima, and Contrarian Ventures.
- Bishop Fox, a Phoenix, Arizona-based cybersecurity platform and service provider, raised $46 million in funding. WestCap, NextEquity Partners, and Rockpool Capital invested in the round.
- Owl Labs, a Boston-based 360-degree video conferencing company, raised $25 million in Series C funding. HP Tech Ventures led the round and was joined by investors including Sourcenext, Matrix Partners, Spark Capital, and Playground Global.
- Red Points, a Barcelona, Spain-based digital revenue recovery platform, raised $20 million in funding. IRIS led the round and was joined by investors including Summit Partners and Eight Roads.
- RoadRunner Recycling, a Pittsburgh-based sustainable waste management company, raised $20 million in Series D extension funding led by Fifth Wall.
- Impact, a Los Angeles-based professional network for the entertainment industry, raised $15 million in Series B funding. Shasta Ventures led the round and was joined by investors including Benchmark, Skydance, Riviera Partners, and other angels.
- Quix, a London, U.K.-based data apps and services development platform, raised £11 million ($12.97 million) in Series A funding. MMC Ventures led the round and was joined by investors including Project A Ventures and Passion Capital.
- Primer, a San Francisco-based software company for B2B marketers, raised $12 million in Series A funding. Craft Ventures led the round and was joined by investors including Slack Fund, Salesforce Ventures, and other angels.
- Butter, a San Francisco-based food operating system developer, raised $9 million in Series A funding. Gradient Ventures led the round and was joined by investors including Uncommon Capital, Notation Capital, and angel investor Jack Altman.
- Acerta Analytics, a Kitchener, Canada-based manufacturing technology solutions company for automotive and off-highway vehicles, raised $7.82 million in Series B funding. BDC Capital's Industrial Innovation and Thrive Venture Fund co-led the round and were joined by investors including OMERS Ventures and StandUp Ventures.
- JOOPITER, a Los Angeles-based digital-first auction house and content platform, raised $6 million in seed funding led by Lightspeed Venture Partners.
- Zenlytic, a New York-based business intelligence tool for commerce, raised $5.4 million in seed funding. Bain Capital Ventures led the round and was joined by investors including Primary Venture Partners, Correlation Ventures, Company Ventures, Habitat Partners, and the Sequoia Scout Fund.
- Circle Labs, a San Francisco-based generative A.I. NPC platform, raised $4.2 million in seed funding from Lightspeed Venture Partners.
- Sesamy, a Stockholm, Sweden-based digital content platform, raised €3.3 million ($3.41 million) in funding. GP Bullhound led the round and was joined by investors including Co_Made, Tham Invest, Brofunds, and others.
- Aide Health, a London, U.K.-based digital health service provider, raised $1.2 million in pre-seed funding. Hambro Perks led the round and was joined by investors including Fuel Ventures, 1818 Ventures, and APX.
PRIVATE EQUITY
- Achieve Partners acquired MasteryPrep, a Baton Rouge, La.-based college readiness company. Financial terms were not disclosed.
- AE Industrial Partners acquired a majority stake in York Space Systems, a Denver-based provider of small satellites, satellite components, and turnkey mission operations. Financial terms were not disclosed.
- Blackford Capital acquired Starfire Direct, a Temecula, Calif.-based outdoor furniture and fireplace company. Financial terms were not disclosed.
- Monomoy Capital Partners acquired Nordic Hot Tubs, a Grand Rapids, Mich.-based hot tub developer. Financial terms were not disclosed.
- RoadSafe Traffic Systems, a Trilantic North America portfolio company, acquired Bay Area Barricade Service, a Concord, Calif.-based job site and traffic safety products provider. Financial terms were not disclosed.
EXITS
- RetailNext acquired Retail Performance, a Milton Keynes, U.K.-based people counting technology and behavioral insights provider, from Ipsos. Financial terms were not disclosed.
IPOS
- ADES International Holding, the Dubai-based oil and gas driller of Saudi Arabia’s wealth fund, is considering an initial public offering by the first half of next year, according to Bloomberg. A deal could value the company at $5 billion.
- Skyward Specialty Insurance Group, a Houston-based insurance provider, filed for an initial public offering.
FUNDS + FUNDS OF FUNDS
- Heartland Ventures, a Columbus, Ohio-based venture capital firm, raised $52 million for a fund focused on technology startups.
PEOPLE
- Clean Energy Ventures, a Boston-based venture capital firm, promoted Peter Sopher to investment partner and Ted Dillon to chief operating officer.
Crypto VC Multicoin Capital has assets frozen with FTX bankruptcy pending - Fortune
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