Changing Focus for ABCDE Fund
The well-known investment fund ABCDE, which has a sector-specific focus on Web3 and blockchain, recently announced that it will halt any new investments. However, ABCDE still holds fast to its commitment to support existing projects. Despite its significant financial weight of $400 million, the firm stated it’s changing its growth strategy.
On the 19th of April, the co-founder of ABCDE and also the founder of the Huobi exchange, Du Jun, declared in an online post that the fund will stop to invest in new projects and the plans to raise capital for the second phase of this fund have been canceled.
Still, Jun reassured that their portfolio’s after-investment support and exit strategies will continue to be in place for the existing projects. This move is set to assure the firm’s dedication to entrepreneurs and liquidity providers, maintaining trust and stability despite this strategic shift.
A Shift Towards Strategic Investment
Jun also mentioned a personal shift in work focus, transitioning from financial investment in primary markets to a strategy-centered, deep incubation approach. The new focus will emphasize industry synergy and long-term value creation. This suggests a developing strategic vision directed more towards building and enhancing industrial collaborations and creating long-term strategic partnerships.
Previous Investment in Ethereum Layer-2 Solution
This significant shift comes three months after ABCDE made its latest investment in an Ethereum layer-2 (L2) solution – the Soon (Solana Optimistic Network). This project successfully raised $22 million through a non-fungible token sale to mark its mainnet launch, as reported on January 22.
Soon’s mainnet boasts of outperforming Solana in terms of speed and efficiency. It’s claimed to deliver average block times of 50 milliseconds compared to Solana’s 400 milliseconds, offering a significant performance upgrade.
Fund Allocation
ABCDE Fund has a diversified investment structure with 28% of its investments channeled into Bitcoin scaling technology, and another 16% allocated to Ethereum’s liquid staking derivatives finance (LSDFi) infrastructure. There is also an additional 12% that is invested in L2s, restaking, and smart contract platforms.
According to Cryptorank data, ABCDE has invested over $40 million worth of capital into more than 30 projects over the past three years. This investment strategy has maintained a globally leading internal rate of return (IRR), even in the current challenging market environment.
Reason for the Fundraising Shift
The decision to halt fundraising efforts by ABCDE came a month after the launch of a new incubator brand by the fund’s co-founder, named Vernal. The incubator is set to announce its shareholders, incubation rules for the first batch of projects in May, as well as its first investments.
Jun clarified that this shift in strategy neither points to financial constraints nor a lack of funds. Instead, it represents a fundamental concern for the current development trajectory of the cryptocurrency industry.
Future of Crypto and Blockchain Investment
Jun expressed his increasing disagreement with the existing market’s current ecological atmosphere. His concerns revolve around some primary funds hyping up their listed projects for short-term market value performance without addressing the value creation of the projects themselves.
As cryptocurrencies continue to raise competition against centralized tech companies, cryptocurrency projects need to embrace more collaborative and inclusive tokenomics. As Charles Hoskinson, Cardano Founder, recently noted at the Paris Blockchain Week, creating a global ecosystem is possible only through co-operative equilibrium.
Regardless of challenges and changing market strategies, it is clear that the exciting chapter in blockchain and cryptocurrency investment is far from over with firms like ABCDE and many others paving the future path.
