What is Multicoin Capital? All about their portfolio & investment thesis

In 2021, we see the rise of Venture Capitals (VCs) that can stir the crypto market with massive investment deals. To get the best support, crypto projects come at big VCs who have wide and strong community networks as well as followers.

Every VC in the crypto world has its own investment thesis whose strategy is valuable for crypto enthusiasts to follow. Alameda Research, Three Arrows Capital, Delphi Digital, and Spartan,... are all influential VCs that have invested in the fast-growing and leading crypto projects since 2017.

Multicoin Capital mainly focuses on projects that can satisfy the theses introduced by the VC. And in this article, we will walk you through the renowned Venture Capital named Multicoin Capital.

• Multicoin Capital Overview.
• The portfolio analysis.
• The performance of Multicoin Capital and the investment thesis.

What is Multicoin Capital?

Multicoin Capital is a US-based Venture Capital (VC) that has been selectively investing in potential blockchain-based startups. Despite having been around for a while since May 2017, the VC has invested in only a small number of crypto projects that are driven by the theses introduced by the board of Multicoin members.

The crypto fund is based in Austin, Newyork City, and Beijing. As a result, they can reach out for crypto projects around the world. This will enhance the mobility of Multicoin Capital, not only in the US which might limit the influence of the VC.

The second fund worth over $100M was released by Multicoin Capital in May 2021, focusing on new entrants in the crypto space. Furthermore, in October 2021, Multicoin Capital raised $250M for the third fund to supportively back new crypto startups that can introduce outstanding ideas having practical applications in the crypto space.

Besides investments, Multicoin Capital also often releases research articles, podcasts, and videos that are helpful for readers and investors. Through this, the VC can express the ideas behind every investment deal so that readers can understand the scope of Multicoin Capital. As a result, we can extract useful insights for our personal investments inspired by this funding capital.

Multicoin Capital Members

Kyle Samani

Ky Samani is the co-founder and managing partner of Multicoin Capital. He is described as a thesis-driven and diligent person since he used to work as an engineer. In the past, he used to found a health tech startup Pristine which was taken over by Upskill. His Twitter name even has the ".sol" suffix, meaning he strongly supports Solana

Tushar Jain

Tushar Jain is the co-founder and managing partner of Multicoin Capital. He has degrees in Finance and Political Science from NYU. Before founding Multicoin Capital, he found a health tech startup ePatientFinder which was then bought by Elligo Health Research. The two co-founders of Multicoin Capital are colleagues at NYU.

Mable Jiang

Mable Jiang is the leader of the investment team in China that focuses on business models implemented by blockchain technology. She has various experiences in managing investment strategy at Nirvana Capital and Citi Group.

Read more: Mable Jiang (Multicoin Capital) x Thanh Le (Coin98 Finance) Podcast

Multicoin Capital Portfolio

Portfolio Overview

Multicoin Capital has a selective portfolio as they are investing in not too many crypto projects. They believe in the technical endeavors that can reach further goals of creating long-term values and impactful applications to the world at scale.

The Multicoin Capital portfolio contains crypto projects that require lots of technical expertise and effort to realize the potential ideas. Most invested projects by Multicoin Capital are in the following categories:

• Infrastructure/Data: The Graph, Arweave, Helium, Dune Analytics, etc.
• Layer 1: Solana, Algorand, Near, Kadena, Dfinity, etc.
• Services to end-users: Coin98, OpenOcean, Math Wallet, MobileCoin, etc.
• Derivatives: Perpetual Protocol, MCDEX, etc.

Infrastructure

• Dune Analytics is one of the best data analytics platforms for the Ethereum blockchain. Multicoin Capital and other investors have funded over $10M in the seeding round and series A round. Dune Analytics is now expanding to cover data of all EVM blockchains. Furthermore, non-EVM blockchains’ data will be collected if they’re EVM compatible.
• The Graph was invested in by Multicoin Capital in a $2.5M seed round in 2019. The project is focused to be the query layer in the main components of the Web 3.0 stack introduced by Multicoin Capital.
• Arweave is another lego in the Web 3.0 stack of Multicoin Capital. In 2019, a total of $5M was invested in this decentralized-storage infrastructure, which was led by a16z, Multicoin Capital alongside other big VCs and investors.
• dfuse is solving the data infrastructure challenge for traditional developers. APIs connecting with databases across blockchains will be built to tackle the obstacle. Multicoin Capital along with other investors has co-led a $3.5M investment in dfuse. 
• Filebase raised $2M in a seed round led by Multicoin Capital with other investors. The platform allows blockchain developers to access and manage data across blockchain platforms.
• Helium has been in Multicoin Capital’s portfolio since 2019, and in series C, it raised $111M  in a token sale led by a16z, Multicoin Capital including other popular VCs.

⇒ Multicoin Capital has a strong and solid idealogy of investment as focusing on projects that build infrastructure for blockchain platforms. Most of the big investments for this thesis were made in 2019, showing the long-term view of Multicoin Capital for the Web 3.0 future and decentralized storage.

However, only Arweave (AR) and Helium (HNT) have released their tokens that have a market cap of $1.5B and $3B respectively. Other invested infrastructure projects of Multicoin Capital have not released any plan of issuing tokens yet, such as Dune Analytics.

Blockchain platforms

• Solana is undoubtedly the most successful investment deal of Multicoin Capital since the blockchain platforms have had exponential growth in 2021. Multicoin led a $20M investment series A round for this hyper-speed Solana blockchain in 2019.
• Algorand has been in Multicoin Capital’s portfolio since 2019. The blockchain platform facilitates the payment system of governments and organizations.
• Near Protocol raised $12M from Multicoin Capital and other partners to build a next-gen blockchain infrastructure for decentralized applications.
• Kadena raised $2.25M in the first round led by Multicoin Capital and other partners in 2018 to build a smart-contract blockchain platform. The platform aims to solve the trilemma of old-fashioned blockchain that are scalability, security, and speed.
• DFINITY has the ambition to create a decentralized “Internet Computer” to compete with AWS. In 2018, the idea was invested $102M in the funding round led by Multicoin Capital and other VCs.

⇒ Since 2019, Multicoin Capital has had a foreseen view of the demand for next-gen blockchain platforms that have more advanced technologies in comparison to existing ones at that time. Following the thesis for blockchain platforms, Multicoin Capital selected projects that can solve current problems.

Solana, Kadena, Near, DFINITY, Algorand,... have yielded massive returns on investment of Multicoin Capital. In particular, SOL and KDA prices remain stable after various big corrections of the crypto market.

Services to end-users

• Coin98 Labs has raised $1.25M in a seed round in 2021 led by Multicoin Capital and other VCs in order to build the second product Coin98 Exchange. Previously, Coin98 raised $11.25M in a strategic funding round led by Hashed and Spartan Group with Multicoin Capital to build cross-chain DeFi products.
• MathWallet in 2020 was invested $7.8M in a Series A funding round led by Multicoin Capital. As its name, MathWallet focuses on building a significant wallet product that supports more than 50 blockchains.
• OpenOcean is granted a $2M fund from Binance Labs, Multicoin Capital, and other investors to build an exchange aggregator. The aggregator ecosystem is expanding further to centralized and decentralized exchanges.

⇒ In the bullish trend of crypto in 2020-2021, Multicoin Capital has spotted that crypto services are going into mass adoption with a large number of new users coming into the crypto space. As the market is growing up, the number of non-custodial wallets will rise. As a result, Multicoin Capital has invested in 3 crypto projects that build crypto wallets for end users.

Derivatives and trading platforms

• MCDEX has raised $7M in a funding round led by Alameda Research, Delphi Ventures, Multicoin Capital, and other big VCs. The platform aims to build an AMM decentralized perpetual swap protocol.
• Perpetual Protocol has raised $1.8M in a strategic funding round led by Multicoin Capital in 2020. The platform uses the vAMM design to build a decentralized exchange for derivatives. Some might say Perpetual Protocol is the combination of Uniswap and BitMex.
• Serum is the Solana-based project that receives the main focus of the $100M DeFi Venture fund given by Multicoin Capital. Serum is a decentralized exchange running with a central limit order book (CLOB) on Solana. The Serum platform has a very big ambition to concentrate all liquidity of projects built on top of Serum.

⇒ Multicoin Capital is driven by the thesis of co-founders who have an engineering background. As a result, most investments of this venture capital are in platform and infrastructure categories that require in-depth technical expertise. 

Investing in trading platforms and derivatives markets can give Multicoin Capital an extremely high return if one of the investments makes it to the top of the market. Serum is now dominating the DEX sector in Solana as most Solana-based DEXs are connecting to Serum.

In which Ecosystem Multicoin Capital Invested?

In 2017-2020, Multicoin Capital mostly invested in blockchain platforms and infrastructure projects that are the backbone of the crypto ecosystem. In 2021, those projects are receiving lots of funds and capital from investors, indicating that the thesis of Multicoin Capital is suitable for the time being. 

In the period of 2021, Multicoin Capital has a strong focus on Solana-based projects as the blockchain platform has been growing up exponentially. After a huge bet on Solana, Multicoin Capital is gradually shifting its focus on projects inside Solana. This might be another bet of Multicoin Capital on the future of the Solana ecosystem.

Read more: Solana Scosystem Overview

Projects in the Solana ecosystem

• Saber is a Solana-based decentralized exchange for stablecoins. The platform raised $7.7M from investors including Multicoin Capital in Jul 2021.
• UXD Protocol raised $3M in the seed round led by Multicoin Capital along with Alameda Research and other investors in 2021. The protocol aims to solve the stablecoin trilemma (Price stable, Capital Efficient, Decentralized) by creating fungible, USD-pegged stablecoins called UXD.
• Grape Network raised $1.2M in the seed funding round led by Multicoin Capital to build a Solana-based DAO infrastructure protocol.
• Drift Protocol is a Solana-based derivatives market that was invested $3.8M in financing led by Multicoin Capital. In Dec 2021, Drift has released the mainnet which supports 4 trading pairs and adds more in the future.

⇒ Multicoin Capital invests in projects with strong upside potential in the Solana ecosystem. With the theses of technology and innovative ideas, the VC is distributing the second fund worth $100M to some strongly believed projects on Solana.

Saber (SBR) and Grape Network (GRAPE) are underperforming in terms of tokenomics. The token prices are going down that might make investors unhappy in the short term. UXD Protocol (UXP) has just launched a public sale like Mango, Aurory, etc. Drift Protocol is performing well with about 2000 DAU on the platform.

Should we follow Multicoin Capital’s portfolio?

Performance

Multicoin Capital has been around since 2017 so they started to invest in this market at the early stage. As the bullish trend in 2021, Multicoin Capital has a well-perform portfolio (today prices with the prices at the beginning of 2021) as follows:

• Solana (SOL): 9000%.
• Terra (LUNA): 9000%.
• Kadena (KDA): 8000%.
• Helium (HNT): 2000%.
• Livepeer (LPT): 2500%.
• Nervos Network (CKB): 450%.

However, Multicoin Capital also invests in projects that have not released their tokens yet such as Dune Analytics. Most projects that were invested in by Multicoin Capital listed their project tokens on the largest CEXs such as Coinbase, Binance, etc.

Investment Thesis

Multicoin Capital’s investment thesis is inspired by technology and fundamental basis which have a huge potential in the upcoming years. The Multicoin Capital portfolio is now being included in more trending niches such as Web3 and NFTs.

• Solve current problems with advanced technology: Solana is a strong investment example of Multicoin Capital as the blockchain platform has solutions for old-fashioned blockchain platforms. 
• Follow the growth of the crypto world: At the beginning of the crypto space, Multicoin Capital understands the importance of building infrastructure. As time goes on, they are adding more projects inside the blockchain ecosystem as well as in other categories.
• Fund and support: Besides funding, Multicoin Capital also actively engages in supporting projects with a strong network effect of partners and doing advisory activities for projects.
• Thesis-driven: Multicoin Capital introduced 3 theses on the website in 2019 and has been sticking to them since then.

Multicoin Capital in 2022

The second fund and the third fund of Multicoin Capital have a total value of $250M which will be invested in crypto projects in the following years. The focus will shift from technical and market infrastructure to Open Finance, Web3, NFTs, and Digital Collectibles in the next coming years.

Conclusion

As Multicoin Capital is explained in this article, we can conclude some quick takes that might express the overall thesis of this venture capital.

• Multicoin Capital team has a strong background of technical as well as entrepreneurial experience. 
• The successful investments of Multicoin Capital are blockchain platforms (Solana, Terra, Near Protocol,...) and infrastructure projects (Dune Analytics, Filebase, The Graph,...). 
• Driven by the thesis, Multicoin Capital has an ahead view of the present and future state of the crypto world. Then they will be able to front-run the market to gain the best success.
• In 2021-2022, Open Finance, Web3, and NFTs are the category targets of Multicoin Capital. They have a total fund of $250M to invest in the upcoming projects.

And that is all you need to know about venture capital Multicoin Capital. I hope you’ve gained the overview and our insights will be useful to you. There will be more articles for other VCs. Stay tuned!

If you want to know further about Multicoin Capital, please feel free to leave a comment below.