Startups across Australia and New Zealand now have an even bigger pool of cash to play for, after AirTree announced a suite of new funds will be thrown exclusively at Web3 startups.
AirTree, the prolific VC outfit best known for its early backing of startups like Canva, Linktree and Milkrun, announced a raft of new investment vehicles earlier the week totalling AU$700 million. Of that cash reserve, AU$50 million will be dedicated to projects working with Web3, crypto and DAO structures.
According to AirTree partner John Henderson, the fund emerges only as a natural next step for the firm, which he says has been tracking the crypto ecosystem since 2013.
“Until early 2020, we didn’t feel that crypto was investible for an institutional fund like ours. We experimented personally — snagged a few whitelists, sh1posted about VCs in discord chats, and got rekt plenty — the best way to learn is to do,” Henderson said.
“But with our fund hats on, our view was that crypto was still in the installation phase; the infrastructure was still being built out, with ‘real’ usage yet to come,” he said. “It wasn’t until DeFi Summer (May-Oct 2020) that we truly grokked the fact that crypto had transitioned into ‘real world’ use cases and adoption.”
The pitch is a long one: the firm will take less of a stake than the standard 5-10%, promise long lock-up periods, mobility, the usual recruitment stuff, regulatory assistance, and even a willingness to be more online and shoehorn slang like “HODLers”, even if it makes Henderson and his team sound like they were born yesterday.
As it stands, AirTree currently has about $1.3 billion in funds under management, and is engaged in more than 80 investments. Since it was founded in 2014, the firm has picked 23 companies that went on to breach valuations of $100 million. Another eight have achieved unicorn status.
Now, like a wave of other venture capitalists both locally and in the US, AirTree has its eyes on Web3.
At the end of last year, Australian crypto exchange Independent Reserve released a report that suggested as much as 28.8% of the Australian population now has direct exposure to crypto assets, up on the 18.4% of those who did in 2020.
It’s a much more bullish picture than drawn by others in the space. In October, comparison site Finder said the rate was more like 17.8% — still the third-highest in the world — while others have put it closer to 20%.
Adrian Przelozny, CEO at Independent Reserve, said that the findings show how crypto adoption in Australia is on track to match consumer appetite for share trading, which in March 2021 was recorded among close to half of the population.
At AirTree, the bullish sentiment is shared. Henderson said he and his colleagues are interested in Web3 projects because they take “the internet back to its decentralised roots”.
“Web3 is all about open, permissionless innovation. It runs on the currency of tokens — digitally native assets which confer property rights — giving builders and users the ability to ‘own’ a piece of the new internet,” Henderson said.
“We know from hard-won personal experience that this won’t be an up and to the right story. We’re ready for some to challenge us for being late and for others to challenge us for being far too early,” he said.
“We’re acutely aware that investing in Web3 is very different to Web 2.0 and intend to invest accordingly.”