Hack VC, a major crypto venture capital fund founded by blockchain veterans Alex Pack and Ed Roman, has already raised $77 million for its third fund, with additional commitments coming in above its initial $80 million target, according to Securities and Exchange Commission filings, internal documents and an investor briefed on the matter who spoke to Fortune under cover of anonymity.
The new fund, focused on seed-stage investments, began investing capital in 2023 and has already generated a net return of 1.7 times invested capital, according to documents shared with investors and viewed by Fortunedemonstrating bets that have rapidly increased in value amid a crypto sector recovery.
Hack VC declined to comment.
The rise of crypto funds
Megafunds like a16z crypto, Paradigm, and Haun Ventures dominated the latest crypto cycle, raising billions of dollars during the heady days of 2021 and 2022 to back blockchain projects and buy liquid tokens in cryptocurrencies like Ethereum and Solana.
But venture capitalists have also posted impressive numbers, with firms like Dragonfly and Electric Capital raising hundreds of millions of dollars in funding. Hack VC, where managing partner Pack previously co-founded Dragonfly and worked as an advisor to cryptocurrency exchange Huobi, raised its first seed fund in 2021, closing at $206 million.
According to investor documents, the first fund has so far lost money on its investments, having returned a net return of 90% of the initial capital invested, but that hasn’t stopped Hack from raising a $150 million venture fund – focused on later-stage companies and tokens – which began investing in 2022 and has so far achieved a net return of 150%.
In an interview with Bloomberg in February, when Hack announced its second $150 million fund, Pack compared the cryptocurrency industry to “the equivalent of the internet in the mid-90s.” He said the focus of the second fund would be on supporting infrastructure projects.
According to investor documents, the second fund has so far deployed just $75 million, or 50% of the total committed capital, but values its holdings at $150 million. The most profitable investments so far have been in cryptocurrency projects, including io.net, a decentralized cloud computing network, and Elixir, a network designed to power liquidity for cryptocurrency exchanges.
While Bloomberg reported in March that Hack was targeting at least $100 million for its third fund, the investor who spoke with Fortune said the fund’s target is $80 million, down significantly from Hack’s first seed fund, which closed at more than $200 million.
SEC filings in late August show that Hack began raising capital for the third fund in September 2023 and has already raised more than $77 million across two separate vehicles, including a feeder fund, which is a common structure for raising money outside the United States.
According to investor documents, the third fund has already achieved a higher return multiple than Hack’s first two funds, despite being active for less than two years, and continues to raise capital, with $85 million committed.
A crowded field
Hack’s latest fund places it among the crypto VCs with the largest war funds raised in 2024, with ParaFi announcing a $120 million fund and Lemniscap announcing a $70 million fund in August. Fortune Last week, blockchain fund-of-funds Accolade also reported raising over $135 million across two new vehicles, with fundraising efforts underway. Maintaining its megafund status, Paradigm announced a new $850 million fund in June, though it pales in comparison to its 2021 vintage of $2.5 billion.
Despite the influx of new capital into the space, cryptocurrencies remain at a crossroads, with prices of major assets like Bitcoin largely stagnant after surging this year following the SEC’s approval of Bitcoin and Ethereum ETFs. Traditional financial institutions from BlackRock to Fidelity continue to invest in the space, though a lack of major breakthroughs and regulatory uncertainty are holding back momentum.
Hack VC has nonetheless managed to differentiate itself in a crowded field of competitors with impressive deal flow and a variety of bets across different crypto sectors, from small DeFi protocols to large enterprises like the new Layer 1 blockchain Berachain.
The Hack VC investor who spoke with Fortune said the company’s main advantage is its ability to invest in popular and often oversubscribed projects that are difficult for angel investors to get into.
The investor added that Hack VC has not yet begun distributions for its second fund, the $150 million venture-focused vehicle, as it has only called 50% of investors’ capital, but that they expect to start receiving returns in a few years.
