Peter Johnson is a partner at Jump Capital that will help lead the firm’s now formalized crypto … [+] strategy.
For some firms, last year offered a sign that it was time to take crypto seriously; coin companies were doing well and investors started to get a bad case of FOMO. But for Chicago-based Jump Capital, 2020 validated the crypto strategy it had been deploying for six years. As the firm watched startups like portfolio company Bitso begin to see serious adoption — the Mexico City-based unicorn garnered more accounts on its coin trading platform than Mexico had standard brokerage accounts — Jump Capital decided that it was time to dive even deeper.
“Crypto is becoming real and the adoption was really accelerating,” Peter Johnson, a partner and one of the crypto strategy leads at Jump Capital, tells Forbes. “There was a huge opportunity we had — and were uniquely positioned to take advantage of — when we decided to really double down.” The nine-year-old firm, which is affiliated with Jump Trading, formalized its crypto strategy by dedicating 40% of its seventh and latest fund to that market, and building out a team to focus on the area. With four unicorns and four exits in the crypto space under its belt, the firm is getting ready to fire on all cylinders.
Jump Capital raised $350 million for its seventh fund, JCDP – 7, marking a nearly 50% increase from the $200 million it raised for its last vehicle in 2019, as originally reported in Midas Touch newsletter. The fund attracted 167 investors, according to Jump cofounder and partner Sach Chitnis, with many reupping from prior raises and multiple eager to gain access to emerging crypto companies. Jump typically targets Series A and B rounds in mainly U.S.-based companies — other than its crypto strategy which invests globally.
With the latest fundraise, the firm is looking to invest in crypto sectors like DeFi, Web 3.0, blockchain and financial applications. Partner and fellow crypto lead Saurabh Sharma says they also hope to continue investing in the tech and infrastructure companies needed to take crypto to the next level. “For the space to grow and be successful, a couple of things need to happen, and one is that the underlying technology needs to evolve to reach the scalability needed to serve to mass scale versus something very niche,” Sharma says. The firm has amassed a handful of successful crypto portfolio companies like BitPanda, the Austrian coin exchange last valued at $4 billion, and CoinDCX, a coin exchange based in India valued at $1.1 billion. The firm has made 30 investments in the crypto space this year alone.
Jump Capital attributes much of its success in crypto to the firm’s roots. Johnson says because the firm has always been focused on financial services and really tapped into the capital markets due to its affiliation with Jump Trading, they are better prepared to choose future successful companies. They look at the startups as financial companies, not just crypto entities. That knowledge base helps them cut through the market hype to find companies with real market potential and also allows Jump to offer stronger value-add to its portfolio, he says. Jump aims to offer guidance on how to build a customer facing product, include customer service tools or navigate regulations leaning on its fintech and financial services experiences.
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The firm has seen recent successes outside of crypto, too. Financial advisor tech portfolio company Personal Capital was recently acquired for $1 billion and M1 Finance, a robo advisor, just raised a new round of funding at a $1.3 billion valuation. The fund will continue to invest in fintech, IT and data infrastructure, software-as-a-service and the future of media. Jump will also stick with its strategy of going deep deep into micro markets and looks to tap into growing trends like the re-fragmentation of ecommerce and growth of vertical SaaS through this fund, Chitnis says. “There are a lot of things happening on both sides of the candle,” he adds, speaking of the firm’s recent momentum. “There are really good opportunities in a broad spectrum of areas that we target and we were also seeing the other side of it with portfolio companies succeeding with increased velocity.”