Crypto-focused VC firm Framework Ventures raised $400M

Web3-focused VC firm Framework Ventures announced on Tuesday that it raised $400 million for its third fund, which the general partners say will be focused on crypto-enabled gaming, content and commerce.

Why it matters: While more traditional venture money pours into the web3 space, Framework and other crypto-native firms say they have an advantage in winning deals — particularly at the earliest stages.

How it works: In 2020, the firm launched Framework Labs — a 20-person team built to support the firm’s DeFi and infrastructure investments.

• As a result, general partner Vance Spencer tells Axios the firm can help portfolio companies get off the ground and support them once their protocol is live.
• He emphasized that the team has playbooks for setting up and running a DAO, providing security around your smart contracts, and setting up and running token economics, among other things.
• “Once you launch your protocol,” Spencer says, “we’ll be your largest customer, we’ll be the market maker, one of the larger traders on your spot exchange or one of the borrowers on your money market.”

Flashback: Framework Ventures was founded by general partners Michael Anderson and Vance Spencer in 2019 with an initial $14 million fund.

• But with investments in companies like Chainlink, Synthetix, and Aave, the firm raised a $100 million second fund in 2021 and now has $1.4 billion in assets under management.

Details: Framework invests at the seed and pre-seed stage of the web3 ecosystem, making both equity and token investments. It seeks to lead or co-lead those rounds.

• “We target about 5% ownership of the given network that’s launching, because we feel that’s a good way to be material in terms of the economics, but not so overbearing that it calls into question potential decentralization,” says Anderson, speaking with Ryan.

State of play: There’s no shortage of venture money entering the crypto space, with firms like Sequoia, Bessemer and others announcing dedicated funds or allocations focused on web3 investments.

• But Spencer says: “We’re competing and we’re winning at the earliest stages. There’s a specific market that wants to work with us and it’s largely due to the fact that we’re crypto native and on-chain in a very big way.”