Amid a challenging climate for crypto venture capital, Accolade Partners has successfully raised $202 million for its third blockchain-focused fund, Accolade Blockchain III. The firm has strategically embraced a shift in market sentiment, leveraging declining investor enthusiasm as an opportunity to expand its presence in the blockchain ecosystem.
The fund, which closed in October, underscores Accolade’s commitment to supporting blockchain ventures despite industry volatility. “We believe in the decentralized business model. We believe it’s better, faster, cheaper,” said Managing Partner Atul Rustgi, highlighting the firm’s belief in blockchain as a transformative force in software development.
Strategic Investments and Secondary Deals
Accolade Blockchain III has already deployed over half of its capital, investing in venture funds managed by prominent players such as 1kx, Archetype, Framework, ParaFi, Portal Ventures, Reverie, and Varrock Ventures. Unlike crypto hedge funds that engage in liquid market trading, Accolade focuses on venture funds acquiring equity and tokens in blockchain startups, particularly those advancing decentralized finance, gaming, and stablecoins.
A key feature of the latest fund is an enhanced secondary strategy. Rustgi revealed that approximately 15% of the capital has been allocated to secondary deals, including acquiring stakes in existing venture funds and management companies. These investments were secured at discounts ranging from 30% to 70% below fair market value, which Rustgi described as “just beautiful secondaries.”
“This time, more than any fund we’ve ever had, we’ve been pretty aggressive there,” Rustgi noted, emphasizing the firm’s determination to seize undervalued opportunities in a subdued market.
Pioneering in Blockchain Venture Capital
Accolade has been a trailblazer in crypto venture capital, with its first foray dating back to 2018 through an investment in Andreessen Horowitz’s inaugural crypto fund. Today, the firm manages $1.3 billion across its blockchain-focused funds of funds, reflecting its sustained confidence in the sector.
While the broader crypto market has faced setbacks over the past two years, Accolade has capitalized on the downturn, positioning itself for long-term growth. The firm’s strategy aligns with its belief in the enduring potential of blockchain technologies, even as traditional venture markets remain subdued.
Rustgi highlighted the expansive nature of the market, which now boasts over 500 crypto-focused venture funds. “We saw an opportunity to buy low in a market where sentiment has been broadly negative,” he said, underscoring Accolade’s proactive approach to navigating challenging conditions.
A Vision for Blockchain’s Future
As blockchain technologies gain traction and adoption expands, Accolade’s forward-thinking strategy sets it apart in the venture capital space. By combining traditional equity investments with innovative secondary deals, the firm continues to build on its reputation as a leader in blockchain and crypto-focused funding.
