Abu Dhabi fund will scour the globe for web3 opportunities.

Based in Abu Dhabi The announcement last week by Venom Ventures Fund that it is ready to invest $1 billion in web3 applications drew the eye, not least because it occurred after a dismal year for an industry still grieving from the collapse of FTX, which was one of its centerpieces until November.

However, Peter Knez, one half of Venom’s two-person leadership team, believes the timing couldn’t be better.

“When cash is short, it’s a terrific moment to begin something like this,” he told The Block in an interview. “You can show up with a lot of capital, and there are a lot of individuals — wonderful projects — who are struggling to get capital.”

For well-capitalized investors operating in a down market, it’s a well-worn line in any industry. Knez is familiar with them. He formerly served as co-chief investment officer of BlackRock’s fixed income group and previously worked at Lincoln Capital Management and Goldman Sachs.

HashKey Capital, for example, just announced a third $500 million fund. According to CEO Deng Chao, the fund was closed precisely because the industry had bottomed out. The distinction is that HashKey launched its first two funds towards the bottom of previous cryptocurrency cycles, in 2018 and 2020, respectively. It’s been around the block a few times.

Venom is a virtually unknown prospect, although one armed with a boatload of cash. How will the $1 billion be put to use?

Regional emphasis

Venom’s selection is extensive. According to its website, the company intends to run its venture capital operation alongside a startup incubator while also providing advising services to founders. It will also invest across the business spectrum, from $25,000-200,000 grants to equity investments ranging from seed-stage checks to late-stage money, according to Knez.

“Our view at Venom Ventures is that we will do everything from seed to Series A, B, C, and IPO,” he stated. “Assuming you have the funds, restricting yourself by stage rather than quality of opportunity doesn’t really make sense – if you can do the homework.”

Venom Ventures is a collaboration between Venom Foundation, a little-known Layer 1 blockchain licensed by the Abu Dhabi Global Market (ADGM) and geared to the demands of the Middle East, North Africa, and other growing economies, and Iceberg Capital, a locally authorized investment management organization.

The fund’s goal is to aid in the development of the web3 market in the United Arab Emirates (UAE), which has been a significant priority for the Middle Eastern country in recent years.

Dubai adopted a “metaverse plan” last year with the goal of adding $4 billion to its economy by 2027. It has issued licenses to cryptocurrency operators through the Virtual Assets Regulatory Authority (VARA), a designated regulatory entity.

“Part of the reason we’re in Abu Dhabi, the UAE in general, and Abu Dhabi in particular, is that they’re very, very accommodating to having a regulatory environment,” Knez explained.

He went on to say that, while Venom has a “regional concentration,” its ultimate goal is to invest globally. The fund will take into account all initiatives, not just those dedicated to developing on the Venom blockchain.

According to its website, Venom will focus on projects and protocols in payments, asset management, banking services, and GameFi. Knez, on the other hand, appears to be drawn to teams focused on encouraging institutional adoption.

He claimed he was “searching around for a blockchain that I could adopt in order to accelerate the digital transformation of asset management, particularly around things like tokenization” before joining Venom.

“In my opinion, the tokenization of securities — particularly less liquid ones like real estate — is perhaps the most significant innovation since the emergence of derivatives,” he said.

Money to spare

The UAE, which is rich in oil and gas, has yet to become a prominent participant in the cryptocurrency field. However, its recent statements about investing in the industry appear to have aroused the interest of several founders.

Binance CEO Changpeng Zhao is said to have been to Abu Dhabi in November 2022 to seek funding for the company’s billion-dollar industry recovery fund.

It is unclear where the UAE’s crypto-curious capital will come from. Knez stated that the majority of the $1 billion available to Venom comes from local, high-net-worth individuals.

“That’s how we got started. We’ll decide how much we want to scale it down the road strategically. “However, a billion bucks is more than enough to get started,” he added.

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