Katie Haun’s Crypto VC Fund Raises $1.5 Billion After a16z Departure

(Bloomberg) -- Former federal prosecutor Katie Haun is proving she’s a force to be reckoned with in crypto investing after her new venture capital firm raised $1.5 billion. 

Haun Ventures on Tuesday announced a $500 million early-stage fund and another $1 billion for more mature startups focusing on web3, a more decentralized vision of the internet powered by blockchain technology, cryptocurrencies and nonfungible tokens.

The firm’s launch comes during a challenging time for the cryptocurrency industry. After a meteoritic surge that drove Bitcoin to an all-time high in early November, digital tokens have tumbled as the Federal Reserve has started to increase interest rates amid surging inflation. 

Still, Haun said in an interview that “it’s not a bad time to deploy a crypto fund” despite those challenges. “The extreme volatility is reminiscent of the first two crypto funds I deployed. What I learned from those funds is that great founders and great projects are going to be built in every cycle,” added Haun, who until recently was a partner at Andreessen Horowitz.

Indeed, the decline in the price of Bitcoin and other virtual currencies hasn’t stopped the flow of money into crypto-focused venture funds. Earlier this month, Electric Capital raised $1 billion for crypto-related investments. Bain Capital Ventures just launched a $560 million crypto fund. Those fund raises came after venture firms invested about $32 billion in crypto startups last year, according to PitchBook data.

Haun first learned about crypto as she pursued criminals using it while working at the Justice Department. Back in 2013, Haun helped the government buy crypto while working undercover as a federal prosecutor.

Autograph, OpenSea Deals

She went on to create the government’s first cryptocurrency task force, and led the Justice Department’s investigation into the Mt. Gox hack. She joined crypto exchange Coinbase Global Inc.’s board in 2017, where she met Chris Dixon, with whom she managed Andreessen Horowitz’s dedicated crypto funds. 

Haun was the first female general partner at Andreessen Horowitz when she joined in 2018 and quickly emerged as a power player in a space primarily dominated by men. 

“I did not fit the mold of the traditional venture investor,” she said in the interview. “I think we need more people who don’t fit the mold. I think web3 really needs those voices.” She left the firm in December, bringing a handful of employees with her to start Haun Ventures. 

Haun said her funds will be deployed over at least two years and invest in digital tokens, as well as equity across areas ranging from decentralized-finance applications to NFTs and so-called decentralized autonomous organizations, or DAOs. 

Haun Ventures so far has made fewer than 10 startup investments, including in celebrity-focused NFT company Autograph, NFT marketplace OpenSea, blockchain builder Aptos and crypto lender Moonwell. Haun has been a member of OpenSea’s board since 2021. She’s also joined the board of Autograph, which includes Apple Inc.’s services head Eddy Cue and football star Tom Brady. 

Adding Value

Haun said she wants to support crypto efforts with everything from hiring to governance. Some of her limited partners, including endowments, hospital systems and financial services companies, may want to be actively involved as well, she said.

“We’ll look to effectuate system change and be really a venture contributor,” she said.

Haun has included on her team political insiders, including Tomicah Tillemann, who can help startups build connections with officials in Washington -- something those in the early stages might struggle to do on their own.

“At the level where we are investing, the founders generally have their pick of capital. They have a lot of folks who are eager to put resources into their companies,” Tillemann, Haun Ventures’s global chief policy officer, said in an interview. “By virtue of that you need a very clear value proposition.” Tillemann previously worked as a senior adviser to former Secretaries of State Hillary Clinton and John Kerry.

Haun Ventures currently has a team of nine and plans to expand. The firm’s current roster includes Sam Rosenblum, who was previously a general partner at Polychain Capital, and Chris Lehane, who served on Airbnb’s executive management team. The firm’s advisers include Jared Cohen, who runs technology incubator Jigsaw, actress Mindy Kaling and attorney William Frentzen, one of Haun’s former mentors.

Lehane, who is Haun Ventures’s chief strategy officer, said in an interview that a lot of his job will focus on working with the different startups to develop strategies for making their products more mainstream and tackling regulatory and political issues early on.

Having a say in crypto regulation will only become more important in the coming months, as the White House, government agencies, and Capitol Hill grapple with how to regulate the asset class. President Joe Biden this month signed an executive order instructing federal agencies to study various aspects of the industry, such as a possible digital U.S. dollar, as he seeks a more coordinated approach to oversight.

“It’s a time of great change and great challenge in web3,” Haun said. “The landscape is changing a lot.”

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