Top Venture Capitalists in Bitcoin Investing

For all of the headlines announcing bitcoin as the currency of the future, the new technology has had difficulty attracting major venture capital investment.
Known for its volatility and popularity amongst criminals, many venture capitalists steered clear of bitcoin investing. The tides are starting to turn, however, as major players in the technology world are starting to invest not only the cryptocurrency, but the technologies which make it work.

Record highs for bitcoin investing

2014 was a record high for bitcoin investing, reaching almost $350 million in venture capital. This year appears even more promising, with major venture capital investment occurring in the first quarter. Notably, Bitcoin startup 21 Inc. announced $166 in venture funding, setting a record for any startup in the digital-currency sector.
Although the precise nature the new startup remains a secret, Chief Executive and co-founder Matthew Pauker describes the development of software and hardware products “to drive the mainstream adoption of bitcoin.” Apparently this mission appealed to investors, many of whom are major players in the fintech sector.

Major venture capital firms

Some of the primary investors in 21 Inc.’s first round of funding are American venture-capital firms RRE Ventures, Data Collective, Khosla Ventures, and Andreessen Horowitz. Qualcomm, an American semiconductor company, also obtained a strategic stake in the company through its venture-capital unit.
Many of these investors come as no surprise. For example, Marc Andreessen, co-founder of Andreessen Horowitz, has long been a vocal supporter of the opportunities in bitcoin investing. Describing Bitcoin as “a sweeping vista of opportunity to reimagine how the financial system can and should work in the Internet era, and a catalyst to reshape that system in ways that are more powerful for individuals and businesses” in an article for the New York Times, Andreessen often takes to Twitter to reaffirm his support of bitcoin investing. As of January 2014, his venture capital firm had invested $50 million in this technology.
Chinese private equity firm Yuan Capital is also a leading investor in 21 Inc. This connection makes sense, as a recent Goldman Sachs report reveals that 80% of bitcoin volume is exchanged into and out of Chinese yuan, giving China bitcoin trading dominance in this currency.

Individual Venture Capitalists

Bitcoin investing has some very high-profile supporters. In addition to Marc Andreessen’s support, PayPal co-founders Peter Thiel and Max Levchin have been outspoken advocates of the cryptocurrency. In Thiel’s words, “PayPal had these goals of creating a new currency. We failed at that, and we just created a new payment system. I think Bitcoin has succeeded on the level of a new currency.”
Dropbox CEO Doug Houston, Zynga Inc. (NASDAQ:ZNGA) co-founder Mark Pincus, Expedia (NASDAQ:EXPE) CEO Dara Khosrowshahi and eBay Inc. (NASDAQ:EBAY) co-founder Jeff Skoll are also high-profile advocates of bitcoin investing. All of these individuals contributed to the record-breaking first round of financing for 21 Inc. Together, this group of big name investors represents the profound interest directed towards bitcoin investing at this time. Both venture-capital firms and individual investors recognize the potential of this market.
 

Securities Disclosure: I, Morag McGreevey, hold no direct investment interest in any company mentioned in this article.