Pantera's Second Venture Fund Returns Fail to Match Its First

The venture funds Pantera Capital raised in August 2013 and August 2014 have returned 46.5% and 15.9% from their inception to September 2019, respectively, according to firm data obtained by CoinDesk.

The returns underperform index funds most retail investors can buy into and outperform venture funds limited to smaller pools of accredited investors.

Up to September 2019, the S&P 500 index, for example, has returned, adjusted for inflation, 62.6% over the first Pantera venture fund and 40.8% over the second Pantera venture fund.

The closely aged funds' returns slid as the second fund ramped up investments in 36 companies and counting, in diverse companies building mostly supplemental cryptocurrency products - a more than fourfold rise from the first fund's eight companies dedicated to cryptocurrency services catering to the bare essentials.

While the first Pantera venture fund has invested in digital asset developers like Ripple Labs and basic exchanges and payment processors like Bitstamp, Xapo, Circle and Ripio, the second venture fund has invested in exchanges with peripheral financial instruments like cryptocurrency futures platform ErisX, scattered cryptocurrency platforms that include Shapeshift, Abra, Brave, Civic, Starkware, BitOasis and BitPesa, and even another cryptocurrency fund manager, Polychain Capital.

If strategy and volume is any indication, the third Pantera venture fund has mirrored the approach of the second fund, putting more money into ErisX, Starkware and at least 16 in-the-weeds companies.

All companies considered by last September, Pantera Capital grew the value of capital in the first venture fund from $12 million to $92 million, in the second venture fund from $26 million to $41 million.

In the first fund, the venture data says Pantera Capital in 2018 took away $50.5 million from a $9.2 million investment and 6% stake in Bitstamp when 80% of the bitcoin exchange sold to Belgian investment holding company NXMH. Pantera Capital also stands to make $22.3 million from the remaining 20% Bitstamp equity should it be bought, making it one of the fund's more lucrative investments.

Less remarkable than the Bitstamp exit, the second Pantera venture fund drew in one of its notable exits in Korbit - $6 million from a $603,205 investment - when the Korean digital currency exchange was acquired in 2017 by Korean gaming developer NXC Corp.Unlike the second fund, the first Pantera venture fund has not had a company end in a bankruptcy or a closure that did not involve a buy-out.

At least two cryptocurrency apps backed by the second fund have shut down, bringing its value down along with them: Basis, a $133 million-funded coin that planned to back itself with fiat currency, and TruStory, a crowd-sourced crypto-offering fact-checking site that raised $3.3 million.