Hack VC, a prominent crypto venture fund founded by blockchain veterans Alex Pack and Ed Roman, has already raised $77 million toward its third fund, with additional commitments over its initial goal of $80 million, according to Securities and Exchange Commission filings, internal documents, and an investor briefed on the matter, who spoke with Fortune on the condition of anonymity.
The new fund, focused on seed-stage investments, began investing capital in 2023 and has already generated a net return of 1.7 times the capital invested, according to documents shared with investors and viewed by Fortune, demonstrating bets that have rapidly grown in value amid an upturn in the crypto sector.
Hack VC declined to comment.
The rise of crypto funds
Megafunds like a16z crypto, Paradigm, and Haun Ventures dominated the last crypto cycle, raising billions of dollars during the heady days of 2021 and 2022 to back blockchain projects and buy up liquid tokens in cryptocurrencies such as Ethereum and Solana.
But the next layer of VCs also boasted impressive figures, with firms like Dragonfly and Electric Capital raising funds worth hundreds of millions of dollars. Hack VC, whose managing partner Pack previously cofounded Dragonfly and worked as an advisor at the crypto exchange Huobi, raised its first seed fund in 2021, closing at $206 million.
According to the investor documents, the first fund has so far lost money on its investments, having returned a net of 90% of the initial capital invested, but that didn’t stop Hack from raising a $150 million venture fund—focused on later-stage companies and tokens—that began investing in 2022 and has so far achieved a net return of 150%.
In an interview with Bloomberg from February, when Hack announced its $150 million second fund, Pack likened the crypto industry to the “mid-90s equivalent of where the internet was.” He said the focus of the second fund would be to back infrastructure projects.
According to the investor documents, the second fund has only deployed $75 million so far, or 50% of the total committed capital, but values its holdings at $150 million. The most profitable investments so far have been in crypto projects including io.net, a decentralized cloud computing network, and Elixir, a network to power crypto exchange liquidity.
While Bloomberg reported in March that Hack was targeting at least $100 million for its third fund, the investor who spoke with Fortune said that the fund target was $80 million—a significant decrease from Hack’s first seed fund, which closed north of $200 million.
Filings with the SEC in late August show that Hack began raising capital for the third fund in September 2023 and has already raised more than $77 million across two separate vehicles, including a feeder fund, which is a common structure for raising money outside the U.S.
According to the investor documents, the third fund has already achieved a return multiple higher than Hack’s first two funds, despite being active for less than two years, and is still raising capital, with $85 million committed.
A crowded field
Hack’s latest fund puts it among the crypto VCs with the largest war chests raised in 2024, with both ParaFi announcing a $120 million fund and Lemniscap announcing a $70 million fund in August. Fortune also reported last week that the blockchain fund of funds Accolade had raised more than $135 million across two new vehicles, with fundraising efforts ongoing. Keeping its megafund status, Paradigm announced a new $850 million fund in June, though it paled in comparison to its 2021 vintage of $2.5 billion.
Despite the new capital flowing into the sector, crypto remains at a crossroads, with prices for top assets like Bitcoin largely stagnant after rallying this year following the SEC’s approval of Bitcoin and Ethereum ETFs. Traditional financial institutions from BlackRock to Fidelity continue to invest in the space, though the lack of mainstream breakthroughs and regulatory uncertainty is hampering momentum.
Hack VC has still managed to differentiate itself in a crowded field of competitors with impressive deal flow and a variety of bets across different crypto sectors, from small DeFi protocols to larger companies like the new layer-1 blockchain Berachain.
The Hack VC investor who spoke with Fortune said the firm’s main advantage is its ability to invest in popular and often oversubscribed projects that are difficult for angel investors to enter.
The investor added that Hack VC has not yet begun distributions for its second fund, the $150 million venture-focused vehicle, because it has only called 50% of investors’ capital, but that they expect to begin receiving returns in a few years.
