After a couple of years of exploring the world of angel investments, Reverie, the crypto advisory firm, is now making a bold move. The firm is proudly introducing its flagship $20 million fund dedicated to investing in pre-seed and seed-stage crypto companies, as exclusively revealed by co-founder Larry Sukernik in an interview with TechCrunch.
This new fund, supported by two prominent U.S.-based institutional investors, whose names Sukernik has chosen to keep confidential, comes on the heels of two years of comparatively smaller investments in approximately 40 companies. These include notable names like Osmosis, a decentralized exchange, Sovereign Labs, a blockchain scaling-focused project, and Orca, a crypto marketplace with a focus on Solana. Reverie has also provided guidance to projects such as Compound, a money market provider, and dYdX, a trading platform. While Reverie intends to be a versatile crypto fund, its current focus lies in the realms of decentralized social media and security.
Although the fund’s investment philosophy may not be groundbreaking within the industry, it is poised to stand out among its peers because of its emphasis on favoring companies that are developing products with practical, non-speculative utility.
Sukernik confidently asserts, “We’ve come to realize over the years that you can’t measure success in terms of IQ points or technical prowess alone. Every iconic company in the world, whether it’s Apple, Facebook, or Google, started by creating products that resonated with people’s needs, not just through technical wizardry. Our mission is to establish a foundation that harks back to these fundamentals, focusing on the core elements that have historically propelled companies to greatness while fine-tuning the product-market fit.”
In an industry often preoccupied with technical innovation and speculative growth, Sukernik believes that building products that genuinely meet user demands is the wiser long-term strategy. Although this might appear self-evident, it’s worth noting that many crypto companies struggle to find genuine demand for their projects, even if those projects are unique and innovative.
Sukernik further argues that many venture capitalists in the crypto space are primarily using speculation as an entry point into the sector, often creating products akin to gambling experiences to attract and retain users. In contrast, Reverie’s approach rejects this premise, as Sukernik states, “There’s a much larger market for non-speculative products, for building things that people genuinely love.”
Sukernik is quick to clarify that he doesn’t consider all speculative projects as inherently negative, given that his firm has invested in some of the largest exchanges. However, Reverie aims to go beyond this realm and focus on founders who leverage the unique features of crypto to craft “special products” that can stand the test of time.
Regarding the fund’s size, Sukernik underscores that the deliberate decision to start with $20 million is strategic. He believes that deploying a larger fund, such as $100 million, can be challenging to do profitably. As he puts it, “Having more money than startups to invest in… that’s not the ideal situation. We don’t need an excessively large fund because there aren’t that many crypto startups out there. The $20 million is sufficient for us to validate our belief that hands-on investors can help build generational businesses.”
Sukernik and co-founder Derek Hsue both come from backgrounds at Digital Currency Group and Blockchain Capital, respectively, prior to launching Reverie. Their motivation was born out of dissatisfaction with the conventional approach to crypto venture capital when they embarked on this venture in 2021. Many VC firms manage portfolios of hundreds of companies with small teams, leaving little time for meaningful engagement with founders. Sukernik and Hsue were determined to change this dynamic.
Sukernik notes that most crypto investors are merely financial backers, lacking practical experience in running companies or providing relevant advice to founders. Reverie, on the other hand, is committed to a more hands-on approach.
“In the end,” Sukernik concludes, “this industry is characterized by its inherent unpredictability. I can’t predict exactly what Reverie will look like ten years from now, but one thing is certain: we will always be staunch supporters of early-stage founders, steadfast partners for the long term. Everything else will unfold in due time.”