Crypto startup Ledger teams up with Cathay Innovation to launch $110 million industry fund

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Katai Innovation hopes to secure itself in a new investment partnership with a company that protects crypto assets.

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$1.5 billion venture capital company enters the crypto market with a new $110 million fund dedicated to the sector with which it will work in conjunction. LedgerA French digital asset security startup, Cathay co-founder Dennis Barrier told TechCrunch.

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The fund is similar to a corporate venture capital firm in that it is partly company-led, but Ledger differs from the typical corporate venture capital because it is a Series C startup rather than a large conglomerate looking to bet on nascent firms. Ledger Cathay Capital, as the new fund is called, will invest in seed funds of Series A companies in a wide variety of segments of the cryptocurrency landscape, including emerging DeFi, security, and infrastructure, Barrier said.

Denis Barrier, co-founder of Cathay Innovation

Denis Barrier, co-founder of Cathay Innovation Image credits: Katai Innovation

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The Ledger’s claim to fame is a USB-like device that confirms crypto transactions, allowing users to retain physical control of their personal wallet keys rather than relying on their memory for access. Startup’s latest fundraiser brought in $427 million for the company, its CEO Pascal Gauthier told TechCrunch, up from the $380 million reported by TechCrunch at the time, due to new commitments that were made afterwards. According to Gauthier, Cathay Innovation was the lead investor in the round, which valued Ledger at $1.5 billion.

Cathay, Ledger’s backer for the past five years, asked Ledger to team up with them to raise new capital for the crypto fund rather than go it alone because the VC firm wanted “the best of both worlds,” Barrier explained. He wanted the fund to be able to move quickly like a traditional venture capital while still providing long-term support and expertise to portfolio companies like a corporate venture arm, Barrier explained. He added that it took about a year for the fund to become an official vehicle after the two companies started talking about the strategy.

While launching a venture arm for a startup is somewhat unconventional, it is far more common in crypto – Uniswap, FTX, and Binance are three prime examples. Ledger itself, which Gauthier says has been profitable for years, has recently invested in other startups. One of them was RTFKT, an NFT company that Nike acquired last December, Gauthier said, although he did not name any of Ledger’s other bets in the space.

“We invested from the balance sheet because the pressure from our partners was too much, so we had to start somewhere. Now we are structuring what we do very naturally and very quickly… but we have been in the market for a while now,” Gauthier said.

Cathay, a global venture capital firm best known for betting on tech startups including Pinduoduo and Chime through generalist funds, has teamed up with companies in the past to delve deeper into the sector. He runs smart energy fund together with Total Energy and Hubei, as well as mobility fund along with Valeo, both of which operate similar models to Ledger Cathay Capital, according to Barrier.

While Ledger itself is best known for its hardware, Gauthier said the foundation has broad powers.

“Anyone who can build on top [Ledger] The platform – and this, in fact, any market participant – has the ability to interact with us. [through the fund]”Gaultier said.

He added that the fund has yet to deploy any capital, noting that it closed just recently. Bpifrance, the country’s state-owned investment bank, is one of the investors in the new fund, according to an official statement from Ledger Cathay Capital.

Due to the recent downturn in the cryptocurrency market, I asked Gauthier if he was concerned about the timing of the launch of this fund and if it was too late to exploit the possibilities of cryptocurrencies. In response, he noted that Ledger was founded in 2014 and has previously experienced downturns, adding that he remains optimistic about the potential of the market, in part due to the developer activity he has seen on the Ledger platform.

Gauthier believes this will be a key differentiator for Ledger Cathay Capital as Ledger has a global view of new dApps and blockchains coming to market from its own users – the company claims it secures 20% of the world’s cryptocurrencies. This is one of the reasons why Gauthier said he is not worried about cryptocurrency prices right now, in addition to the benefits he says come from being a global investor headquartered outside of the United States.

“When markets get tough, we are at our best,” Gauthier said.

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