Exclusive: Hong Kong crypto venture capital firm CMCC Global launches US$100 million fund amid industry slump

CMCC Global, a cryptocurrency-focused venture capital firm based in Hong Kong, has raised US$100 million for a new fund aimed at backing Asian blockchain start-ups amid Hong Kong’s virtual asset push, defying a funding crunch in the crypto sector set off by a series of collapses last year.

The firm’s new Titan Fund completed its first round of US$100 million on Wednesday, with more than 30 investors participating, CMCC Global co-founder Martin Baumann told the South China Morning Post in an interview.

These include blockchain company Block.one, Hong Kong tycoon Richard Li’s Pacific Century Group, Winklevoss Capital, Jebsen Capital and Animoca Brands founder Yat Siu.

The Titan Fund, CMCC Global’s fourth fund, will offer equity investments in early-stage blockchain start-ups with a heavy focus on Hong Kong, Baumann said. Among five investments it has already made, two are Hong Kong companies, he added.

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The fund was a leading investor in Mocaverse, a new non-fungible token (NFT) project launched last December by Hong Kong blockchain unicorn Animoca Brands that raised US$20 million in September, and in August it participated in a pre-seed funding round for Terminal 3, a Hong Kong-based Web3 data infrastructure start-up.

But Titan Fund does not have a strict mandate for how much capital will be allocated to Hong Kong companies, and aims to invest in “the best entrepreneurs globally”, Baumann said. However, CMCC Global, which was established in Hong Kong in 2016, has a “natural attachment” to the city and believes it offers “a lot of potential” in fintech innovation, he added.

“If Hong Kong continues on its route of embracing Web3, there will naturally be more and more entrepreneurs starting companies in that space,” Baumann said. “And we can be their first capital.”

“Ever since Hong Kong embraced this [sector], we see a steady increase [of] new companies aiming to settle down here and companies relocating to Hong Kong,” said Baumann.

Yen Shiau Sin, managing partner of Titan Fund, added that a crackdown on crypto in the US means that Asian firms are beneficiaries, as “projects are thinking of coming here talking to us”.

Still, fundraising in the current environment is “super hard”, Baumann said. CMCC Global’s new fund came as investment in the crypto sector dried up amid a prolonged market slump that followed a series of blow-ups last year, including the bankrupt exchange FTX.

In the second quarter of this year, the value of global venture capital investments in crypto firms declined 70.9 per cent year on year, while the number of deals saw a 54.5 per cent drop, according to market data provider PitchBook.

Titan Fund will focus its investments in three areas; blockchain infrastructure, consumer applications such as gaming and NFTs, and financial services such as exchanges, wallets, and lending and borrowing platforms, said Yen.

But exchanges will not be the fund’s “primary focus”, according to Baumann.

“There’s enough exchanges in the world, I think, and they’re well capitalised,” he said. “It’s very difficult for new incumbents to enter with what’s happening in Hong Kong, with the most recent blow-up.”