Crypto VC Hypersphere opens $130 million liquid fund, seeks $75 million for new VC fund

Hypersphere Ventures, a crypto investment firm, has opened its recently launched liquid fund that has already gathered $130 million in assets under management (AUM) to outside investors.

The liquid fund, dubbed Atlas, is a multi-manager fund aiming to provide 40% returns from various trading strategies, including DeFi, quantitative, market making and arbitrage, Hypersphere said Wednesday. The fund also offers co-investments into private treasury rounds, for example, in Toncoin ( TON +0.59% ), Hypersphere founder Jack Platts told The Block. "These co-investments are segregated in private share classes that existing investors can opt-in to," Platts said.

Atlas was first launched in January in stealth mode with an initial investment of $100 million from Hypersphere's balance sheet, Platts said. The fund has since grown to $130 million in AUM and is now open to outside investors.

Platts said that Atlas is an open-ended liquid fund, so it doesn't have a target amount to raise from outside investors. However, he added that the capacity of the fund's strategy is well over $300 million.

Investors can prefer liquid funds because they may generate returns faster than traditional venture capital funds. Liquid funds are easier to trade, whereas venture funds hold more illiquid assets and are subject to lock-up periods and vesting schedules. According to a recent Galaxy Digital report , the estimated total AUM of liquid crypto hedge funds exceeded $21 billion at the end of Q1 2024, marking the first time since October 2022.

"We're crypto natives and we designed the Atlas fund for ourselves," Platts said. "Atlas answers the question allocators have been asking: how do you design an investment product that captures crypto's eye-watering returns with less gut-wrenching volatility?"

Hypersphere also seeks $75 million for new VC fund

In addition to Atlas, Hypersphere is also set to raise a new venture fund to invest in early-stage crypto projects. The firm is eyeing $75 million for the VC fund, Platts told The Block, adding that the fundraising will start in the fall.

Atlas is Hypersphere's fourth fund since Platts launched the firm in 2020. Hypersphere says its first two funds generated over $600 million in profits, after fees, from an initial investment of less than $50 million. "Our first fund was venture strategy and the second was a hedge fund liquid strategy," Platts said. "Our third fund is a $60 million venture fund. We are still actively investing from the third fund that is up 150% net so far."

Hypersphere recently hired executives from high-frequency trading firm Millennium and hedge fund Bridgewater to implement risk and other monitoring controls for its funds. Michael Friedlander, formerly of Millennium, recently joined Hypersphere as chief operating officer and chief risk officer to help launch Atlas, Platts said. Meanwhile, Luke Mazey was recently promoted to chief financial officer, having previously worked at Bridgewater, Platts added.

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