Blockchain startup Blockstack has announced the creation of a $25-million fund that will look to invest in the decentralized internet through combining an initial coin offering with more traditional venture capital funding.
The fund will raise money from existing venture capital investors, rather than retail investors, in a change of tone from the spate of ICOs that have recently launched around blockchain startups.
Dubbed the Blockstack Signature Fund, the fund will tailor investments toward decentralized app builders, in anticipation of increasing development volumes for the blockchain ecosystem.
By combining the new ICO model with traditional VC funding, the company is aiming to establish a new funding model for the space, without encountering the problems associated with past ICOs.
Blockstack’s co-founder, Muneeb Ali, said the fund would connect the venture capital world with decentralized app developers in a more effective route than the straight-to-retail ICOs that have proved so prominent in recent months.
“What we are doing is Sportsbook up this channel between app developers on Blockstack and venture capital, so that (developers) can actually go and talk to these investors, get feedback from them and then potentially get some money to build out their apps.”
The fund has already attracted interest from several notable venture capital firms, including RisingTide Capital, Open Ocean, Compound and Lux Capital.
Each of the venture capital partners has already contributed resources and will share a part in evaluating funding proposals on a case-by-case basis as they are presented. However, while Blockstack is looking to move developers away from the direct ICO model, it has one eye on its own initial coin offering in the near future.
Blockstack has already outlined plans for raising further funding through an ICO, as it continues to develop its flagship decentralized protocol, which could effectively give rise to a new decentralized ecosystem.
According to Ali, their plans for supplementing the $5.45 million already raised for the project are contingent on getting the platform to a development-ready state.
“When we feel that the platform is ready and we can actually enable it for some of our developers, then you will see something very similar to ERC-20, but we believe it will be much-better fleshed out and easier to use in production.”