Fund Structure and History
This is a requested blog post and question we receive often, and figured it was a good time to officially break down the fund's structure and history. Since it's inception, Visary's fund structure has always been proprietary, in-house capital. Despite interest over the years from various funds, family offices, and high net worth individuals to invest in the fund, we chose this path for a number of reasons, but first, will explain how the fund got to this point.
Prior to moving into crypto full time, I worked in the big data space for over 8 years. One of the highlights was at a company called Pentaho, which was a big data analytics startup built during the dawn of open-source data and parallel processing systems like Hadoop. I joined as the first business hire and helped build out their go-to-market and enterprise sales team for 5+ years. There I learned what someone would probably learn in a decade in a typical business setting in an intense, consolidated period of growth and customer acquisition. I am forever grateful for this experience. Pentaho ended up getting acquired by Hitachi for ~$600M. This was a substantial acquisition back then, before a lot of money supply and valuation bloat occurred in markets more recently.
While at Pentaho, I made a non-trivial amount of money at the time, including from vested equity. This was the first step towards a career in technology startups, and having extra capital for the first time in my life also prompted me to begin investing. I soon became enamored by markets and valuing and trading stocks. In 2014/15, I put most of my net worth at the time into Nvidia and AMD at around $4 and $2 respectively. I began to gain a strong understanding of semiconductors and chip markets through countless hours of research (being a lifelong PC gamer didn't hurt). It was clear a wave of demand for chips was on the horizon and I placed this as my first big bet. After Pentaho, I worked a few other roles over the years building out technical sales teams and managing systems integrations teams and climbed the ranks, but couldn't shake my passion for modeling markets and deploying capital to invest.
In late 2015, I got into crypto, and the rest is history. I went down the rabbit hole and crypto offered me something new, at the right time in my life. Philosophical alignment via the deep appreciation I had for open-source technology and open data, perhaps overly-idealist Libertarian and free market ideas, and the feeling of being involved in something very nascent and untapped. I started buying at this time, and ended up going all-in on crypto throughout 2016, including into Ethereum shortly after it's launch.
Throughout 2016 and 2017, I did everything imaginable in crypto. I setup mining rigs at home for Ethereum and GPU coins like Monero and Vertcoin. I also participated in some ICOs because I found it to be such a unique way to raise money globally (some of which had surprisingly huge returns, despite being totally ridiculous experiments). I was a homegrown retail investor and trader through and through, and began experiencing rapid growth in just a few short years. In 2017, I was managing a P&L for a data consultancy, still making good money in a comfortable, secure job, but saw my portfolio take off to new heights in parallel. I was still plugging all my savings and bonuses into crypto, but the day job slowly stopped mattering.
Having traded stocks for a couple of years prior and experiencing both success and enough horror stories to learn the hard way, I knew that at some point I had to begin selling these gains and de-risking. Through the summer of 2017 and into early 2018, I sold the majority of trading positions I had (e.g. things like Litecoin, Monero, Verge, and ICON to name a few, all of which had immense returns) and left all my Bitcoin and most of my Ethereum in cold storage, as I actually believed in these (and still hold some of those original positions) and wasn't necessarily trying to trade them. In hindsight, I obviously didn't time the top that cycle, but having sold through a period of ~6 months when most things I held were up 50-100x+, I walked away in a good position to say the least. In early 2018, I left my job and launched Visary Capital (Note: The first 2 investments were technically in late 2017 in Blockstack, now Stacks, and Filecoin, which both turned out great this cycle, but the fund officially launched in January 2018).
This fund is completely homegrown from savings, trading, and investing my own capital in both traditional markets and crypto over about a 7 year period. Everything has been self-taught over years of research, trial and error, experimentation, and failure. The fund was massively over-deployed and out of dry powder by 2019 during the last innings of the previous bear market. This was a grueling period of time and uncertainty, but the market started to turn. Once liquidity opened up and assets started taking off, including capturing a ton of upside in the first DeFi summer of 2020 (YFI, SNX, etc), the fund was well beyond all-time highs again and became more active than ever. During the latest cycle, the crypto fund managed to grow ~40x in aggregate through a mix of active buying through the bear market, various early stage token investments, and exits.
This has brought us to the point of being able to do a lot more venture and carve up some liquidity and manage risk and time preference a bit differently. Given my roots in building early sales and go-to-market teams in startups, venture investing and advisory were always a natural addition, which really began in 2019 (with a few exceptions) but has become more substantial year over year.
The fund is now structured approximately 65/35, where 65% of the fund is liquid (active crypto positions) and semi-liquid (vesting crypto positions), and 35% of the fund is 'illiquid' venture equity. Though this may fluctuate a bit, we don't expect to go much beyond this ratio, as we want to stay true to the roots and believe liquidity and optionality are priority.
We believe the fund is unique not just because of the from-the-ground-up, entrepreneurial history, but also because of understanding liquidity, cyclicality, and market structure better than "crypto VCs" – and don't really consider ourselves VCs in the typical sense. We are active market participants, do'ers with hands-on go-to-market experience, open-source advocates, early project contributors, and we also use many of the products we invest in.
LP fund structures are crucial for investments in any market's growth and health, and we work with many LP funds to share and source deals. However, not having LPs also comes with many benefits. We are low bureaucracy and highly flexible in rounds. Our due diligence process is unique given our only focus is on aligning with Founders, not pleasing LPs. We respect and prioritize a Founder's time more than anything. Many funds wax poetic about being "Founder-first" but reality plays out differently. Our skin in the game is directly aligned with Founders at all stages. These factors have allowed us to maximally focus on a few key things:
1) Talent Network: In-house talent sourcing for both BD and software development roles, working with our third-party hiring network, and partnering with Turing to support remote engineering hiring.
2) Customer and Sales: Hands-on business development, building out sales processes, messaging, and direct outreach.
3) Strategic Capital: Helping raise subsequent rounds through our syndication/fund network. We've helped source over $40M of additional capital for our startups, which is tailored based on value-add, along with helping form and fill out the rounds we participate in.
The fund structure also allows us to move rapidly in crypto (which is important) and do things like deploy into certain narrative shifts, buy undervalued tokens, add to our existing vesting positions in the liquid market, provide liquidity to our early investments, yield farm (circa 2020/21), actively stake/orchestrate/run nodes.
The direction we want to take the fund is now towards more in-house resources for talent, product, and go-to-market – a holistic "Visary Labs" approach, where we even build some products around data and analytics for example. We expect more of this to materialize in the coming years and believe we can achieve this as the fund continues scaling, without the need for LPs. More to come on this!
Are we completely closed to LPs forever? Not necessarily, but we would be highly selective and partner with one or two tight-knit LPs instead of a large group. If you are an LP who believes you align with the fund and wants to hear more about the fund's AUM, performance and plans, we are always open to discussions. With that said, we've turned down all investors as of today. On-top of all the benefits on the investing and business side, it is also a personal and life choice. The setup this fund has achieved is rare, and no matter what anyone says, bringing in outside capital changes everything. Nothing has been more fulfilling than working with Founders in this way, and also being 100% autonomous and in charge of your own time and destiny.
We are excited to expand the team out in the future and continuing to partner closely with Founders and being activist market participants. The rise of proprietary, Solo GP and 'Solo Capitalist' funds has undoubtedly been legitimized over the years and we expect many of them to outperform traditional fund structures, especially in crypto.
Faizan J. Khan
Founder, Managing Director