- The venture capital firm has just launched a fundraiser for its flagship vehicle
- With a focus on Web3, the strategy plans to focus on five verticals: fashion, finance, games, music and sports.
A longtime proprietary cryptocurrency trader is trying his hand at the venture capital space, according to people familiar with the matter and marketing materials obtained by Blockworks.
Antonio Hallak is now in fundraising mode for his Illumina Capital, a venture capital firm focused on digital assets with an incubator that deals with token investments — not equity stakes.
The startup’s fundraising efforts are led by hedge fund marketer Melissa Fox. It plans to raise between $50 million and $75 million for the launch, with backing from a number of institutional investors, sources said, including crypto natives and deep-pocketed traditional financiers.
Illumina’s flagship vehicle, Illumina Fund I, mandates a minimum investment of $1 million, but word is that potential sponsors are already asking to contribute significantly larger amounts.
The plan is to raise a second fund shortly after the flagship goes live.
Hallak confirmed the launch but declined to describe the startup’s strategy or share additional details. It appears that Hallak favors a token approach, in part because of the increased liquidity it provides to limited partners.
These tokens usually change hands frequently in the secondary market. Corporate exits from Illumina are expected to take between six and 18 months, according to marketing materials — a considerably shorter duration than pure equity stakes.
Key to the business is the incubator, Illumina Labs, a sister company of Illumina Capital. The entity guides startups from concept to whitepaper to tokenomics to find their right market fit, as well as developing and conducting smart contract security audits, among other related functions.
In some cases, the company’s investors can contribute to the incubator’s startup pipeline – or even hire its services on their own. One investor, Inder Phull, CEO of music metaverse startup PIXELYNX, called on Illumina Labs to consult on his company’s tokenomics and broader blockchain structure.
PIXELYNX is now investing in the venture capital fund, which Phull says Blockworks is expected to deliver “much larger and symbolically meaningful returns, especially when you pick the right projects.”
“Returns are much more meaningful compared to traditional stocks, where perhaps one in 50 companies makes a significant advantage,” Phull said.
There is also a market making component for freshly issued tokens from another Hallak subsidiary, Weybridge.
Illumina Labs, the incubator, is expected to have about 10 employees in the coming weeks and is expected to grow to 30-40 employees before the end of the year, including engineers, smart contract developers and tokenomics experts.
“One aspect of our approach that has struck a chord with our portfolio companies is the fact that we are not just a provider of capital,” Hallak told Blockworks. “The accelerator is the initial entry point… It shows that we’re giving them the highest probability of success to get to launch.”
Hallak plans to employ a multi-vertical approach to focus on what he sees as an accelerated evolution of Web3 and the metaverse that will transform not only crypto, but traditional industries as well. Thus, Illumina plans to invest in sports, games, music, finance and fashion.
The token-only model allows Illumina to essentially spread chunks of investable capital within much larger corporations. If a long-standing music label, for example, is about to launch its first NFTs, the venture capital fund could back the token without having to buy the label’s capital, which would likely be prohibitively expensive. or maybe already a public company.
The fund, with one exception, has so far backed new tokens from companies that have been around for 10 or 15 years, sources said – reflecting Hallak’s belief in the convergence of traditional industries and assets. digital.
In another departure from traditional venture capital firms, Illumina plans to accept checks from limited partners up front. Typically, funds draw on capital once they have found an investment opportunity.
Another limited partner, gaming veteran Rudy Koch, co-founder of blockchain-based gaming startup Mythical Games, said the fund’s focus is a perfect fit with changing consumer needs.
“Web3 is creating this new consumer, who wants to be part of the value chain in any industry,” Koch told Blockworks. “We no longer want to be mere consumers, we want to be partners in the products with which we engage. And tokenomics and DAOs are examples of ways we can achieve that, ways we can move consumers further up the value chain.
Hallak – who, before developing a number of quantitative crypto trading models, led Credit Suisse’s electronic trading unit – will in the meantime invest the capital in a market-neutral and delta-neutral return-generating strategy designed to generate annual returns in the low double -digits.
The fund plans to support a total of 20 to 30 symbolic projects in the start-up phase. The vehicle’s investment committee imposes a maximum allocation of 20% to a token.
Sponsors have the option to invest via crypto and receive in-kind contributions once the fund is depleted. Hallak, Fox and CFO Carey Harrold, formerly of Jump Trading, are now working to finalize service providers for the company.
The venture capital side of the business already has a human resources manager, as well as a recruiting manager responsible for filling a number of vacancies, including operational roles and business development professionals.
Get the top crypto news and insights of the day delivered to your inbox each evening. Subscribe to Blockworks’ free newsletter now.