Fidelity has quietly rebranded its crypto VC — here's a look inside the business

Fidelity's crypto custody unit may have captured most of the media attention since its announcement last year, but it is not the only crypto business associated with the Boston-based financial services giant. 

Operating behind the scenes is the firm's crypto venture capital unit, which over the summer rebranded to Avon, Fidelity confirmed to The Block. The firm has made three public investments and is led by Alex Thorn and Sachin Patodia. The business, which does not make bets on tokens and invests using the firm's own capital, is not a part of Fidelity Digital Assets and is housed under Devonshire, Fidelity's early and late stage venture fund. Devonshire is technically affiliated with FMR LLC, the parent company of Fidelity. 

"It is completely separate from the financial services offered by Fidelity and has no impact on their performance," a spokesman said. 

Indeed, Avon's roots long precede the launch of Fidelity Digital Assets. At first the fund was experimental, run by Matt Walsh and Nic Carter, who left the firm in 2018 to start their own VC firm, Castle Island Ventures. A source said the fund was viewed by Fidelity CEO Abigail Johnson as an opportunity to build and stand at the "bleeding edge."

As the crypto market has matured, so too has Avon. To date, the fund has backed BlockFi, Flipside Crypto, and Elementus.

The fund is geared toward investing in so-called "infrastructure plays," according to a source. That is to say, companies that are building platforms and services that help mature the cryptocurrency ecosystem. BlockFi, a New York-based lending company, for instance, offers services that allow crypto investors earn interest on cryptocurrency deposits. Flipside Crypto, which announced a $7.1 million seed fundraise in September, provides business intelligence on crypto companies. Elementus, which raised $3.5 million in September as well, offers tools to help identify illicit behavior on blockchains.

A spokesman described the fund's thesis as "identifying the early use cases for crypto and blockchain technology and investing in businesses that will accelerate growth and adoption." 

As for how many companies the fund will invest in next year, a Fidelity spokesman said there isn't a specific number in mind. 

"Avon is more focused to taking a thoughtful and deliberate approach to its investments as opposed to a specific number of investments," he said.