Europe’s Cherry Ventures dives into crypto with new $34 million fund

Berlin-based venture capital firm Cherry Ventures, a seed-stage investor known for its early bets on mobility startups Auto1 and Cazoo, is set to trade in cars for crypto with a new $34 million fund. 

Other than one 2018 pre-seed round for NFT startup Unlock Protocol, the Cherry Crypto I fund will be the firm’s first major foray into the digital asset space, following the launch of its $340 million generalist fund. 

Patrick Mayr, an investor on the Cherry crypto team, says the fund is backed by both Limited Partners (LPs) familiar with Cherry that are looking for crypto exposure, and by new investors who are only investing into the crypto fund. 

While the team behind the fund — which includes former Aragon CTO Brett Sun in a research role, MakerDAO’s Luca Prosperi as an advisor, and former Medwing director Yannis Heykin in charge of finance — will invest globally, Mayr hopes it can capitalize on Cherry’s roots in Europe to dig into what he sees as an untapped market. 

“Crypto has a lot of its early roots in Europe,” he says, citing how Ethereum was launched in Berlin. “But it was only really in the last twelve months that you’ve seen an influx of European crypto founders — it’s like a waterfall of crypto entrepreneurs at the moment.” 

Tokens all the way 

The crypto founders targeted by Cherry will be funded primarily through token-based investments over equity. The fund has already quietly invested in staking platform Lido, lending protocol optimizer Morpho and NFT investment Decentralized Autonomous Organisation (DAO) BlackPool. 

When asked if the fund would plow money into non-fungible tokens (NFTs), Mayr said it is looking into the sector and has the infrastructure needed to invest. If Cherry Ventures were to start acquiring NFTs, it would join fellow European VC Blossom Capital, which recently confirmed that it had bought a digital collectible in an interview with The Block. 

One aspect of web3 that Mayr is looking to take an active role in is governance. Many if not most web3 decentralized protocols offer users the ability to purchase tokens that allow them to vote on proposals and thus influence the development of the project. 

“Everybody's still figuring out how [governance] works”, says Mayr. “Web3 is still so nascent. I think that it’s definitely the role of an investor to help shape what governance of these protocols look like.”