Spice VC expects Q4 first close in fund targeted at $250 million: Exclusive

Spice VC’s second venture fund is expected to have its first close mid-fourth quarter as it works toward a $250 million target, the firm’s founder told The Block.

The target value is five times that of its first fund, which closed in 2018.

Earlier this month, Spice VC, focused on Blockchain and tokenization ecosystem, said it sold part of its holdings in two of its most successful companies — Blockdaemon and Securitize.  It did so in order to fund a payout to more than 400 of its long-term investors, known as limited partners, expected to be executed in the fourth quarter. That’s the second payout this year.

That fund already has paid back 82% of its investors’ initial investment, a rarity in the space, according to founder and managing partner Tal Elyashiv. The average time for a startup to reach an exit can be more than eight years, according to a Venturebeat report.

“This is unheard of in early stage funds in general,” Elyashiv said in an interview today. “The multiple on funds invested is close to six. That’s the value of the fund versus money invested in the fund, so this is obviously extremely helpful in raising SPiCE II.”

The strategy of the second fund, launched in May, is similar to its predecessor – focusing on companies building key components of the blockchain ecosystem. But because the industry has progressed, the verticals have expanded from being largely financial to everything from gaming and insurance to supply chain management and healthcare.

Exact investments haven’t yet been pinpointed as “the good companies raise much faster than in the past,” said Elyashiv, who previously was Capital One's CIO. “Where in the past VCs would take several months to make a decision on investments, now opportunities are not open for that long.”

That said, VCs are being more wary with their money.

“Where herd mentality played a bigger role a year ago, VCs are more cautious now, doing much deeper due diligence and want to be more sure about what they’re investing in,” Elyashiv said. That’s because some companies this year ended up “too short in terms of runway and got hurt really badly in being able to raise next rounds. VCs are much more leery of that right now.”

A third fund will only come into shape once the firm has the capacity to focus on one.

Clarification: This story has been updated to reflect the fund will have its first close by the end of this year.