European sovereign wealth fund SRIW joins $17 million round for blockchain venture firm Tioga Capital

SRIW Group, a Belgian sovereign wealth fund that manages about $4 billion worth of assets, has invested in blockchain venture firm Tioga Capital.

Tioga announced the news on Wednesday, saying that it has raised $17 million for its first round of funding, and SRIW backed the round. Tioga did not disclose how much SRIW invested, but managing director Michiel Lescrauwaet told The Block that the sovereign fund is "one of the bigger investors" in the round.

Lescrauwaet previously managed Adamant Capital, a bitcoin fund that he set up with Tuur Demeester. Adamant quietly shut down late last year for "personal & family reasons," as The Block reported in August.

Lescrauwaet set up Tioga earlier this year to specifically invest in blockchain startups. Besides SRIW, Belgian family offices such as Van Hool and Vlerick and other local tech entrepreneurs also participated in Tioga's first funding round.

As for SRIW, the fund invested in Tioga through its W.IN.G (Wallonia Innovation and Growth) unit. W.IN.G is already an investor in two blockchain startups — CVTrust and Be Blockchain, its managing partner Nicolas D'Haene told The Block.

"We believe strongly in the blockchain technology's potential for transformation across many industries," said D'Haene. "We also believe Wallonia offers, through its rich biotech and logistics ecosystems, ideal opportunities for blockchain entrepreneurs."

European focus

Tioga, headquartered in Belgium, is focused on investing in European blockchain startups.

Lescrauwaet told The Block that there are about 2,000 blockchain-focused startups in Europe, mainly in Zug, Zurich, Frankfurt, London, and Berlin. "But there is a big dislocation in the market," he said. "There is no VC funding ecosystem to support European startups in the same way as there is in the U.S. That's why we see a lot of value for European startups and their valuations are more attractive."

Tioga will invest in those startups that have already received "some real initial traction" for their products and services, said Lescrauwaet. The firm will mainly join startups' seed and Series A rounds, with an average investment of $1 million, said Lescrauwaet.

Tioga is registered with Luxembourg financial regulator CSSF. That is "very different" from a firm that is registered in the Cayman Islands or "some exotic area," Patrick Van de Mosselaer, managing director at Tioga, told The Block. "For SRIW, for instance, investing in the Cayman Islands-based firms would be a total no go obviously," he said.

Looking ahead, Tioga plans to raise another $33 million by the end of 2021, taking the total funding to $50 million, said Lescrauwaet.