Crypto investor HashKey Capital closes third fund at $500 million

Crypto investment firm HashKey Capital has closed its third fund by raising $500 million. The fund comes as the industry is reeling under pressure from recent collapses and the bear market.

Dubbed HashKey Fintech Investment III, the fund targets investments across crypto areas, with a focus on infrastructure and application builders, the firm announced on Monday. HashKey began raising the fund over a year ago. By January 2022, the fund had $360 million in commitments and is now officially closed.

The fund had initially targeted closing at $600 million, but "timing matters more than the size," Deng Chao, CEO of HashKey Capital and head of HashKey Group Singapore, told The Block in an interview. "We are now at the bottom of the next cycle. That's why we closed the fund and launched it officially," said Chao. "We closed our previous two funds too at the bottom of the next cycles in 2018 and 2020."

HashKey's first two funds raised a combined $100 million and its current assets under management stand at over $1 billion. HashKey Group, a spinoff of Chinese conglomerate Wanxiang Group, was one of the earliest investors in Ethereum in 2014. Chao said the new fund will continue investing for a longer term with a focus on value.

"We always hold a cyclical view towards the industry," he said. "So when we evaluate a project, we look at it from a cyclical perspective — whether it would still be around after this cycle or would be able to survive the cycles to come."

The current market situation is a good time to invest in projects focused on growing the crypto industry and bringing mass adoption, said Chao. Specifically, HashKey is interested in projects that have real use cases and are focused on building tooling for easily onboarding new users from web2 to web3 to 3, said Xiao Xiao, investment director at HashKey Capital, in the interview. Ethereum, Polygon and other Layer 2 networks are some ecosystems HashKey is focused on, Xiao added.

The HashKey Fintech Investment III has thus far deployed around $100 million, Michael Chen, investor relations director at HashKey, said in the interview. The firm looks to fully deploy the fund in the next 2 to 3 years by investing in projects that are in different stages, backing both equity and token deals, he added.

HashKey's current portfolio includes some high-profile companies and projects, including Aztec, Blockdaemon, dYdX, Animoca Brands, Falcon X, Polkadot and Coinlist.