Michael Bodley

<div id="highlights-block_62fce45cf7858" class="highlights">
 <ul>
 <li>The capital haul is the latest sizable endeavor to opportunistically emerge through crypto’s lingering bear market</li>
 <li>Shima Capital&#8217;s limited partners include billionaire investor Bill Ackman and Andrew Yang </li>
 </ul>
 
</div>



Shima Capital, led by a venture capitalist with crypto experience, has raised $200 million for a new vehicle keying in on early-stage private crypto plays.



The Yida Gao-led firm’s limited partners include the likes of hedge fund billionaire Bill Ackman, former US presidential candidate <a href="https://cms.blockworks.co/andrew-yang-we-must-avoid-politicizing-crypto-web3/" target="_blank" rel="noreferrer noopener">Andrew Yang</a> and fellow digital assets-focused venture firm <a href="https://cms.blockworks.co/tag/dragonfly-capital/" target="_blank" rel="noreferrer noopener">Dragonfly</a>. 



Gao, who previously founded crypto hedge fund firm Divergence Digital Capital (DDC) — which now has more than $100 million in assets under management — is set to focus on nascent private token plays alongside seed and pre-seed equity stakes. The fund also aims to snap up convertible debt-to-equity notes in promising startups. 



Gao left DDC around the end of 2021’s first quarter to set up Shima, which is named for the small town in China where he was born. The firm’s flagship vehicle imposes a lengthy six-year lockup, with optional extensions at the discretion of a majority of limited partners.



Shima’s team has already begun putting the outside money to work in a handful of crypto startups. The fund demands a minimum investment of $1 million for institutional investors, with some backers chipping in $5 million to $10 million, Blockworks has learned. Yang and other limited partners were not immediately available for comment, per their representatives.



“Why now? Some of the funds have gotten so large in size that we see a missing component,” Gao told Blockworks. “It’s impossible for them to back [early-stage startups] and move the needle on [returns] in any meaningful way.”



<h3 class="wp-block-heading">Shima Capital founder no stranger to venture capital</h3>



Gao has been in the venture capital space since raising his first special purpose vehicle (SPV) in 2014. He said the digital assets sector is still small enough by market capitalization that a small to mid-sized fund is primed to “effectuate more change” in Web3 than in Web2 — especially so as markets tanked following the <a href="https://cms.blockworks.co/tag/terra/" target="_blank" rel="noreferrer noopener">blowup of Terra stablecoin UST</a> and the ensuing collapse of <a href="https://cms.blockworks.co/tag/three-arrows-capital/" target="_blank" rel="noreferrer noopener">crypto lenders</a>. 



Multibillion-dollar crypto companies still rise and fall at the whims of the <a href="https://cms.blockworks.co/new-hedge-fund-first-to-take-investor-checks-via-token-options/" target="_blank" rel="noreferrer noopener">world’s largest</a> <a href="https://cms.blockworks.co/steve-cohen-building-out-crypto-investment-firm/" target="_blank" rel="noreferrer noopener">hedge fund</a> <a href="https://cms.blockworks.co/brevan-howard-scores-largest-crypto-hedge-fund-launch-ever/" target="_blank" rel="noreferrer noopener">firms</a>.



Shima typically targets investments of $500,000 to $2 million, totals that big-time venture firms, including <a href="https://cms.blockworks.co/tag/a16z/" target="_blank" rel="noreferrer noopener">a16z</a> and <a href="https://cms.blockworks.co/tag/sequoia/" target="_blank" rel="noreferrer noopener">Sequoia</a>, typically don’t favor, because they have so much dry powder at their disposal. 


<div class="wp-block-image">
<figure class="alignright size-large is-resized"><img loading="lazy" decoding="async" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/08/yida-LinkedIn-Profile-Pic-1000x1024.png" alt="Shima Capital founder Yida Gao" class="wp-image-27416" width="185" height="189" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/08/yida-LinkedIn-Profile-Pic-1000x1024.png?w=1000 1000w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/yida-LinkedIn-Profile-Pic-1000x1024.png?w=293 293w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/yida-LinkedIn-Profile-Pic-1000x1024.png?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/yida-LinkedIn-Profile-Pic-1000x1024.png?w=251 251w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/yida-LinkedIn-Profile-Pic-1000x1024.png?w=255 255w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/yida-LinkedIn-Profile-Pic-1000x1024.png?w=214 214w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/yida-LinkedIn-Profile-Pic-1000x1024.png?w=78 78w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/yida-LinkedIn-Profile-Pic-1000x1024.png?w=50 50w, https://blockworks-co.imgix.net/wp-content/uploads/2022/08/yida-LinkedIn-Profile-Pic-1000x1024.png?w=1496 1496w" sizes="auto, (max-width: 185px) 100vw, 185px" /><figcaption>Yida Gao, Shima Capital founder | Source: Shima Capital</figcaption></figure></div>


The startup is concentrating on companies working to solve consumer, blockchain-based gaming, metaverse, sustainable decentralized finance (DeFi), regenerative finance and infrastructure problems in crypto, among other areas. 



“We see a pocket of opportunity that’s missing in the capital stack for Web3 in being the first institutional capital in the pre-seed,” Gao said.&nbsp;



Gao’s team includes chief technology officer Carl Hua, a <a href="https://cms.blockworks.co/tag/celsius/" target="_blank" rel="noreferrer noopener">Celsius</a> alum; head of research Alex Lin, a former venture partner at a firm run by former Binance executives, Old Fashion Research; and head of talent Chris Adams, who formerly held the same title at Atomic VC.



<h3 class="wp-block-heading">Crypto growth brings institutional support</h3>



Shima plans to set up an incubation model, wherein the team would work with a number of portfolio companies each year in an advisory capacity. More hires are in the works.&nbsp;



The incubation approach also includes consulting on tokenomics, especially when it comes to inventive and governance structures. “We’re trying to be the missing layer in Web3,” he said.&nbsp;



Shima also offers limited partners exposure to co-investments. Gao calls most investor capital at the commencement of the fund and then draws down on that pool as investment opportunities arise, though he’s struck arrangements with some investors to pay as they go.



Down the line, he’s considering parking investor capital in a market-neutral, yield-generating liquid hedge fund strategy that would aim for low-volatility returns in the 7% to 8% range. That endeavor could, in turn, lead to an internal digital assets-focused crypto hedge fund. 



Shima’s other day-one investors include Animoca Brands, Mirana Ventures, OKex and Republic Capital.



Before founding DCC, Gao was the general partner of Los Angeles-based venture firm Struck Capital. He’s also spent time at the private investor New Enterprise Associates and Morgan Stanley.



Resume aside, Gao said even a couple of years ago pulling off such a launch with sticky, institutional capital would have been difficult — if not impossible. 



“I think it’d be very difficult to get institutional support…Crypto has grown up a great deal in the time since,” he said.



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Venture Capitalist Launches $200M Crypto Fund as Web3’s ‘Missing Layer’

<div id="highlights-block_a7a4bb5f1e5f523a41031b947c7b872c" class="highlights">
 <ul>
 <li>The company raised about $3 million at a valuation of about $30 million from a number of venture firms</li>
 <li>The startup has also partnered with a number of well-known gaming guilds, which it plans to tap in a bid to grow its market share</li>
 </ul>
 
</div>



Blockchain-based gaming platform <a href="https://docs.openblox.io/" target="_blank" rel="noreferrer noopener">OpenBlox</a> has raised its seed round as the company looks to ride a wave of interest in play-to-earn gaming in preparation of its first game launch later this year.



OpenBlox raised about $3 million at a valuation of about $30 million and plans to earmark the funds for product and business development, game design and additional staffers. The round was led by venture capital firm Shima Capital, a recently launched San Francisco firm helmed by veteran venture capitalist Yida Gao. Shima, after this story was published, reduced their contribution by an unspecified amount. 



Venture firms including 3Commas Capital, 100&#215;100 Venture Capital, Digital Strategies and MC Ventures were also set to participate in the seed round.



MC Ventures withdrew their commitment after publication, as did Digital Strategies. Representatives for the firms did not respond to a request for comment. 



OpenBlox, which employs ethereum virtual machine (EVM) technology in an effort to create a bridge between blockchains, also has an NFT marketplace in the works — and in the meantime has been partnering with a number of prominent gaming guilds.



The team plans to roll out three games — players can deploy blockchain applications, including NFT (non-fungible tokens), across the trio of metaverses. The gaming platform intends to create a Web3-powered community, as opposed to minting digital collectibles on a one-off basis — an approach that may deliver immediate profits, but one that rarely drives sustained user engagement.



It&#8217;s planning its first experience, dubbed RunBlox, to be released publicly in May on the Avalanche blockchain — along with an in-game token, $RUX. To play the game, users are required to hold a RunBlox shoes NFT, which will be partially distributed via an airdrop. 



Its digital universe is based on a collection of 7,998 genesis blox NFTs that can breed via in-game mechanics, similar to blockbuster play-to-earn giant Axie Infinity.



The fundraise comes as a growing number of top-tier traditional game-makers — including Ubisoft — are looking to employ blockchain elements.



Those blue-chip, so-called AAA developers have the leg up on game design and gameplay, industry participants say, but <a href="https://cms.blockworks.co/ubisoft-nft-efforts-are-off-to-a-rocky-start/" target="_blank" rel="noreferrer noopener">have faced a tough sell</a> from gamers wary of NFTs because of environmental concerns.



After starting with just Ethereum, the team has pivoted onto the Arbitrum blockchain, a side-chain, as it works to expand its decentralized finance (DeFi) dealings.



The startup plans to introduce an in-game token, which perhaps could convey governance features down the line. The longer-term plan is to create a decentralized autonomous organization (DAO) that would be controlled by game players.



Gao, who has previously backed other play-to-earn Web3 startups, said the team has “deep experience” in both traditional video games and as crypto natives. OpenBlox is also working with a number of top-tier developers and graphic designers, which helps, he said.



The challenge is to bridge avid traditional video gamers — accustomed to stunning graphics and engaging gameplay — with legions of crypto natives who may be less choosy on the gameplay front, but more particular when it comes to the blockchain technology in play and the potential to make money as a consumer in exchange for their time and loyalty.



“You want to basically have these new types of ways to play games, where the ownership is in the hands of the players, not the developers, and you&#8217;re able to bring in other users and bring in other counterparts to the space,” Gao said. “So, instead of having all the graphic designers and the people making the games in the studios control everything, you can bring in others.”



Elle Sia, a Web3-focused investment director at OpenBlox backer Digital Strategies, said the game&#8217;s graphics are significantly sharper than your average crypto-native game.&nbsp;



And the team, according to Sia, has been taking pains to ensure the gameplay is fun and engaging.



“It needs to be fun,” Sia said. “Otherwise, no one&#8217;s going to play it. Otherwise, it becomes a bit of a Ponzi, so far as you need new players to come in.”



The startup will also look to lean heavily on its partnerships with gaming guilds — including Real Deal Guilds (RDG), Ancient8, Good Games Guild and BreederDAO — to drum up interest in the metaverse venture and gain players worldwide.&nbsp;



Dr X, the pseudonymous OpenBlox founder, said in a statement that the startup’s incoming investors “bring a large network of stakeholders” to the venture.



Updated Dec. 14, 3:15 pm ET: Shima Capital reduced the size of its commitment after this story was published, and Digital Strategies, as well as MC Ventures, rescinded their capital pledges.



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Blockchain Gaming Startup Raises Round on Heels of Surging Play-to-earn Demand

Morgan Chittum

<div id="highlights-block_621eabc4c01c6" class="highlights">
 <ul>
 <li>Led by Archetype, raise investors include Coinbase Ventures, Dragonfly Capital, Solana Ventures and ParaFi</li>
 <li>Parcl has 15 full-time employees but hopes to expand its staff to 25 by the end of the year</li>
 </ul>
 
</div>



Parcl, a startup that digitizes real estate investments via the Solana blockchain, raised a $4.1 million seed round Tuesday, earmarked for marketing and staffing.



The New York-based company has 15 full-time employees but aims to expand its staff to 25 by year-end, co-founder and CEO Trevor Bacon told Blockworks.



“It&#8217;s a tough hiring environment, but we&#8217;ve managed with our team and vision to have been able to attract some of the best talent,” Bacon said.



Parcl’s mission is to give everyone a chance to invest in real estate, a market which has historically high barriers to entry, but consistent returns.



Parcl’s protocol allows users to invest in a digital square foot of real-live property via its price index, which replicates the price per square foot in various neighborhoods. The platform has transaction fees, but no minimum investment requirement.



“[For example], Tribeca will have a price per square foot of like $2,000, and we&#8217;ll call that a ‘parcl,’” he added. “‘A parcl’ is one square foot of any given neighborhood, and the blockchain is what allows you to create those assets and trade them. It’s basically a way to gain exposure to real estate.”



Led by Archetype, raise investors include Coinbase Ventures, Dragonfly Capital, Solana Ventures, ParaFi, Shima Capital, Slow Ventures, Tribe Capital, Not Boring Capital and FJ Labs.



Parcl will launch a testnet, along with the release and sale of a non-fungible token (NFT) collection in the coming weeks. All of the proceeds, Bacon said, will go toward buying someone a house.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



Start your day with top crypto insights from David Canellis and Katherine Ross. <a href="https://blockworks.co/newsletter/empire">Subscribe to the Empire newsletter</a>.



Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. <a href="https://blockworks.co/newsletter/onthemargin">Subscribe to the Forward Guidance newsletter</a>.



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