Dispersion Capital launches $40M fund focused on decentralized infrastructure

This deep into the crypto winter big venture fund debuts are few and far between, a far cry compared to previous years. But the freeze is not stopping some venture capitalists from launching new funds targeting the decentralized technology market.

Dispersion Capital has compiled a $40 million first fund to invest in decentralized infrastructure, the firm exclusively told TechCrunch. The venture vehicle is backed by Web 2.0 and web3 entities including WeNade, Circle Ventures, Ripple, Alchemy Ventures, NGC and individual general partners. It will focus on deploying capital into pre-seed and seed rounds, and has already deployed 10% of the fund.

The evolution of blockchain infrastructure technology has been slow, Patrick Chang, founder and managing partner of Dispersion Capital, said. "We believe there's so much more that needs to be built."

The alternative asset class needs new infrastructure -- who will build it?

Blockchains and decentralized computing are still very new, Chang added, arguing that they still have a "lot of missing pieces." In his view, existing blockchain infrastructure technology was built bit by bit, something that new development work which is bringing Web2.0 "know-how" to web3 could help harmonize.

During the 2021 crypto bull market, lots of startups were founded to build NFT projects, decentralized finance protocols and more, but few of the upstart technology companies focused on the underlying infrastructure itself, Chang said. "What was frustrating for users and people coming into web3 was onboarding, scalability and hacks. The infrastructure was incredibly immature and people weren't thinking about it."

Fast-forward to today and there are a plethora of startups and developers working to improve web3 infrastructure.

Dispersion plans to deploy its fund into startups that want to help onboard new crypto users with technology like refreshed data infrastructure, cybersecurity and smart contracts.

While it's mainly looking at U.S.-based companies, Dispersion actively invests in other regions, too, Chang shared. About a quarter of its active investments are based in Israel, but the firm is also looking into Asia-based builders, given the proliferation of developments for ZK, or zero-knowledge technology, in that region, Chang noted.

"The mission for us is how can we get web3 to a level similar to cloud computing that it's invisible technology that everyone doesn't realize they're using, but are," Chang said. "In the long term, the focus is on how we bring web3 to the masses and bring it [to] a billion users."