Canonical Crypto, a newly formed venture capital firm, has raised $20 million for its first fund to support blockchain development infrastructure projects, with a preference for talent making the transition from Web 2 to Web 3.
The fund was backed by a number of crypto greats, including Andreessen Horowitz (a16z) partners Marc Andreessen and Chris Dixon.
Other investors included Coinbase Ventures' head of corporate development Shan Aggarwal, Dragonfly Capital's Haseeb Quresh, FTX Ventures' Amy Wu and several family offices.
"The thesis really focuses on the world I grew up in, which is developer infrastructure," Canonical Crypto founder Anand Iyer said in an interview with CoinDesk. "I feel like we're at a stage in the crypto world right now where we need better infrastructure. ... We need better airports to support all the planes that are flying."
The origins of Canonical
Iyer founded Canonical Crypto late last year after moving from the traditional tech industry into crypto. Prior to that, he spent several years at Microsoft, including serving as the tech giant's ambassador to the Silicon Valley developer community. Iyer then co-founded HItpost, a mobile developer specializing in sports (acquired by Yahoo in 2013), and Trusted Child Care, which was acquired by Care.com.
Noticing the growing interest in blockchain technology among his friends in Silicon Valley, he jumped in, starting his own DeFi courses and joining Pear VC to lead crypto and blockchain investments.
Canonical Crypto was born out of a desire to help early-stage founders build blockchain infrastructure. By this, Iyer means anything that increases developer productivity, from collaboration on code to testing to security and storage. Amazon Web Services is the development bundle used by many in Web 2, and Iyer sees the need to unbundle similar services for Web 3.
Investment Strategy
Iyer received advice from well-known venture capitalists Andreessen and Dixon when putting the fund together, and Dixon recommended "focusing on what you're extremely good at."
Canonical Crypto plans to invest in 40 to 50 projects with the first fund, writing checks of $250,000 to $500,000 for pre-seed and seed round investments. The company will provide operational support, with a focus on helping founders figure out how to tailor their tooling to the right group of users and develop a marketing strategy to get the solution to the best audience.
The fund has already made initial investments in several companies, including Solana-based non-fungible token (NFT) marketplace Formfunction, decentralized low-code application development platform Thirdweb, communications infrastructure provider Notifi, and Solana-focused data infrastructure solution Vybe Network.
Canonical Crypto is launching its first fund during a cryptocurrency bear market that has not deterred venture capital investment. A16z broke industry records last week, announcing that its fourth crypto fund raised $4.5 billion.