The third-largest cryptocurrency exchange by daily trading volume, Huobi, has launched an investment fund that will invest in blockchain companies. According to China Money Network, the fund will be a partnership between the Singapore-headquartered exchange and two other firms, and seeks to raise 100 billion Korean won (US$93 million). The announcement comes just days after another leading crypto exchange, Binance, announced a similar move.
Fostering The Blockchain Startup Ecosystem
Huobi’s investment fund is a partnership between the exchange, investment firm NewMargin Capital, and Kiwoom Securities, a South Korean online brokerage firm. NewMargin is a Beijing-based investment firm which has invested in many successful companies including software developer AsiaInfo, edutech firm eFuture, and wind turbine manufacturer GoldWind.
The fund plans to invest in blockchain startups in China and South Korea. It also aims to increase cooperation between blockchain companies in those countries. It will also bring on limited partners including the Industrial Bank of Korea and the Korea Development Bank. Seoul-based Mirae Asset Financial Group will also come on board as an investor, according to reports.
The announcement comes just days after Binance announced a similar fund of its own. The $1 billion fund will use the exchange’s native BNB tokens exclusively and will be administered through Binance Labs. However, unlike Huobi, which will bring other investors on board, Binance will source the entire investment amount from its own reserves. The fund will invest both directly and indirectly in blockchain startups, as well as in other blockchain-focused investment funds. The exchange will seek to invest in 20 investment funds with at least $100 million under management.
Binance Labs, the exchange’s incubator, will administer the funds, an executive disclosed, and the fund has already invested in four projects. They include MobileCoin, a privacy-focused blockchain startup which will be built on the Stellar Consensus Protocol and which promises its users easy private key management and an opaque ledger that will ensure security and privacy. Binance led a $30 million fundraising round for the startup, which boasts the founder of the encrypted messaging app Signal as its technical advisor.
The fund has also invested in Oasis Labs, a startup whose blockchain platform Ekiden promises to address the scalability and security challenges that face most blockchains. The other projects in which the fund has invested are Certik, a verification platform for smart contracts, and Republic, a decentralized crowdfunding platform.
Crypto exchanges are not the only companies to have identified the huge potential of blockchain startups. Japanese games developer and publisher Gumi also recently announced a blockchain-focused investment fund, American tech website VentureBeat reported on May 30. The $30 million fund which is dubbed Gumi Cryptos will invest in “promising cryptocurrency and blockchain technology companies globally.” Some of the companies in which the fund has already invested include decentralized video streaming service Theta, sharing economy marketplace Origin Protocol, and Basis, a stable cryptocurrency which uses an algorithmic protocol similar to a central bank to maintain stability.