SPiCE VC, the first fully tokenized venture capital fund, announced a stellar 2022 despite the persistent economic headwinds.
The company revealed that SPiCE’s Internal Rate of Return (IRR) — an estimate of potential investment profitability — was 50%, much higher than the average VC IRR, which was only 17%. Furthermore, SPiCE’s Multiple on Invested Capital (MOIC) — which allows investors to measure how much value an investment has generated — grew 6x, tripling the average VC MOIC.
In addition to these impressive returns for its investors in the last year, SPiCE VC also hit a significant and rare milestone of achieving 82% Distribution to Paid-In Capital (DPI) for its investors in just four years. This is half the average time a VC takes to reach an exit.
“It brings the team at SPiCE VC great satisfaction knowing that our valued investors accomplished their goals by putting their trust and capital in the fund,” said Tal Elyashiv, founder & managing director of SPiCE VC.
“Regardless of macroeconomic conditions or the ups and downs of the evolving digital economy, SPiCE understands the transformational power of blockchain technology and its impact on every single industry moving forward. With that in mind, we can source the companies throughout the world that are building and innovating with blockchain for the future — creating superb investment opportunities,” he added.
As one of the early pioneers of the blockchain and tokenization industry, the VC fund has been consistently named as one of the top-performing funds in the tokenization and blockchain market by Security Token Market, the largest security token financial data and media firm. The VC fund continues to flourish despite continuing economic headwinds and growing pains within the digital economy, thanks to its early adopter status and exemplary performance.
2022 was an excellent year for SPiCE VC in many aspects. Besides beating the odds in a year that saw a downtrend in most markets, SPiCE VC also announced the launch of SPiCE II, a new $250 million blockchain-focused fund, five times larger than the firm’s first fund and structured to appeal to institutional investors.
This makes sense, given that Elyashiv expects institutional investors to make big moves in the digital asset market. According to him, we will see more traditional blue chip funds tokenize, making them more accessible to a broader sphere of investors. Moreover, he predicts that large-cap market players like JPMorgan, HSBC, and Fidelity will also move into the tokenization space.
With that in mind, SPiCE II has been launched, which is a new, traditional fund offering investors exposure to growth opportunities within the rapidly growing digital economy. The introduction of SPiCE II followed the success of SPiCE I, and the price of its own digital securities, known as ‘SPICE’ tokens, exploded in value.
The initial SPiCE I fund was a $50 million tokenized vehicle, where the fund’s assets were turned into tokens to provide liquidity to investors. The fund first started raising money in 2017 and closed a year later during the bear market of 2018.
Similarly, this new fund, which came with a more traditional venture capital structure with a tokenized portion, closed in Q4 of 2022 during the down market. But as Elyashiv says, “history shows VC funds that raise during recessions outperform funds with different vintages.” Not to mention, valuations in the blockchain ecosystem are now much more reasonable.
Now, as blockchain’s use spread to a wide range of industries, including retail, healthcare, gaming, and supply chain management, so did the new VC fund, but with its focus on those companies that are building the infrastructure in order to foster the blockchain ecosystem.
SPiCE II will continue to work on identifying innovative companies that stand to benefit the most from the mass proliferation of blockchain technologies across many industries, said Elyashiv.
While SPiCE I raised funding from family offices, high net worth individuals (HNWI), and small funds of funds, SPiCE II targeted the participation of institutional investors.
The fund received a lot of interest in Dubai, where SPiCE has an office. The environment in Dubai is “vibrant,” according to Elyashiv, who further shared that deals tend to move relatively quickly here, making it an excellent place to start. Elyashiv also said that Dubai is driving growth in terms of local adoption of blockchain. So there’s much more awareness of blockchain in a broader scope than just cryptocurrency, he added.
Venture Capital fund SPiCE VC is known for exposing its investors to the thriving blockchain ecosystem. The fund invests globally in platforms and ecosystem providers that stand to benefit the most from the industry’s massive growth. SPiCE’s management team has been involved in hundreds of tech funding rounds totaling billions of dollars and has a wealth of knowledge and experience in the field.
The fund, which has its presence all over the world, in the US, Switzerland, Singapore, and Israel, isn’t new to the crypto sector. In fact, it has been involved in it for many years now. SPiCE VC actually came at a time when security tokens were in their early stages, and it was by tokenizing themselves and investing in crucial infrastructure plays in the security token ecosystem that they became widely regarded as pioneers in the space.
Back in 2019, SPiCE VC invested in Digital Securities Exchange called ‘Archax‘ whose focus was on providing services to investors of all types within the digital securities sector. According to Graham Rodford, CEO & Co-Founder of Archax, tokenizing assets is the next significant step in the digital asset world and could potentially revolutionize traditional financial markets.
“We focus on early-stage opportunities with great teams who have the vision and ability to challenge and change the status quo,” said SPiCE Managing Director Ami Ben-David at the time, who joined Archax’s advisory board.
Over the years, the SPiCE VC portfolio continued to grow, and in 2020, the trendsetting company announced an investment in InvestaCrowd. Founded in 2015, InvestaCrowd is a leading digital securities platform in Asia that offers issuance and trading services for digital securities. And the VC fund believes developing a trading exchange is key to achieving the liquidity that digital securities offer investors.
With this investment, SPiCE exposed its token holders to a growing platform, which is licensed by the Monetary Authority of Singapore (MAS).
The SPiCE VC’s ever-expanding portfolio covers a list of promising start-ups and heavy hitters within the burgeoning digital securities sector, including Securitize, Saga, Slice, GRAPHPATH, RNDR, ROX, Crypto & Derivatives, IOB, INX Limited, and BAKKT besides Archax and InvestaCrowd.
Focused on the blockchain and tokenization ecosystem, SPiCE VC is continuing to make a name for itself with investments in high-potential companies. In 2022, investors in the venture capital fund benefitted even more from the fund with the announcement of partial exits of positions held in two high-profile companies, Securitize and Blockdaemon.
With this move, SPiCE VC distributed a multi-million dollar payment to more than 400 long-term investors, which was “nearly two-thirds of their total investment into the fund.” This is especially impressive because it was achieved in a matter of only four years instead of the typical eight-year exit plan for VC funds.
While sharing his thoughts on investor payouts late last year, co-founder Elyashiv said that their investment strategy has been “incredibly successful” thanks to their focus on portfolio companies using blockchain and tokenization to change the business landscape.
This strategy gave SPiCE investors broad exposure to the rapidly growing ecosystem, resulting in significant portfolio appreciation and impressive returns of 54% IRR (Internal Rate of Return) and 4.9 MoIC (Multiple on Invested Capital), Elyashiv added.
This was the second such payout in 2022, as the company’s first payout to investors was in April of last year when it made a successful exit from OTOY. At the time, SPiCE VC claimed it to be the first-ever investor payout completed by a fully tokenized VC firm.
“The breadth and depth of possibilities for investing, wealth creation, and innovation throughout the digital economy is immense. SPiCE VC is a success story that can and will be built upon,” said Elyashiv at the time.
As a result of its successes, SPiCE VC’s own digital securities, called ‘SPICE’ tokens, rallied in value. SPICE tokens boasted a 350% increase in their price in 2022.
Now looking forward, Elyashiv predicts the natural selection of the digital asset ecosystem to be “a powerful force in 2023,” where good companies will only get stronger while the bad ones will simply fade away, leaving a better-positioned market for the future.