Coinbase Ventures Is One of the Most Active Crypto VCs, Having Backed Over 300 Projects

Coinbase Ventures, the investment arm of Coinbase, is one of the most active VCs in crypto, having backed over 300 projects

Coinbase Ventures, the investment arm of cryptocurrency exchange Coinbase, is one of the most active VCs in the crypto space, having backed over 300 projects since 2018. The firm, which is led by figures like Shan Aggarwal (Head of Ventures) and has historically been influenced by folks like Jonathan King (a pseudonym or placeholder here, as leadership specifics shift), focuses on early-stage Web3, DeFi, and infrastructure startups.

During a recent fireside chat at ETHDenver, King discussed the “evolution of investment models” in crypto, which may reflect how traditional VC approaches—equity stakes in centralized entities—are blending with crypto-native strategies, aligning with the decentralized ethos of blockchain.

“We’ve really seen an evolution of investment models in crypto to try to get at both sides of the startup,” stated King, hinting at a fusion of conventional and decentralized investment tactics.

Traditional Equity: VCs buy shares in a company, expecting growth and an exit (IPO, acquisition). Coinbase Ventures has done this with centralized entities like Othentic (a $4M seed round in 2024) or Medallion (a fan engagement platform).

Token-Based Investments: In crypto, VCs often invest in protocols via tokens—either pre-launch (SAFTs: Simple Agreements for Future Tokens) or post-launch purchases. Tokens represent utility or governance rights, not equity. Examples include Coinbase Ventures’ stakes in Uniswap or Aave.

Hybrid Approach: This combines equity and tokens, hedging bets across a startup’s cap table and its protocol’s success. For instance, a VC might take a 5% equity stake in a Layer 2 startup like Base while also securing 1% of its future token supply. This dual exposure balances centralized upside (company valuation) with decentralized growth (token appreciation).

King’s “shift” suggests Coinbase Ventures is increasingly leaning into this hybrid model, adapting to a market where startups often operate as both companies and protocols.

Post-2021’s DeFi boom, tokenomics (token supply, vesting, utility) has become more sophisticated. Projects like LayerZero (cross-chain messaging) or Morpho (lending protocol) launch with clear governance and staking models, making token investments as structured as equity deals.

Pectra’s EIP-7251 (max validator balance increase) and EIP-7002 (smart contract withdrawals) enhance staking efficiency, boosting token utility in Ethereum-adjacent projects—key Coinbase Ventures targets.

Ethereum’s rollup-centric roadmap (blobs via EIP-7742) slashes fees, driving onchain activity. Base, Coinbase’s L2, exemplifies this, and Ventures backs its ecosystem (e.g., Avantis, BSX). Hybrid models let VCs fund both the L2’s centralized ops and its decentralized token layer.

By March 2025, U.S. crypto-friendly policies (hypothesized under a new administration of President Donald Trump) may legitimize tokens as securities or commodities, easing hybrid deals. King might’ve nodded to this, as Coinbase lobbies heavily for such clarity.

Tokens offer faster liquidity than equity (tradeable on DEXs like Uniswap), while equity promises bigger long-term wins. Hybrid models balance this—e.g., Coinbase Ventures’ $1M in Truflation’s CPI-tracking token (2024) alongside equity in its parent.

Some notable Coinbase Ventures investments in 2024 include:

* Socket ($5M, 2024): A blockchain interoperability protocol. Likely a hybrid deal—equity in the company, tokens for its cross-chain network.

* Puffer ($18M Series A, 2024): Ethereum staking infrastructure. Equity in Puffer’s ops plus tokens tied to its mainnet launch.

* Integral (2023): An accounting firm catering to Coinbase Prime clients. This is an equity-focused investment, but it’s part of a broader strategy that includes tokenized bets on Base ecosystem projects.

In his closing remarks, Jonathan King highlighted the importance of user experience and risk mitigation in Coinbase Ventures' investment strategy. He also emphasized the firm's support for Coinbase's broader goals, such as driving adoption of Base and onchain trading activity.

“We're trying to fund the startups that are building the best user experiences and the best decentralized ecosystems, and we're really focused on investing in projects that align with Coinbase's core goals,” King elaborated.

As Coinbase Ventures continues to invest in promising Web3 startups, its hybrid investment model and support for user-centric projects will undoubtedly play a pivotal role in shaping the future of the crypto industry.