An Overview of Bain Capital Crypto's Investment Strategy and Landscape

Author: Nianqing, ChainCatcher

Recently, Bain Capital Crypto has maintained an active investment pace in the zk field, previously known for investing in projects like Celestia, Scroll, and Fuel. Similar to Jump Crypto, which originated from Jump Trading, Bain Capital Crypto became an independent specialized crypto investment fund in March this year, separating from Bain Capital Ventures, and has focused its investments on scalability solutions, DeFi, privacy, and other areas. This article will help you understand the background, team, investment style, and investment landscape of Bain Capital Crypto.

1. Development History

On International Women's Day this year, investment firm Bain Capital, managing approximately $160 billion in assets, announced its first specialized crypto fund, with a scale of $560 million, and established an independent division, Bain Capital Crypto (hereinafter referred to as BCC). According to CoinDesk, Bain Capital has been planning to set up a separate crypto fund since last year, with relevant disclosures in a regulatory document from September last year.

BCC aims to support crypto/web3 builders from seed to growth through a highly technical and collaborative approach. Its partner, Stefan Cohen, stated that the fund has always focused on early-stage investments through liquidity tokens.

In fact, Bain Capital, as a long-established capital firm focused on technological innovation, has been investing in the crypto space for the past seven years, with over a dozen crypto projects in its portfolio, including dYdX, Compound Finance, Cosmos, DCG, BlockFi (Bain Capital has not yet disclosed its risk exposure to BlockFi), Biconomy, Lolli, and others.

Data Source: Bain Capital Ventures - RootData

2. Investment Areas and Style

BCC partner Stefan Cohen mentioned in an interview that BCC's primary investment focus is on building the infrastructure for the next generation of the internet, specifically including blockchain scalability solutions, privacy products, middleware, and storage solutions.

According to its official website, the generational shift of internet users (builders and creators) combined with open technology provides unlimited design space for developing applications controlled by users, and we are currently in the early stages of this transformation. Therefore, following this line of thought, BCC has three key focus areas :

• Technical and Economic Research: As the next wave of internet and financial infrastructure is built, the team will need in-depth technical support to think through key design decisions.
• Governance Design and Participation: Crypto protocols require specialized levels of active participation, code contributions, risk parameter adjustments, and topics related to DAO organization and management. The team will actively participate in these ecosystems.
• Cross-Stage Participation: Given the early liquidity dynamics of crypto protocols and limited capital intensity, protocol teams need investors who can participate across liquidity ranges, supporting teams in both private and public markets. BCC can flexibly engage across capital stages and even call upon capital to utilize protocols.

In summary, BCC will deeply engage with the ecosystems of the projects it invests in, providing technical consulting and support, while also participating in governance through DAOs and leveraging its capital advantages to provide liquidity at different stages of the ecosystem.

3. Team

Stefan Cohen and Alex Evans co-lead the BCC fund, which currently has 10 members, with researchers and investors almost evenly split. Investment is a two-way selection process, and project parties also value the research capabilities and technical support that investment institutions can provide. Scroll co-founder Ye Zhang mentioned in an interview that the team is quite cautious when selecting partners, with one criterion being a strong research capability and technical strength. In addition to having many related ecosystem projects in its portfolio, teams like BCC also have researchers who have been deeply involved in zk, cryptography, and other fields for many years.

Since joining Bain Capital in 2016, BCC partner Stefan Cohen has been leading crypto investments, interested in infrastructure related to L1, scalability solutions, privacy, DeFi, and DAOs; Alex Evans focuses on early investments in DeFi, blockchain scalability, and privacy technologies.

Research director Guillermo has completed his undergraduate, master's, and doctoral studies in electrical engineering at Stanford University, enjoys solving mathematical problems, and frequently innovates incentive mechanism models for DeFi, among others. Notably, the team's cryptography PhD Wei Dai has focused on research and development of scalable and privacy-preserving blockchain systems and has made significant contributions to the study of zero-knowledge proof (zk) technology.

Additionally, the BCC team includes experienced quantitative analysts, investors, and regulatory advisors.

Source: https://baincapitalcrypto.com/team/alex-evans/

4. Investment Portfolio

Data Source: Projects - RootData

1. Nucleo

Website: https://www.gonucleo.xyz/

Twitter: https://twitter.com/gonucleo

Nucleo is a multi-signature solution that conducts transactions on the Ethereum blockchain using zero-knowledge cryptography. In August, Nucleo began internal testing on the ZK Rollup-based privacy and scalability solution Aztec Network, allowing users to conduct private transactions, private DeFi, private fundraising, and other operations through viewing keys using multi-signature and zero-knowledge cryptography technologies.

On November 22, it completed a $4 million seed round financing, led by Bain Capital Crypto.

2. Notebook Labs

Website: https://www.notebooklabs.xyz/

Twitter: https://twitter.com/NotebookLabs

Notebook is an identity infrastructure layer that allows existing identity providers to interact with Web3 while maintaining anonymity and privacy using zero-knowledge proofs. Notebook can enhance the security of DeFi, governance, and airdrops. With Notebook, creators and communities can run airdrops resistant to witch hunts, DAOs can verify humanity and aggregate participants' credentials, and lending protocols can build credit scoring systems to provide low-collateral loans. Related products are expected to launch in 2023.

At the end of October this year, it completed a $3.3 million seed round financing, led by Bain Capital Crypto.

3. Celestia

Twitter: https://twitter.com/CelestiaOrg

Website: https://celestia.org/

Celestia is the first truly modular blockchain, aiming to combine the sovereign interoperable zones of Cosmos with Ethereum's rollup-centric approach while sharing security. By separating execution from consensus and introducing data availability sampling for scalability, it hopes to support a broader potential user demand while keeping verification costs relatively stable, providing better performance for users.

On October 20 this year, it completed a $55 million financing round, led by Bain Capital Crypto.

4. Skip

Twitter: https://twitter.com/SkipProtocol

Website: https://skip.money/

Skip Protocol aims to build on-chain and off-chain MEV infrastructure, helping users, stakers, and validators share MEV profits, enabling seekers to execute more complex and profitable strategies.

In September this year, it completed a $6.5 million seed round financing, led by Bain Capital Crypto.

5. Community Labs

Twitter: https://twitter.com/CommunityLabs

Website: https://communitylabs.com/

Community Labs is a software development company and venture studio within the Arweave ecosystem. However, in addition to expanding Arweave's data storage capabilities, Berenbaum is also looking for other uses for Arweave to make its functionality more similar to blockchains like Ethereum and Solana. He has established a decentralized token trading platform called Verto (https://testnet.verto.exchange/) on Arweave. The founder, Tate Berenbaum, is only 19 years old.

In early September this year, it completed a $30 million financing round, with Bain Capital Crypto participating.

6. Fuel

Twitter: https://twitter.com/fuellabs_

Website: https://fuel-labs.ghost.io/

Fuel is a UTXO-based modular execution layer that brings globally accessible scale to Ethereum. As a modular execution layer, Fuel can achieve global throughput in ways that a monolithic chain cannot, while inheriting Ethereum's security.

In early September this year, it completed a $30 million financing round, with Bain Capital Crypto participating.

7. Primitive

Twitter: https://twitter.com/primitivefi

Website: http://primitive.xyz/

Primitive has built the Replicating Market Maker (RMM) protocol, a scalable and efficient on-chain derivatives solution without oracles. RMM liquidity is an innovative financial instrument that can replicate the returns of derivatives. The assets supporting these derivatives are effectively used as spot liquidity, allowing for swaps between assets, just like other DEXs.

In August this year, it completed a $9 million Series A financing round, led by Bain Capital Crypto.

8. RISC Zero

Twitter: https://twitter.com/risczero

Website: https://www.risczero.com/

RISC Zero is building the next generation of scalable blockchains using zero-knowledge proof technology and RISC-V zkVM. RISC Zero allows developers accustomed to programming in Rust, Go, C++, and other standard programming languages to write decentralized applications on-chain. In March this year, RISC Zero launched a zero-knowledge proof virtual machine that enables developers to build zero-knowledge proofs and execute them on any computer using various programming languages.

In August this year, it completed a $12 million seed round financing, led by Bain Capital Crypto.

9. Jadu

Twitter: https://twitter.com/JaduAVAs

Website: https://jadu.ar/

Launched in 2020, Jadu is developing an AR mobile application that connects to players' Ethereum wallets, allowing users to turn their 3D animated NFTs into playable avatars. The application has completed beta testing and can integrate avatars from NFT series such as Deadfellaz, Cyber Kongz, and FLUFs, as well as some avatars from The Sandbox video game.

In May this year, it completed a $36 million financing round, led by Bain Capital Crypto.

10. Scroll

Twitter: https://twitter.com/Scroll_ZKP

Website: https://scroll.io/

Scroll is an Ethereum L2 solution utilizing ZK Rollups. Scroll leverages the latest advancements in zk proof efficiency and prover hardware acceleration to provide a secure and scalable execution layer, maximizing compatibility with the Ethereum Virtual Machine (EVM).

In April this year, it completed a $30 million Series A financing round, with Bain Capital Crypto participating.

11. Variational Research

Website: https://variationalresearch.com/

Variational Research is a global algorithmic market maker and liquidity provider focused on digital assets. We collaborate with DeFi protocols and financial institutions/fintech companies to help bridge the gap between traditional finance and decentralized finance. Variational is supported by several institutions, including Sequoia Capital, Bain Capital, Coinbase Ventures, Dragonfly Capital, and North Island Ventures.

12. MakerDAO

Twitter: https://twitter.com/MakerDAO

Website: https://makerdao.com/

MakerDAO is a decentralized lending platform that enables over-collateralized loans by locking tokens like ETH in smart contracts and minting a stablecoin pegged to the US dollar, DAI. The stability of DAI is achieved through a dynamic system of collateral debt positions, autonomous feedback mechanisms, and incentives for external actors. Once generated, DAI can be freely sent to others for payment of goods and services or held as long-term savings.