原文标题：《Katie Haun launched a $1.5 billion crypto fund—and then the industry blew up. How has she navigated crypto』s year from hell?》
Original source: Fortune magazine official website
Original translation: 0x26, BlockBeats
On a sunny April morning, Katie Haun trudged along a winding path in the hills above Palo Alto around the Stanford Dish, a large radio telescope near Stanford University. The three-and-a-half-mile trail is a favorite of the prosecutor-turned-VC, but Haun wasn’t doing it for fun. Instead, her small team of 11 needed to rally their spirits for a high-stakes show-and-tell to convince her $1.5 billion company’s wealthy investors that everything was on track even as the cryptocurrency industry shattered.
Fresh off their hike, Haun, her team, and a few LPs who accompanied them returned to the Menlo Park offices of Haun Ventures, where the team settled in among the 70 or so LPs and founders of Haun’s portfolio companies who had gathered. Wat, a seasoned trader, reassured the crowd by showing the Gartner Hype Cycle chart, long used to assess tech trends. The message: The trough of the cycle is the real time to build.
Cryptocurrencies can be cyclical, but this time the trough was much steeper than investors expected, exacerbated by the collapse of many of the industry’s leading projects. For Haun, who has risen from Supreme Court clerk to a high-powered position at the Justice Department to the top of the VC world, the cryptocurrency fiasco is the first serious setback to her rapidly rising career and carefully cultivated reputation.
Threading the Needle
The timing was terrible. Launching a new crypto fund in the spring of 2022 was like starting a new movie theater chain before the pandemic hit. In the space of a few months, a raging bull run that took Bitcoin to $69,000 turned sour; high-profile projects like Terra collapsed; and the VC industry was hit by rising interest rates. Then in November, industry leader FTX collapsed in a massive fraud, and U.S. regulators began the most aggressive crackdown in the industry’s history.
The result is that Haun has raised $1.5 billion — a lot of money even for Silicon Valley VC firms — but many of the best opportunities are gone. In raising the money, which was spread across two funds, Haun had touted a roughly two-year investment plan, according to a fundraising document. Now that timeline no longer applies.
In the second quarter of 2023, venture capital funding for crypto projects fell to $2.3 billion, down more than 70% from the same period in 2022, as many investors turned their attention to the hotter field of artificial intelligence. The script for cryptocurrency venture capital is being rewritten.
Still, some crypto VCs are burning through their spare cash. For example, Polychain Capital has already invested most of its third fund, which was raised in 2022 and 2023. Although it has successfully raised $200 million for its fourth fund, other crypto VCs have not been so lucky. So far in 2023, crypto VCs have raised only about $2 billion, compared to more than $22 billion in all of 2022.
Haun Ventures is taking a more cautious approach, currently planning to spend all its cash in about three years. As of mid-June, the firm had invested about 30% of its funds in about two dozen projects, including publicly traded, liquid tokens. These tokens include well-known cryptocurrencies such as Bitcoin and Ethereum, as well as small-cap tokens associated with projects, which are often included as part of venture investments along with traditional equity. Haun Ventures declined to name the tokens it holds.
During that time, the firm’s investments have been split almost evenly between digital tokens and traditional equity, though through 2023 the firm has emphasized investments in startups, partner Rosenblum said.
Haun Ventures has invested in companies such as NFT creation platform Zora and Web3 infrastructure platform thirdweb. The firm also participated in the $32 million Series B round of privacy-focused blockchain network Aleo and provided support for encrypted data analysis platform Artemis. The company plans to announce more deals soon.
Like other VCs, Haun Ventures uses its influence to help its portfolio startups. When Aleo nearly lost its banking services after Silicon Valley Bank and First Republic collapsed, Haun served as a back-up agent, introducing it to other banks and sending employees to help answer policy questions.
Amid regulatory woes in the U.S., Haun has also been looking for opportunities overseas. She recently returned from a trip to Japan, where she met with a member of Congress who is pushing for Web3 adoption.
It’s too early to make any assessment of Haun Ventures’ returns because, as the firm’s own LPs acknowledge, it’s too early to assess a startup’s performance. What’s more, many of the LPs are giant investors, including Saudi Arabia’s sovereign wealth fund, who are willing to take the risk. “If it goes to zero, it won’t crush our portfolio,” said one Haun investor.
While some may applaud the firm’s relative caution, there is still pressure on the firm to do something with its capital because Haun Ventures, like other venture funds, charges management fees. The industry average for management fees is about 2%. Haun Ventures declined to comment on its management fees.
Rosenblum acknowledges that the company is threading the needle in an ever-changing market: “There are two ways to go wrong: One is to move too fast,” he tells Fortune. “The other is to move too slow.”
VCs who don’t follow the beaten path
Like other VCs, Haun faces the challenge of honing her investment strategy amid black swan events. But as a woman in a male-dominated industry, she also faces additional — and perhaps unfair — skepticism for raising the largest fund ever raised by a solo female founding partner.
At a venture capital dinner this spring, people talked about Haun’s background. One diner suggested that Haun might be an authority on regulation, but she lacked a deep background in technology and deals. However, Haun’s supporters said that didn’t matter.
“She’s not an engineer, she’s not a tinkerer, she’s not a builder,” Fred Wilson, co-founder of Union Square Ventures, which has invested with Haun, tells Fortune. Instead, Wilson says, Haun offers her extensive government experience and her connections.
“She’s one of the best networkers I’ve ever worked with,” Wilson said. “She can meet with anybody.”
Haun’s networking skills helped her climb to the top of the VC world — and so did the stories she could tell about herself. While she’s known today as one of the first federal prosecutors to take on cryptocurrency cases, she wasn’t involved in the earliest cases, including the landmark takedown of the dark web marketplace Silk Road. Instead, she led a follow-up case that took down former government enforcers who stole cryptocurrency from Silk Road, and later worked on investigations into the massive hacks of crypto giant Ripple and early crypto exchange Mt. Gox.
Haun used this experience to land a seat on the Coinbase board and later a role as general partner (GP) at venture capital giant Andreessen Horowitz, a position she held for four years and invested in top companies such as NFT platform OpenSea.
“Many of the investors with great stories come from a legal background to VC,” said Rachael Horwitz, a spokesperson for Haun Ventures. “We believe Katie (Haun) is undoubtedly one of the most experienced leaders and traders in the cryptocurrency space.”
Some in law enforcement resent that her brief stint in the digital asset legal field helped Haun gain wealth and fame while others who have established themselves in the field have not reaped the same benefits. Some were particularly frustrated by an article that referred to Haun as “D.C.’s top crypto cop” — a title she has never held and never claimed to have.
“She didn’t work very hard in government for 10, 20, 30 years — she only did a couple of encryption cases,” one person familiar with the matter said. “I do give her credit for playing the game smarter, not harder.”
One former law enforcement source recalled an episode in which a former Justice Department prosecutor took to LinkedIn to slam media reports that they believed misrepresented Haun’s role in the government. The law enforcement source, who spoke on the condition of anonymity, told Fortune that some drama ensued, with Haun’s friends apparently pushing for the post to be taken down. Soon after, the post disappeared.
Whether or not reports have exaggerated Haun's accomplishments, the former law enforcement official said, Haun has clearly benefited greatly from her growing fame. "She positioned herself as the greatest and best in terms of her career in government, and that's where it all started," they said.
Law enforcement is a world of ego and secrecy, and officers can only talk about cases under certain circumstances, so professional arguments should be treated with caution. Other law enforcement officers defended Haun, pointing out that she never misrepresented her record.
“There are haters out there,” said Grant Rabenn, a former Justice Department prosecutor who is now Coinbase’s head of financial crimes. He asserted that 99% of her detractors “don’t have the vision that she has or the success that she has.”
The venture capital community has a notoriously tense relationship with the media. While many venture capitalists consider themselves independent thinkers, some are thin-skinned and lash out at negative coverage.
But unlike her former Andreessen Horowitz colleague Marc Andreessen, who likes to argue with journalists on social media, and her partner at the firm’s crypto fund, Chris Dixon, who prefers to stay behind the scenes, Haun tends to attend mainstream media events. She debated Paul Krugman, sat with Ezra Klein, and appeared on the cover of Fortune magazine, arguing that cryptocurrencies and compliance are compatible. In May 2022, two months after Haun’s fund launched, she took the stage with Sam Bankman-Fried and Michael Lewis to attend the now-infamous FTX founder’s conference in the Bahamas.
However, after FTX collapsed in November, Haun mostly avoided the media she once pursued — save for a March 2023 op-ed she wrote for The Wall Street Journal and a brief interview for Bloomberg in December — a decision her team attributed to focusing on trading and working with regulators. Although she was interviewed for the cover of Fortune magazine last year, Haun declined multiple interview requests for this story.
Horwitz told Fortune that the best use of the firm’s time is to prioritize investing in companies.
They want a very tight story.
When VCs invite investors to an “LP Day,” it’s usually a lavish affair. Given the doldrums in crypto, Haun Ventures’ April gathering had an air of frugality: a giant dispenser of Peet’s coffee and picnic lunches from La Fromagerie. LPs, founders and the Haun team all hung out on an outdoor patio.
Brian Armstrong — the co-founder of Coinbase, where Haun began her entrepreneurial journey in the crypto industry after joining Coinbase’s board in 2017 — also appeared, delivering his standard speech about how he wants his company to remain an American company despite its existential fight with U.S. regulators.
The LP Day presentation seemed to temporarily appease investors, as no one publicly complained or called for divestment. Part of the reason may be that Haun chose not to invest in FTX, a notorious exchange run by Sam Bankman-Fried, whose parents taught Haun at Stanford Law School. Other top funds, including well-known figures and cryptocurrency experts, chose to support the scammer, resulting in eye-popping losses: Sequoia Capital evaporated $200 million of its investors' funds, while Paradigm reportedly marked its $290 million stake in FTX to zero last year.
After shunning the media she once embraced, Haun’s cryptocurrency advocacy now happens almost entirely behind closed doors. She hosts lawmakers, hosts fundraisers and educational sessions for leading politicians including Sen. Kirsten Gillibrand, D-N.Y., and brings in founders like ThirdWeb’s Furqan Rydhan to extol the benefits of blockchain.
With deals few and far between (Haun Ventures isn’t on the calendar, as one LP put it), much of the firm’s energy seems to be focused on political advocacy. Chris Lehane, who has led policy fights at Airbnb and has been involved in Democratic political campaigns, said he spends about a third of his time on cryptocurrency policy advocacy, including on Coinbase’s new Global Advisory Board, which has a vague mission to “strengthen our efforts with stakeholders” and “responsibly deploy cryptocurrency.”
Katie Haun is still early in her entrepreneurial journey, and her first fund is still young. Still, the former prosecutor has chosen to work mostly behind the scenes, relinquishing her public backer role as cryptocurrencies fight for survival. And even if her firm survives the crisis, it’s unclear whether investors will be willing to continue betting on the volatile industry.
“When they go to raise a second fund, they’re going to want to have a really tight story around what they did and how they responded to changes in the market,” USV’s Wilson told Fortune. “Hopefully they’ll talk about some of the successes, too.”
