December 5, 2023

Thought Web3 was over? This VC just raised €15m to back startups in the sector

“If you don’t invest in protocols, you can’t call yourself a tech investor anymore,” says Heartcore’s partner Yacine Ghalim

Mimi Billing

4 min read

Web3, crypto, blockchain — these interconnected investment areas have gone from boom to bust, some many times over. This hasn’t scared Heartcore VC though.

The Copenhagen-HQ’d VC is announcing it's closed €15m of a new €20m fund that will focus on investing in protocols and tokens. Protocols refer to technologies that allow for decentralised data sharing and tokens refer to digital assets on a blockchain.

The fund is deliberately small and unlike normal VC funds that take ownership stakes in the startups they back, Heartcore will have tokens earmarked for the fund when (if ever) they get released.


Partner Yacine Ghalim is aware of the risks involved.

“We believe that the type of upside that you can get in these emerging asset classes is much more significant than what you can get in traditional companies. But of course, the price to pay is significant volatility, and let's face it, 99% of these protocols are not going to work,” he says.

The rise and fall of crypto

Crypto has made some VCs great profits and burned others, such as FTX-backers Sequoia Capital and SoftBank. That is also true for European VC fund Creandum, which invested in bitcoin miner KNC Miner in 2015. General partner Johan Brenner told Sifted earlier this year, “If we had invested in Bitcoin instead of KNC we would have made millions in profit.”

Ghalim says that he and his three colleagues investing from the fund have decided to focus only on protocols and tokens (NFTs) and stay away from the infrastructure and the “normal” companies that VCs have tended to invest in. There won’t be any investments in companies like French unicorn Sorare for instance.

These more traditional crypto companies would be potential targets for Heartcore’s main fund, Ghalim says.

“What's special with these protocols is that it's as if all of them IPO, right? There is no real M&A, but they all IPO, meaning that at some point the protocol is going to be live and the tokens will be distributed and become a liquid investment, typically two to three years from inception,” Ghalim says. These “IPOs” are not listed on a normal stock exchange, but a crypto exchange.

“You can either decide to sit on the tokens or sell parts of all of them, so you need a hybrid skill set. That's why we felt that it deserved a dedicated vehicle with a dedicated strategy” — a separate fund.

With investments ranging from ​​$250k to $500k, Heartcore will focus on protocols and tokens built on top of the infrastructure built on Bitcoin and Ethereum, the world’s most popular Blockchain network. The focus is on areas such as decentralised finance like trading protocols, entertainment protocols like gaming, Web3 social as well as traditional software.

“The time to invest in infrastructure was more like 5-10 years ago, and for the first time, we have infrastructure that is ready for primetime. These are things built at the application layer, which we think is the next thing that will happen in this space,” Ghalim says.

The LPs

In the US, this type of investment fund isn’t as unusual as in Europe. Andreessen Horowitz raised a $4.5bn crypto fund in 2022 (its fourth) and set up an office in London earlier this year for crypto investments. Other large VCs such as GV (previously Google Ventures) and specialised crypto VCs such as Paradigm and Dragonfly Capital are still betting on the technology.

Heartcore says institutional investors in Europe are still shy about this asset class. So for this fund, the VC has raised capital from family offices and former entrepreneurs as well as the Heartcore team itself.


Ghalim believes if a VC wants to be on top of new tech trends, it's necessary to get involved in this new asset class.

“When we started Heartcore, a lot of other VCs of the time were mostly investing in semiconductors and they didn't understand the internet and they were like, ‘I'm gonna leave this thing to someone else’. And those [VCs] well, they're not around anymore, because the value was created elsewhere,” he says.

“It's very important for a VC to stay relevant and stay on their toes. If you want to play that game, you have to play the game fully. If you don't invest in protocols, I think you can't call yourself a tech investor anymore.”

Mimi Billing

Mimi Billing is Sifted's Europe editor. She covers the Nordics and healthtech, and can be found on X and LinkedIn