Chapter One, an LA-based venture firm which recently announced a $40 million crypto fund, is looking for ways to differentiate itself in the crowded crypto VC world. Its newest effort is called Chapter One Studios, a six-month incubator program which will provide three crypto startups with million-dollar checks and in-house guidance toward realizing their visions.
The firm, led by former Tinder product chief Jeff Morris Jr., has shifted from a more generalist vertical interest toward web3 obsession over the past several months, as early bets in crypto startups like Dapper and Compound Finance have taken off. Chapter One’s embrace of web3 accompanies a broader trend of smaller operator-led funds cozying up to crypto. The firm has aimed to use its design-centric approach to carve out a niche for it in a flock of firms which are increasingly bulking up on technical talent in order to woo crypto founders.
“While there are a lot of funds that participate in things like governance or liquidity or market making, there wasn’t a fund that was entirely focused on usability and making crypto more accessible,” Morris Jr. says.
Their new Studios initiative is a big part of this new framing. Morris Jr. says one goal of the program is to give small teams the resources to reach product market fit without having to worry about the stresses of fundraising. Founders will receive $1 million in investment for a 15% stake of their companies. Notably, the program is only accepting three teams for this first batch.
The six-month program will kick off in April after accepting applications for the next month or so. While startups will have the option of working from Chapter One’s LA office, the firm says they’re anticipating interest from companies working remotely as well.
Chapter One’s leaders say they are accepting applicants from across the web3 ecosystem, but they have laid out a few particular verticals they’re especially interested in as a firm, including products focused on identity, consumer applications, cross-chain interoperability and wallet & developer infrastructure.
The firm has already backed a handful of players in these spaces, including MoonPay, Syndicate, The Graph and Dharma, which was recently acquired by OpenSea.
As the fabled Y Combinator balloons in size, competing programs have tried just about everything to differentiate and find their inroad to chip away at the organization’s supremacy. For its part, Chapter One seems to be purposefully framing itself as an incubator as opposed to an accelerator to appeal to a different type of applicant, but the firm’s leaders also seem to be in touch with the advantages they hold over YC as a more intimate program.
“It’s going to be a six-month period where we basically throw everything we have at companies,” Chapter One’s Menelaos Mazakaris says. “We designed this program with a founder lens in mind. Like, if you’re a founder, would you want to go through a 400-person batch where you have a very light touch with the actual organization that’s helping run the programming? Here, we’re really trying to build generational companies by working with them for six months and then staying deeply in touch.”