Novogratz's new fund, others invest $30 million in online encyclopedia

NEW YORK (Reuters) - A fund launched last month by former macro hedge fund manager Mike Novogratz and global blockchain company Block.One led a group of institutions that invested $30 million in online encyclopedia Everipedia, Everipedia President Sam Kazemian said.

Mike Novogratz speaks during the Reuters Global Investment Outlook Summit in New York, U.S., November 13, 2017. REUTERS/Andrew Kelly

Everipedia launched in 2015 with the goal of becoming an alternative to Wikipedia, the company said. The funding will help create an open source, peer-to-peer information network, Kazemian told Reuters.

“This investment will allow us to build the infrastructure for ... a global, decentralized, neutral forum that can credibly discover the best of our knowledge,” Larry Sanger, Everipedia chief information officer and co-founder of Wikipedia, said in a statement.

With the new funding, Kazemian also said the company had no plans for an initial coin offering - when startups create and sell virtual tokens to investors to raise funds.

“In my opinion, a lot of the ICOs are mainly done to get funding and after the company raises what it needs, it essentially becomes a cash grab,” said Kazemian, adding the $30 million investment was an equity transaction.

In backing the deal, Novogratz said he was looking forward to the “growth of a more modern and inclusive encyclopedia that puts the world’s knowledge on the blockchain.”

Blockchain, the technology that underpins bitcoin and other digital currencies, is a digital ledger that provides a secure way of making and recording transactions.

Novogratz’s $325-million new fund, EOS.IO Ecosystem, is a joint venture between his Galaxy Digital LP, a digital assets merchant bank, and, the developer of blockchain software EOS. In 2017, launched a year-long token sale for EOS which had raised at least $700 million as of the fourth quarter last year.

Everipedia said its open-source software will be developed on top of EOS.IO’s blockchain platform.

Distributed Network Advisors, whose partner includes venture capitalist Brock Pierce, had also invested in Everipedia, Kazemian said.

Reporting by Gertrude Chavez-Dreyfuss; Editing by Susan Thomas