U.S. venture capital firm raises $10 million in six-hour token sale

NEW YORK (Reuters) - U.S.-based venture capital firm Blockchain Capital LLC said on Thursday it raised $10 million in six hours in a sale of its digital tokens to investors.

Servers for data storage are seen at Advania's Thor Data Center in Hafnarfjordur, Iceland August 7, 2015. REUTERS/Sigtryggur Ari/File Photo

The company did not say when the sale occurred.

Blockhain Capital’s tokens called “BCAP” will be made available to buyers on the website on or before May 10, the company said in a statement.

“We wanted to democratize access and provide enhanced liquidity to the venture capital asset class, and we believe we succeeded,” said Blockchain Capital co-founder Brock Pierce.

“We saw incredible institutional demand, which we ended up carving back to make room for the crypto-community.”

The crypto-community refers to a network of investors, technology enthusiasts, as well as software developers and engineers operating in the digital currency space.

The BCAP tokens represent a fraction of ownership in a new fund called Blockchain Capital III Digital Liquid Venture Fund, LP.

It was the first ever digital token sale by a venture capital firm. Over the past year, startups in the blockchain space have raised capital by creating and selling their own currencies in so-called “initial coin offerings” without the help of banks or venture capital firms.

These sales are meant to be quicker than raising capital through VCs and banks, which can take anywhere from six months to a year. It is not uncommon to raise funds in under 12 hours. There are blockchain startups that have generated capital much quicker than six hours, such as FirstBlood, an online gaming website which raised $5.5 million in under a minute.

“Most people don’t want to be locked up for five to 10 years in an investment,” said Pierce in an earlier interview. “If there is liquidity as in a token sale, that dynamic changes everything.”

Blockchain Capital also announced on Thursday that the fund will invest in Parity Technologies Ltd, which created the Parity ethereum software. According to the company website, Parity is the “fastest and most secure way of interacting with the ethereum network.”

Ethereum is an open-source blockchain similar to the bitcoin network.

Blockchain, a ledger of transactions that first emerged as the technology underpinning the digital currency bitcoin, has gained traction on both Wall Street and Main Street. Investors were encouraged by the technology’s ability to record and track the movement of assets.

Reporting by Gertrude Chavez-Dreyfuss; Editing by Tom Brown