Dragonfly Capital closes $650M Fund III amid VC pullback

The $650M raise was Dragonfly’s Fund III, not Fund IV

Despite recent headlines, the $650 million raise reflects Dragonfly Capital Fund III. As reported by Cointelegraph, Fund III closed at $650 million in 2022 with a broad crypto mandate spanning DeFi, crypto gaming, and core Web3 infrastructure. This clarifies that the $650 million figure is not tied to a fourth fund.

A separate fourth vehicle is being raised with a $500 million target, according to NFTGators. The distinction matters because Fund III is already deployable capital, whereas the fourth fund remains in fundraising. Treating them as the same can distort timelines and expectations.

Why it matters: institutional LPs and full lifecycle investment mandate

Institutional limited partners anchored the $650 million crypto fund, as reported by CoinDesk. Backers included Tiger Global, KKR, Sequoia China, and Invesco. Such LP composition typically signals rigorous diligence standards and longer-duration capital, important for an emerging, regulated asset class.

The fund’s size allows Dragonfly to support founders through multiple rounds and lead later-stage financings when warranted. That end-to-end posture can reduce financing risk for portfolio teams during market cycles. Haseeb Qureshi, Managing Partner at Dragonfly, said the firm will “back companies from seed to Series B and beyond.”

Near term, the firm’s disclosed strategy points to deployment across decentralized finance, gaming, and foundational infrastructure. That breadth enables cross-portfolio synergies, such as liquidity, distribution, and security tooling. It also diversifies exposure across protocols, applications, and services.

Founders benefit from a single LP that can lead, follow, and bridge rounds, subject to results and governance. For the broader market, lifecycle support may stabilize runway planning and vendor selection. The approach remains sensitive to regulatory developments and risk controls.

Fund III vs. fourth fund: size, timing, and focus

Timeline of Dragonfly funds to clarify the $650M confusion

Dragonfly launched Fund I around 2018 at roughly $100 million and Fund II around 2020 at roughly $200 million, as reported by Crunchbase. Fund III expanded materially to $650 million in 2022. The jump explains why some later headlines misread the $650 million as a new, fourth fund.

Fourth fund target: $500M and reported status

The fourth fund’s target is $500 million, with about $250 million secured as of September 2024 and a planned close by early 2025, as reported by DisruptionBanking.

At the time of this writing, Coinbase Global (COIN) traded near $162.10 pre-market, down about 1.35%, based on data from Yahoo Finance. This is background context rather than a directional signal.

FAQ about Dragonfly Capital Fund III

Who invested in Dragonfly Capital’s $650M fund and why does it matter?

LPs included Tiger Global, KKR, Sequoia China, and Invesco, indicating institutional validation and underwriting discipline that can benefit founders’ access to follow-on capital.

What stages and sectors will Dragonfly Fund III back (seed, Series B, DeFi, infrastructure, gaming)?

Fund III backs seed through Series B and beyond, deploying across DeFi, gaming, and core infrastructure within the crypto ecosystem.