Four venture firms seek opportunities from Facebook’s Libra cryptocurrency

When Facebook formally unveiled its cryptocurrency, Libra, on Tuesday, the company announced it signed four venture capital firms to the 28-member Libra Association that will govern it.

Membership required investing a minimum of $10 million and permits a role in managing its reserves and controlling its blockchain.

The firms are Union Square Ventures, Andreessen Horowitz, Ribbit Capital and Thrive Capital. More could follow as Facebook hopes to expand the association to 100 members.

The move to join the crypto initiative of the nation’s largest social network is somewhat unusual given that venture investors typically back young startups hoping to dislodge large incumbents. But the firms appear to see Facebook’s Libra as fertile ground for new investments as well as an opportunity for existing portfolio companies.

“We believe Libra has the potential to be the catalyst that brings the entire cryptocurrency and cryptoasset market into the mainstream,” explained Union Square Partner Fred Wilson in a blog post.

Wilson said he viewed the firm’s investment decision as both an ecosystem investment and a financial investment. And he vowed in a blog post that as an association member, Union Square would advocate for openness, transparency, decentralization and permissionless innovation, giving entrepreneurs the unimpeded right to build on top of the platform.

“We think that those features will help accelerate adoption with the entire crypto ecosystem — including our many existing investments in the space — and also help Libra succeed in its goals,” he wrote.

“In addition to participating in the governance process at the Libra Association, USV plans to invest in the Libra Reserve, which will provide the stability for the currency,” Wilson added in his post. “This is an unusual type of investment for us, but we have learned that investing in the crypto sector requires us to explore a variety of new investment structures.”

Andreessen Horowitz said it, too, viewed Libra as a means to reach a critical mass of cryptocurrency users, businesses and developers, according to a blog post from General Partner Katie Haun.

“The Libra network is already open source and in the future will be permissionless,” she wrote. This will help “accelerate the mainstream adoption of user-friendly crypto applications.”

Key to this adoption will likely be the widespread availability of crypto wallets to Facebook users.

Still, Haun said because of Libra’s potential scale, a number of technical, financial and governance questions remain. Andreessen Horowitz plans to take part in the discussions to find answers, she wrote.